Document:

Exhibit 10.2

 

FORM OF KBW, INC.

2006 EQUITY INCENTIVE PLAN

 

SECTION
1.                 Purpose; Definitions

 

The
purpose of this KBW, Inc. 2006 Equity Incentive Plan (the “Plan”) is to give
the Company a competitive advantage in attracting, retaining and motivating
officers, employees, directors, advisors and/or consultants and to provide the
Company and its Subsidiaries and Affiliates with a stock plan providing
incentives directly linked to stockholder value. Certain terms used herein have
definitions given to them in the first instance in which they are used. In
addition, for purposes of the Plan, the following terms are defined as set
forth below:

 

(a)           “Affiliate” means a corporation or other entity
controlled by, controlling or under common control with, the Company.

 

(b)           “Applicable Exchange” means the New York Stock Exchange or
such other securities exchange as may at the applicable time be the principal
market for the Common Stock.

 

(c)           “Award” means an Option, Stock Appreciation
Right, Restricted Stock, Stock Unit, or other stock-based award granted
pursuant to the terms of the Plan.

 

(d)           “Award Agreement” means a written document or agreement
setting forth the terms and conditions of a specific Award.

 

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

 

(f)            “Cause” means, unless otherwise provided in an
Award Agreement, (i) “Cause” as defined in any Individual Agreement to which
the applicable Participant is a party, or (ii) if there is no such Individual
Agreement or if it does not define Cause: 
(A) commission of (1) a felony (or its equivalent in a non-United States
jurisdiction) or (2) other conduct of a criminal nature that has or is likely
to have a material adverse effect on the reputation or standing in the
community of the Company or an Affiliate or that legally prohibits the
Participant from working for the Company and its Affiliates; (B) breach by the
Participant of a regulatory rule that adversely affects the Participant’s
ability to perform the Participant’s duties to the Company and its Affiliates; (C)
dishonesty in the course of fulfilling the Participant’s employment duties; (D)
deliberate failure on the part of the Participant (1) to perform the
Participant’s principal employment duties, (2) to comply with the policies of
the Company and its Affiliates in any material respect, or (3) to follow
specific reasonable directions received from the Company and its Affiliates; or
(E) before a Change in Control, such other events as shall be determined by the
Committee and set forth in a Participant’s Award Agreement. Notwithstanding the
general rule of Section 2(c), following a Change in Control, any determination
by the Committee as to whether “Cause” exists shall be subject to de novo review.

 

(g)           “Change in Control” has the meaning set forth in Section 9(b).

 

 

 

(h)           “Code” means the Internal Revenue Code of 1986,
as amended from time to time, and any successor thereto, the Treasury
Regulations thereunder and other relevant interpretive guidance issued by the
Internal Revenue Service or the Treasury Department. Reference to any specific
section of the Code shall be deemed to include such regulations and guidance,
as well as any successor provision of the Code.

 

(i)            “Commission” means the Securities and Exchange
Commission or any successor agency.

 

(j)            “Committee” has the meaning set forth in
Section 2(a).

 

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

 

(l)            “Company” means KBW, Inc., a Delaware corporation.

 

(m)          “Disability” means (i) “Disability” as defined in any
Individual Agreement to which the Participant is a party, or (ii) if there is
no such Individual Agreement or it does not define “Disability,” (A) permanent
and total disability as determined under the Company’s long-term disability
plan applicable to the Participant, or (B) if there is no such plan applicable
to the Participant, “Disability” as determined by the Committee.

 

(n)           “Disaffiliation” means a Subsidiary’s or Affiliate’s
ceasing to be a Subsidiary or Affiliate for any reason (including, without
limitation, as a result of a public offering, or a spinoff or sale by the
Company, of the stock of the Subsidiary or Affiliate) or a sale of a division
of the Company and its Affiliates.

 

(o)           “Effective Time” means immediately following consummation
of the IPO.

 

(p)           “Eligible Individuals” means directors, officers, employees,
advisors, and consultants of the Company or any of its Subsidiaries or
Affiliates, and prospective employees and consultants who have accepted offers
of employment or consultancy from the Company or its Subsidiaries or
Affiliates.

 

(q)           “Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time, and any successor thereto.

 

(r)            “Fair Market Value” means, if the Common Stock is listed on a national
securities exchange, as of any given date, the closing price for the Common
Stock on such date on the Applicable Exchange, or if Shares were not traded on
the Applicable Exchange on such measurement date, then on the next preceding
date on which Shares were traded, all as reported by such source as the
Committee may select. If the Common Stock is not listed on a national
securities exchange, Fair Market Value shall be determined by the Committee in
its good faith discretion.

 

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(s)           “Free-Standing SAR” has the meaning set forth in Section
5(b).

 

(t)            “Grant Date” means (i) the date on which the
Committee by resolution selects an Eligible Individual to receive a grant of an
Award and determines the number of Shares to be subject to such Award, or (ii)
such later date as the Committee shall provide in such resolution.

 

(u)           “Incentive Stock
Option” means any
Option that is designated in the applicable Award Agreement as an “incentive
stock option” within the meaning of Section 422 of the Code, and that in fact
so qualifies.

 

(v)           “Individual Agreement” means an employment, consulting or
similar agreement between a Participant and the Company or one of its
Subsidiaries or Affiliates that is in effect as of the Grant Date of an Award
hereunder.

 

(w)          “IPO” means the initial public offering of
Shares.

 

(x)            “IPO Date” means the date of the closing of the
IPO.

 

(y)           “Nonqualified Option” means any Option that is not an
Incentive Stock Option.

 

(z)            “Option”
means an Award granted under Section 5(a).

 

(aa)         “Participant” means an Eligible Individual to whom an
Award is or has been granted.

 

(bb)         “Performance Goals” means the performance goals established
by the Committee in connection with the grant of Restricted Stock, Stock Units,
or other stock-based awards.

 

(cc)         “Plan” has the meaning set forth in the first
paragraph of this Section 1.

 

(dd)         “Restricted Stock” means an Award granted under
Section 6.

 

(ee)         “Retirement” means, unless otherwise determined by
the Committee, retirement from active employment with the Company, a Subsidiary
or an Affiliate at or after age 65 or
after attainment of both age 55 and ten years of continuous service with the
Company and its Affiliates.

 

(ff)           “Share” means a share of Common Stock.

 

(gg)         “Stock Appreciation Right” means an Award granted under Section
5(b).

 

(hh)         “Stock Units” means an Award granted under Section 7.

 

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(ii)           “Subsidiary” means any corporation, partnership, joint venture or
other entity during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company or any successor to
the Company.

 

(jj)           “Tandem SAR” has the meaning set forth in Section
5(b).

 

(kk)         “Term” means the maximum period during which an
Option or Stock Appreciation Right may remain outstanding, subject to earlier
termination upon Termination of Employment or otherwise, as specified in the
applicable Award Agreement.

 

(ll)           “Termination of
Employment” means
the termination of the applicable Participant’s employment with, or performance
of services for, the Company and any of its Subsidiaries or Affiliates. Unless
otherwise determined by the Committee, if a Participant’s employment with the
Company and its Affiliates terminates but such Participant continues to provide
services to the Company and its Affiliates in a non-employee capacity, such
change in status shall not be deemed a Termination of Employment. A Participant
employed by, or performing services for, a Subsidiary or an Affiliate or a
division of the Company and its Affiliates shall be deemed to incur a
Termination of Employment if, as a result of a Disaffiliation, such Subsidiary,
Affiliate, or division ceases to be a Subsidiary, Affiliate or division, as the
case may be, and the Participant does not immediately thereafter become an
employee of, or service provider for, the Company or another Subsidiary or
Affiliate. Neither a temporary absence from employment because of illness,
vacation or leave of absence nor a transfer among the Company and its
Subsidiaries and Affiliates shall be considered a Termination of Employment.

 

SECTION
2.                 Administration

 

(a)           Committee. The Plan shall be administered by the
Compensation Committee of the Board or such other committee of the Board as the
Board may from time to time designate (the “Committee”), which shall be
composed of not less than two directors, and shall be appointed by and serve at
the pleasure of the Board. The Committee shall, subject to Section 10, have
plenary authority to grant Awards pursuant to the terms of the Plan to Eligible
Individuals. Among other things, the Committee shall have the authority,
subject to the terms of the Plan:

 

(i)            to select the Eligible Individuals to
whom Awards may from time to time be granted;

 

(ii)           to determine whether and to what extent,
Incentive Stock Options, Nonqualified Options, Stock Appreciation Rights,
Restricted Stock, Stock Units, other stock-based awards, or any combination
thereof, are to be granted hereunder;

 

(iii)          to determine the number of Shares to be
covered by each Award granted hereunder;

 

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(iv)          to determine the terms and conditions of
each Award granted hereunder, based on such factors as the Committee shall
determine;

 

(v)           subject to Section 12, to modify, amend
or adjust the terms and conditions of any Award, at any time or from time to
time;

 

(vi)          to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable;

 

(vii)         to interpret the terms and provisions of
the Plan and any Award issued under the Plan (and any agreement relating
thereto);

 

(viii)        to establish any “blackout” period that
the Committee in its sole discretion deems necessary or advisable; and

 

(ix)           to otherwise administer the Plan.

 

(b)           Procedures.

 

(i)            The Committee may act only by a majority
of its members then in office, except that the Committee may, except to the
extent prohibited by applicable law or the listing standards of the Applicable
Exchange and subject to Section 10, allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it.

 

(ii)           Any authority granted to the Committee
may also be exercised by the full Board. To the extent that any permitted
action taken by the Board conflicts with action taken by the Committee, the
Board action shall control.

 

(c)           Discretion of Committee. Subject to Section 1(f), any
determination made by the Committee or by an appropriately delegated officer
pursuant to delegated authority under the provisions of the Plan with respect
to any Award shall be made in the sole discretion of the Committee or such
delegate at the time of the grant of the Award or, unless in contravention of
any express term of the Plan, at any time thereafter. All decisions made by the
Committee or any appropriately delegated officer pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company,
Participants, and Eligible Individuals.

 

(d)           Award Agreements. The terms and conditions of each Award,
as determined by the Committee, shall be set forth in a written Award
Agreement, which shall be delivered to the Participant receiving such Award
upon, or as promptly as is reasonably practicable following, the grant of such
Award. The effectiveness of an Award shall not be subject to the Award
Agreement’s being signed by the Company and/or the Participant receiving the
Award unless specifically so provided in the Award Agreement. Award Agreements
may be amended only in accordance with Section 12.

 

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SECTION
3.                 Common Stock Subject to
Plan

 

(a)           Maximum Number of Shares.
The maximum
number of Shares that may be delivered pursuant to Awards under the Plan shall
be [       ].

 

(b)           Rules for Calculating
Shares Delivered.

 

(i)            To the extent that any Award is
forfeited, or any Option and the related Tandem SAR (if any) or Free-Standing
SAR terminates, expires or lapses without being exercised, or any Award is
settled for cash, the Shares subject to such Awards not delivered as a result
thereof shall again be available for Awards under the Plan.

 

(ii)           If the exercise price of any Option
and/or the tax withholding obligations relating to any Award are satisfied by
delivering Shares to the Company (by either actual delivery or by attestation),
only the number of Shares issued net of the Shares delivered or attested to
shall be deemed delivered for purposes of the limits set forth in Section 3(a).
To the extent any Shares subject to an Award are withheld to satisfy the
exercise price (in the case of an Option) and/or the tax withholding
obligations relating to such Award, such Shares shall not be deemed to have
been delivered for purposes of the limits set forth in Section 3(a).

 

(c)           Adjustment Provision. In the event of a stock dividend, stock
split, reverse stock split, share combination, or recapitalization or similar
event affecting the capital structure of the Company (each a “Share Change”),
or a merger, amalgamation, consolidation, acquisition of property or shares,
separation, spinoff, other distribution of stock or property (including any
extraordinary cash or stock dividend), reorganization, stock rights offering,
liquidation, Disaffiliation, or similar event affecting the Company or any of
its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board
shall make such substitutions or adjustments as it deems appropriate and
equitable to (A) the aggregate number and kind of Shares or other securities
reserved for issuance and delivery under the Plan, (B) the number and kind of
Shares or other securities subject to outstanding Awards; and (C) the exercise price
of outstanding Options and Stock Appreciation Rights. In the case of Corporate
Transactions, such adjustments may include, without limitation, (1) the
cancellation of outstanding Awards in exchange for payments of cash, property
or a combination thereof having an aggregate value equal to the value of such
Awards, as determined by the Committee or the Board in its sole discretion (it
being understood that in the case of a Corporate Transaction with respect to
which stockholders of Common Stock receive consideration other than publicly
traded equity securities of the ultimate surviving entity, any such
determination by the Committee that the value of an Option or Stock
Appreciation Right shall for this purpose be deemed to equal the excess, if
any, of the value of the consideration being paid for each Share pursuant to
such Corporate Transaction over the exercise price of such Option or Stock
Appreciation Right shall conclusively be deemed valid); (2) the substitution of
other property (including, without limitation, cash or other securities of the
Company and securities of entities other than the Company) for the Shares
subject to outstanding Awards; and (3) in connection with any Disaffiliation,
arranging for the assumption of Awards, or replacement of Awards with new 

 

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awards based on other property or other securities
(including, without limitation, other securities of the Company and securities
of entities other than the Company), by the affected Subsidiary, Affiliate, or
division or by the entity that controls such Subsidiary, Affiliate, or division
following such Disaffiliation (as well as any corresponding adjustments to
Awards that remain based upon Company securities).

 

(d)           Section 409A. Notwithstanding the foregoing:  (i) any adjustments made pursuant to Section
3(c) to Awards that are considered “deferred compensation” within the meaning
of Section 409A of the Code shall be made in compliance with the requirements
of Section 409A of the Code; (ii) any adjustments made pursuant to Section 3(c)
to Awards that are not considered “deferred compensation” subject to Section
409A of the Code shall be made in such a manner as to ensure that after such
adjustment, the Awards either (A) continue not to be subject to Section 409A of
the Code or (B) comply with the requirements of Section 409A of the Code; and
(iii) in any event, neither the Committee nor the Board shall have the
authority to make any adjustments pursuant to Section 3(c) to the extent the
existence of such authority would cause an Award that is not intended to be
subject to Section 409A of the Code at the Grant Date to be subject thereto.

 

SECTION
4.                 Eligibility

 

Awards
may be granted under the Plan to Eligible Individuals; provided, however, that Incentive Stock
Options may be granted only to employees of the Company and its subsidiaries or
parent corporation (within the meaning of Section 424(f) of the Code).

 

SECTION
5.                 Options and Stock
Appreciation Rights

 

(a)           Options. Options to purchase Shares under the Plan may be
granted on such terms and in such form as the Committee may from time to time
determine in its sole discretion, which shall not be inconsistent with the
provisions of the Plan, but which need not be identical from Option to Option.
Options may be of two types:  Incentive
Stock Options and Nonqualified Options. The Award Agreement for an Option shall
indicate whether the Option is intended to be an Incentive Stock Option or a
Nonqualified Option.

 

(b)           Stock Appreciation
Rights. Stock
Appreciation Rights under the Plan may be granted on such terms and in such
form as the Committee may from time to time determine in its sole discretion,
which shall not be inconsistent with the provisions of the Plan, but which need
not be identical from Stock Appreciation Right to Stock Appreciation Right.
Stock Appreciation Rights may be granted as “Tandem SARs,” which are granted in
conjunction with an Option, or “Free-Standing SARs,” which are not granted in
conjunction with an Option. Upon the exercise of a Stock Appreciation Right,
the Participant shall be entitled to receive an amount in cash, Shares, or
both, in value equal to the product of (i) the excess of the Fair Market Value
of one Share over the exercise price of the applicable Stock Appreciation
Right, multiplied by (ii) the number of Shares in respect of which the Stock
Appreciation Right has been exercised. The applicable Award Agreement shall
specify whether such payment is to be

 

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made in cash or Common Stock or both, or shall reserve
to the Committee or the Participant the right to make that determination prior
to or upon the exercise of the Stock Appreciation Right.

 

(c)           Tandem SARs. A Tandem SAR may be granted at the
Grant Date of the related Option or, in the case of a related Nonqualified
Option, at any time after the Grant Date thereof while the related Option
remains outstanding. A Tandem SAR shall be exercisable only at such time or
times and to the extent that the related Option is exercisable in accordance
with the provisions of this Section 5, and shall have the same exercise price
as the related Option. A Tandem SAR shall terminate or be forfeited upon the
exercise or forfeiture of the related Option, and the related Option shall
terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.

 

(d)           Exercise Price. The exercise price per Share subject to
an Option or Free-Standing SAR shall be determined by the Committee and set
forth in the applicable Award Agreement, and shall not be less than the Fair
Market Value of a share of the Common Stock on the applicable Grant Date. In no
event may any Option or Free-Standing SAR granted under the Plan be amended,
other than pursuant to Section 3(c), to decrease the exercise price thereof, be
cancelled in conjunction with the grant of any new Option or Free-Standing SAR
with a lower exercise price, or otherwise be subject to any action that would
be treated, for accounting purposes, as a “repricing” of such Option or
Free-Standing SAR, unless such amendment, cancellation, or action is approved
by the Company’s stockholders.

 

(e)           Term. The Term of each Option and each
Free-Standing SAR shall be fixed by the Committee, but shall not exceed ten
years from the Grant Date in the case of an Incentive Stock Option.

 

(f)            Vesting and
Exercisability.
Except as otherwise provided herein, Options and Free-Standing SARs shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Option
or Free-Standing SAR will become exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in whole
or in part, based on such factors as the Committee may determine. In addition,
the Committee may at any time accelerate the exercisability of any Option or
Free-Standing SAR.

 

(g)           Method of Exercise. Subject to the provisions of this
Section 5, Options and Free-Standing SARs may be exercised, in whole or in
part, at any time during the applicable Term by giving written notice of
exercise to the Company specifying the number of Shares as to which the Option
or Free-Standing SAR is being exercised; provided,
however, that, unless otherwise permitted by the Committee, any such
exercise must be with respect to a portion of the applicable Option or
Free-Standing SAR relating to no less than the lesser of the number of Shares
then subject to such Option or Free-Standing SAR or 50 Shares. In the case of
the exercise of an Option, such notice shall be accompanied by payment in full
of the purchase price (which shall equal the product of such number of Shares
multiplied by the applicable exercise price) by certified or bank check or such
other instrument as the Company may accept. If approved by the Committee,
payment, in full or in part, may also be made as follows:

 

8

 

(i)            Payments may be made in the form of
unrestricted Shares (by delivery of such Shares or by attestation) of the same
class as the Common Stock subject to the Option already owned by the
Participant (based on the Fair Market Value of the Common Stock on the date the
Option is exercised); provided, however,
that, in the case of an Incentive Stock Option, the right to make a payment in
the form of already owned Shares of the same class as the Common Stock subject
to the Option may be authorized only at the time the Option is granted and, provided, further, that already owned
Shares must have been either held by the Participant for at least six months at
the time of exercise or purchased on the open market.

 

(ii)           To the extent permitted by applicable
law, payment may be made by delivering a properly executed exercise notice to
the Company, together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds necessary
to pay the purchase price, and, if requested, the amount of any federal, state,
local or foreign withholding taxes. To facilitate the foregoing, the Company
may, to the extent permitted by applicable law, enter into agreements for
coordinated procedures with one or more brokerage firms. To the extent
permitted by applicable law, the Committee may also provide for Company loans
to be made for purposes of the exercise of Options.

 

(iii)          Payment may be made by instructing the
Committee to withhold a number of Shares having a Fair Market Value (based on
the Fair Market Value of the Common Stock on the date the applicable Option is
exercised) equal to the product of (A) the exercise price multiplied by (B) the
number of Shares in respect of which the Option shall have been exercised.

 

(h)           Delivery; Rights of
Stockholders. No
Shares shall be delivered pursuant to the exercise of an Option until the
exercise price therefor has been fully paid and applicable taxes have been
withheld. Subject to Section 14(e), the applicable Participant shall have all
of the rights of a stockholder of the Company holding the class or series of
Common Stock that is subject to the Option or Stock Appreciation Right
(including, if applicable, the right to vote the applicable Shares and the
right to receive dividends), when the Participant (i) has given written notice
of exercise, (ii) if requested, has given the representation described in
Section 14(a), (iii) in the case of an Option, has paid in full for such
Shares, and (iv) has been entered into the Company’s Register of Members with
respect to such Shares.

 

(i)           Terminations of
Employment.
Subject to Section 9(c) and the last paragraph hereof, a Participant’s Options
and Stock Appreciation Rights shall be forfeited upon such Participant’s
Termination of Employment, except as set forth below:

 

(i)            Upon a Participant’s Termination of
Employment by reason of death, any Option or Stock Appreciation Right held by
the Participant that was exercisable immediately before the Termination of
Employment may be exercised at any time until the earlier of (A) the first
anniversary of the date of such death and (B) the expiration of the Term thereof;

 

9

 

(ii)           Upon a Participant’s Termination of
Employment by reason of Disability, any Option or Stock Appreciation Right held
by the Participant that was exercisable immediately before the Termination of
Employment may be exercised at any time until the earlier of (A) the third
anniversary of such Termination of Employment and (B) the expiration of the
Term thereof;

 

(iii)          Upon a Participant’s Termination of
Employment by reason of Retirement, any Option or Stock Appreciation Right held
by the Participant that was exercisable immediately before the Termination of
Employment may be exercised at any time until the earlier of (A) the fifth
anniversary of such Termination of Employment and (B) the expiration of the
Term thereof;

 

(iv)          Upon a Participant’s Termination of
Employment for Cause, any Option or Stock Appreciation Right held by the
Participant shall be forfeited, effective as of such Termination of Employment;

 

(v)           Upon a Participant’s Termination of Employment
for any reason other than death, Disability, Retirement or for Cause, any
Option or Stock Appreciation Right held by the Participant that was exercisable
immediately before the Termination of Employment may be exercised at any time
until the earlier of (A) the 90th day following such Termination of Employment
and (B) expiration of the Term thereof; and

 

(vi)          Notwithstanding the above provisions of
this Section 5(i), if a Participant dies after such Participant’s Termination
of Employment but while any Option or Stock Appreciation Right remains
exercisable as set forth above, such Option or Stock Appreciation Right may be
exercised at any time until the later of (A) the earlier of (1) the first
anniversary of the date of such death and (2) expiration of the Term thereof
and (B) the last date on which such Option or Stock Appreciation Right would
have been exercisable, absent this Section 5(i)(vi).

 

Notwithstanding
the foregoing, the Committee shall have the power, in its discretion, to apply
different rules concerning the consequences of a Termination of Employment; provided, however, that if such rules are
less favorable to the Participant than those set forth above, such rules shall
be set forth in the applicable Award Agreement.

 

SECTION
6.                 Restricted Stock

 

(a)           Nature of Awards and
Certificates.
Shares of Restricted Stock are actual Shares issued to a Participant, and shall
be evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Any
certificate issued in respect of Shares of Restricted Stock shall be registered
in the name of the applicable Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

 

10

 

“The
transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the KBW, Inc.
2006 Stock Incentive Plan and an Award Agreement, as well as the terms and
conditions of applicable law. Copies of such Plan and Agreement are on file at
the offices of KBW, Inc.”

 

The
Committee may require that the certificates evidencing title of such shares be
held in custody by the Company until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the applicable
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.

 

(b)           Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:

 

(i)            The Committee may condition the grant or
vesting of an Award of Restricted Stock upon the attainment of Performance
Goals or upon the continued service of the applicable Participant. The
conditions for grant or vesting and the other provisions of Restricted Stock
Awards (including without limitation any applicable Performance Goals) need not
be the same with respect to each recipient. The Committee may at any time, in
its sole discretion, accelerate or waive, in whole or in part, any of the
foregoing restrictions.

 

(ii)           Subject to the provisions of the Plan and
the applicable Award Agreement, during the period, if any, set by the
Committee, commencing with the date of such Restricted Stock Award for which
such Participant’s continued service is required (the “Restriction Period”),
and until the later of (A) the expiration of the Restriction Period and (B) the
date the applicable Performance Goals (if any) are satisfied, the Participant
shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
Shares of Restricted Stock.

 

(iii)          Except as provided in this Section 6 and
in the applicable Award Agreement, the applicable Participant shall have, with
respect to the Shares of Restricted Stock, all of the rights of a stockholder
of the Company holding the class or series of Common Stock that is the subject
of the Restricted Stock, including, if applicable, the right to vote the Shares
and the right to receive any cash dividends. If so determined by the Committee
in the applicable Award Agreement and subject to Section 14(f), (A) cash
dividends on the class or series of Common Stock that is the subject of the
Restricted Stock Award shall be automatically deferred and reinvested in
additional Restricted Stock, held subject to the vesting of the underlying
Restricted Stock, and (B) subject to any adjustment pursuant to Section 3(c),
dividends payable in Common Stock shall be paid in the form of Restricted Stock
of the same class as the Common Stock with which such dividend was paid, held
subject to the vesting of the underlying Restricted Stock.

 

(iv)          Except as otherwise set forth in the
applicable Award Agreement, upon a Participant’s Termination of Employment for
any reason during the Restriction Period or

 

11

 

before the applicable
Performance Goals are satisfied, all Shares of Restricted Stock still subject
to restriction shall be forfeited by such Participant; provided,  however,
that the Committee shall have the discretion to waive, in whole or in part, any
or all remaining restrictions with respect to any or all of such Participant’s
Shares of Restricted Stock.

 

(v)           If and when any applicable Performance
Goals are satisfied and the Restriction Period expires without a prior
forfeiture of the Shares of Restricted Stock for which legended certificates
have been issued, unlegended certificates for such Shares shall be delivered to
the Participant upon surrender of the legended certificates.

 

SECTION
7.                 Stock Units

 

(a)           Nature of Award. Stock Units are Awards denominated in
Shares that will be settled, subject to the terms and conditions of the Stock
Units, either by delivery of Shares to the Participant or by the payment of
cash based upon the Fair Market Value of a specified number of Shares.

 

(b)           Terms and Conditions. Stock Units shall be subject to the
following terms and conditions:

 

(i)            The Committee may condition the vesting
of Stock Units upon the attainment of Performance Goal or upon the continued
service of the Participant. The conditions for grant or vesting and the other
provisions of Stock Unit Awards (including without limitation any applicable
Performance Goals) need not be the same with respect to each recipient. The
Committee may at any time, in its sole discretion, accelerate or waive, in
whole or in part, any of the foregoing restrictions. An Award of Stock Units
shall be settled as and when the Stock Units vest or at a later time specified
by the Committee or in accordance with an election of the Participant, if the
Committee so permits.

 

(ii)           Subject to the provisions of the Plan and
the applicable Award Agreement, during the period, if any, set by the
Committee, commencing with the date of such Stock Unit Award for which such
Participant’s continued service is required (the “Stock Unit Restriction
Period”), and until the later of (A) the expiration of the Stock Unit
Restriction Period and (B) the date the applicable Performance Goals (if any)
are satisfied, the Participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber Stock Units.

 

(iii)          The Award Agreement for Stock Units shall
specify whether, to what extent and on what terms and conditions the applicable
Participant shall be entitled to receive current or deferred payments of cash,
Common Stock or other property corresponding to the dividends payable on the
Common Stock (subject to Section 14(f) below).

 

12

 

(iv)          Except as otherwise set forth in the
applicable Award Agreement, upon a Participant’s Termination of Employment for
any reason during the Stock Unit Restriction Period or before the applicable
Performance Goals are satisfied, all Stock Units still subject to restriction
shall be forfeited by such Participant; provided,
however, that the Committee shall
have the discretion to waive, in whole or in part, any or all remaining
restrictions with respect to any or all of such Participant’s Stock Units.

 

SECTION
8.                 Other Equity-Based
Awards

 

Other
Awards of Common Stock and other Awards that are valued in whole or in part by
reference to, or are otherwise based upon, Common Stock, including (without
limitation), unrestricted stock, dividend equivalents, and convertible
debentures, may be granted under the Plan.

 

SECTION
9.                 Change in Control
Provisions

 

(a)           Impact of Event. In the event of a Change in Control (as
defined below), except to the extent the Committee specifically establishes
otherwise for a particular Award, and except as provided in Section 3(d) and in
Section 9(d), immediately upon the occurrence of a Change in Control:

 

(i)            any Options and Stock Appreciation Rights
outstanding which are not then exercisable and vested shall become fully
exercisable and vested;

 

(ii)           the restrictions applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become free of
all restrictions and become fully vested and transferable;

 

(iii)          all Stock Units shall vest in full and be
immediately settled; and

 

(iv)          the Committee may also make additional
adjustments and/or settlements of outstanding Awards as it deems appropriate
and consistent with the Plan’s purposes.

 

(b)         Definition of Change in
Control. For
purposes of the Plan, a “Change in Control” shall mean any of the following
events:

 

(i)            Any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)
becomes the beneficial owner (within the meaning of Rule 13d 3 promulgated
under the Exchange Act) of 20% or more of either (A) the then-outstanding
shares of common stock of the Company (the “Outstanding Company Common Stock”)
or (B) the combined voting power of the then-outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided,
however, that, for purposes of
this Section 9(b), the following acquisitions shall not constitute a Change in
Control:  (A)

 

13

 

any acquisition directly
from the Company, (B) any acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its Affiliates or Subsidiaries or (D) any acquisition
pursuant to a transaction that complies with Sections 9(b)(iii)(A),
9(b)(iii)(B) and 9(b)(iii)(C);

 

(ii)           Any time at which individuals who, as of
the Effective Date, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to Effective Date whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;

 

(iii)          Consummation of a reorganization, merger,
statutory share exchange or consolidation or similar transaction involving the
Company or any of its subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its Subsidiaries (each, a
“Business Combination”), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock (or, for a non-corporate entity, equivalent
securities) and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors (or, for a
non-corporate entity, equivalent governing body), as the case may be, of the
entity resulting from such Business Combination (including, without limitation,
an entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership
existed prior to the Business Combination, and (C) individuals who were members
of the Incumbent Board at the time of the execution of the initial agreement or
of the action of the Board providing for such Business Combination constitute
at least a majority of the members of the board of directors (or,

 

14

 

for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination; or

 

(iv)          Approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company.

 

(c)           Special Change in
Control Post-Termination Exercise Rights. Unless otherwise provided in the applicable Award
Agreement, notwithstanding any other provision of the Plan to the contrary,
upon the Termination of Employment of a Participant, other than for Cause,
during the 24-month period following a Change in Control, any Option or Stock
Appreciation Right held by the Participant as of the date of the Change in
Control that remains outstanding as of the date of such Termination of
Employment may thereafter be exercised, until the later of (i) the last date on
which such Option or Stock Appreciation Right would be exercisable in the
absence of this Section 9(c) and (ii) the earlier of (A) the third anniversary
of such Change in Control and (B) expiration of the Term of such Option.

 

(d)           Notwithstanding the foregoing, if any
Award is subject to Section 409A of the Code, this Section 9 shall be
applicable only to the extent specifically provided in the Award Agreement and
permitted pursuant to Section 11.

 

SECTION
10.               Section 16(b)

 

The
provisions of the Plan are intended to ensure that no transaction under the
Plan is subject to (and not exempt from) the short-swing recovery rules of
Section 16(b) of the Exchange Act (“Section 16(b)”). Accordingly, the composition
of the Committee shall be subject to such limitations as the Board deems
appropriate to permit transactions pursuant to the Plan to be exempt (pursuant
to Rule 16b-3 promulgated under the Exchange Act) from Section 16(b), and no
delegation of authority by the Committee shall be permitted if such delegation
would cause any such transaction to be subject to (and not exempt from) Section
16(b).

 

SECTION
11.               Section 409A of the Code

 

(a)           It is the intention of the Company that
no Award shall be “deferred compensation” subject to Section 409A of the Code,
unless and to the extent that the Committee specifically determines otherwise
as provided below, and the Plan and the terms and conditions of all Awards
shall be interpreted accordingly.

 

(b)           The terms and conditions governing any
Awards that the Committee determines will be subject to Section 409A of the
Code, including any rules for elective or mandatory deferral of the delivery of
cash or shares of Common Stock pursuant thereto and any rules regarding treatment
of such Awards in the event of a Change in Control, shall be set forth in the
applicable Award Agreement, and shall comply in all respects with Section 409A
of the Code.

 

15

 

SECTION
12.               Term, Amendment and
Termination

 

(a)           Effectiveness. The Plan shall be effective as of the
date (the “Effective Date”) it is adopted by the Board.

 

(b)           Termination. The Plan will terminate on the tenth
anniversary of the Effective Date. Awards outstanding as of such date shall not
be affected or impaired by the termination of the Plan.

 

(c)           Amendment of Plan. The Board may amend, alter, or
discontinue the Plan, but no amendment, alteration or discontinuation shall be
made which would materially impair the rights of the Participant with respect
to a previously granted Award without such Participant’s consent, except such
an amendment made to comply with applicable law, tax rules, stock exchange
rules or accounting rules. In addition, no such amendment shall be made without
the approval of the Company’s stockholders to the extent such approval is
required by applicable law or the listing standards of the Applicable Exchange.

 

(d)           Amendment of Awards. Subject to Section 5(d), the Committee
may unilaterally amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall without the
Participant’s consent materially impair the rights of any Participant with
respect to an Award, except such an amendment made to cause the Plan or Award
to comply with applicable law, tax rules, stock exchange rules or accounting
rules.

 

SECTION
13.               Unfunded Status of Plan

 

It is presently intended
that the Plan constitute an “unfunded” plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock or make payments; provided, however,
that unless the Committee otherwise determines, the existence of such trusts or
other arrangements is consistent with the “unfunded” status of the Plan.

 

SECTION
14.               General Provisions

 

(a)           Conditions for Issuance. The Committee may require each person
purchasing or receiving Shares pursuant to an Award to represent to and agree
with the Company in writing that such person is acquiring the Shares without a
view to the distribution thereof. The certificates for such Shares may include
any legend which the Committee deems appropriate to reflect any restrictions on
transfer. Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for Shares under the Plan prior to fulfillment of
all of the following conditions:  (i)
listing or approval for listing upon notice of issuance, of such Shares on the
Applicable Exchange; (ii) any registration or other qualification of such
Shares of the Company under any state or federal law or regulation, or the
maintaining in effect of any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice of

 

16

 

counsel, deem necessary or advisable; and (iii)
obtaining any other consent, approval, or permit from any state or federal
governmental agency which the Committee shall, in its absolute discretion after
receiving the advice of counsel, determine to be necessary or advisable.

 

(b)           Additional Compensation
Arrangements.
Nothing contained in the Plan shall prevent the Company or any Subsidiary or
Affiliate from adopting other or additional compensation arrangements for its
employees.

 

(c)           No Contract of
Employment. The
Plan shall not constitute a contract of employment, and adoption of the Plan
shall not confer upon any employee any right to continued employment, nor shall
it interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment of any employee at any time. A
Participant shall, by participating in the Plan, waive all and any rights to
compensation or damages in consequence of the termination of such Participant’s
employment with the Company or any Subsidiary or Affiliate for any reason
whatsoever, whether lawfully or otherwise, insofar as those rights arise or may
arise from such Participant ceasing to have rights under the Plan as a result
of such termination, or from the loss or diminution in value of such rights or
entitlements, including by reason of the operation of the terms of the Plan or
the provisions of any statute or law relating to taxation. An Eligible
Individual shall have no right to be designated a Participant.

 

(d)           Required Taxes. No later than the date as of which an
amount first becomes includible in the gross income of a Participant for U.S.
federal or other income tax purposes (or similar taxes in the applicable
non-U.S. jurisdiction) with respect to any Award under the Plan, such
Participant shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any federal, state, local or foreign taxes or
social security (or similar) contributions of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Company and subject to any applicable laws (including any laws that require
that such withholding be effected as a repurchase and be permitted only to the
extent such a repurchase would be permitted), withholding obligations may be
settled with Common Stock, including Common Stock that is part of the Award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and the
Company and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to such
Participant. The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.

 

(e)           Deferral Arrangements. Subject to applicable law, the
Committee may from time to time establish procedures pursuant to which a
Participant may elect to defer receipt of all or a portion of the cash or
Shares subject to an Award, all on such terms and conditions as the Committee
shall determine.

 

(f)            Limitation on Dividend
Reinvestment and Dividend Equivalents. Reinvestment of dividends in additional Restricted
Stock at the time of any dividend payment, and the payment

 

17

 

of Shares with respect to dividends to Participants
holding Awards of Stock Units, shall only be permissible if sufficient Shares
are available under Section 3 for such reinvestment or payment (taking into
account then outstanding Awards). In the event that sufficient Shares are not
available for such reinvestment or payment, such reinvestment or payment shall
be made in the form of a grant of Stock Units equal in number to the Shares
that would have been obtained by such payment or reinvestment, the terms of
which Stock Units shall provide for settlement in cash and for dividend
equivalent reinvestment in further Stock Units on the terms contemplated by
this Section 14(f).

 

(g)           Designation of Death
Beneficiary. The Committee shall establish such procedures as it
deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of such Participant’s death are to be paid or by
whom any rights of such eligible Individual, after such Participant’s death,
may be exercised.

 

(h)           Subsidiary Employees. In the case of a grant of an Award to
any employee of a Subsidiary of the Company, the Company may, if the Committee
so directs, issue or transfer the Shares, if any, covered by the Award to the
Subsidiary, for such lawful consideration as the Committee may specify, upon
the condition or understanding that the Subsidiary will transfer the Shares to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan. The Committee may also adopt
procedures regarding treatment of any Shares so transferred to a Subsidiary
that are subsequently forfeited or canceled.

 

(i)            Governing Law and
Interpretation.
The Plan and all Awards made and actions taken thereunder shall be governed by
and construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of the Plan are not
part of the provisions hereof and shall have no force or effect.

 

(j)            Non-Transferability. Except as otherwise provided by the Committee,
Awards under the Plan are not transferable except by will or by laws of descent
and distribution.

 

(k)           Non-Pensionable. Benefits under the Plan shall not be
treated as pensionable earnings for purposes of any pension plan maintained by
the Company and its Affiliates, unless explicitly provided otherwise in such
plan.

 

(l)            Data Protection. By participating in the Plan, the Participant consents
to the collection, processing, transmission and storage by the Company, in any
form whatsoever, of any data of a professional or personal nature which is
necessary for the purposes of administering the Plan. The Company may share
such information with any Subsidiary or Affiliate, any trustee, its registrars,
brokers, other third party administrator or any person who obtains control of
the Company or one of its Subsidiaries or divisions.

 

(m)          Right of Offset. The Company or its Subsidiaries and
Affiliates shall have the right to offset, against the obligation to pay
amounts or issue Shares to any Participant under the Plan, any outstanding
amounts (including, without limitation, travel and entertainment expense,

 

18

 

advance account balances, loans, tax withholding
amounts paid by the employer or amounts repayable to the Company or its
Subsidiaries and Affiliates pursuant to tax equalization, housing, automobile
or other employee programs) such Participant then owes to the Company or its
Subsidiaries and Affiliates and any amounts the Plan Administrator otherwise deems
appropriate pursuant to any tax equalization policy or agreement.

 

(n)           Foreign Employees and
Foreign Law Considerations. The Committee may grant Awards to Eligible
Individuals who are foreign nationals, who reside outside the United States or who are not compensated from a payroll
maintained in the United States, or who are otherwise subject to (or could
cause the Company to be subject to) legal or regulatory provisions of countries
or jurisdictions outside the United States, on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Committee, be
necessary or desirable to foster and promote achievement of the purposes of the
Plan and comply with such legal or regulatory provisions, and, in furtherance
of such purposes, the Committee may make such modifications, amendments,
procedures, or subplans as may be necessary or advisable to comply with such
legal or regulatory provisions (including to avoid triggering a public offering
or to maximize tax efficiency).

 

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Exhibit 10.3  

 
 

FULLY DISCLOSED CLEARING AGREEMENT    
    
    OF    
    
    PERSHING DIVISION    
    
    DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION    
    

        THIS AGREEMENT is made and entered into as of this October 22, 1992 by and between the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corporation ("Pershing"), a Delaware Corporation and Keefe, Bruyette & Woods, Inc. ("Broker"), a New York Corporation. 

	1.
	Subject
to the approval of the New York Stock Exchange, from the opening of business on or about February 19, 1993, until the termination of this Agreement as provided for in
Paragraph 17 hereof, Pershing will carry the cash and margin accounts of the customers introduced by Broker to Pershing, and accepted by Pershing, and will clear transactions on a fully
disclosed basis for such accounts, all as more specifically provided in Paragraph 3 hereof and subject to the terms and conditions hereinafter set forth. 

2.     Representations and Warranties  

	(a)
	Broker
represents and warrants that: 

Broker
is duly registered and in good standing as a broker/dealer with the Securities and Exchange Commission and is a member firm in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). 

Broker
has all requisite authority, whether arising under applicable federal or state laws or the rules and regulations of any securities exchange or regulatory authority to which Broker is subject,
to enter into this Agreement and to retain the services of Pershing in accordance with the terms hereof; and 

Broker
and each of its employees is in substantial compliance and during the term of this Agreement will remain in substantial compliance with the registration, qualification, capital, financial
reporting, customer protection, and other requirements of every securities exchange of which Broker is a member, of the NASD, of the Securities and Exchange Commission and every state to which
jurisdiction Broker and each of its employees are subject. 

	(b)
	Pershing
represents and warrants that: 

Pershing
is duly registered and in good standing as a broker/dealer with the Securities and Exchange Commission and is a member firm in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). 

Pershing
has all requisite authority, whether arising under applicable federal or state laws, or the rules and regulations of any securities exchange or regulatory authority to which Pershing is
subject, to enter into this Agreement; and 

Pershing
is in substantial compliance and during the term of this Agreement will remain in substantial compliance with the registration, qualification, capital, financial reporting, customer
protection requirements of every regulatory and self-regulatory organization to whose jurisdiction Pershing is subject. 

 

3.     Services to be Performed by Pershing  

Pershing,
acting as Broker's agent, shall carry the customers' cash and margin accounts introduced by Broker on a fully disclosed basis and perform the following services: 

	(a)
	Execute
transactions in the customers' accounts and release or deposit money or securities to or for the accounts, only upon Broker's instructions;

	(b)
	Prepare
confirmations and prepare and mail summary monthly statements to Broker's customers on forms disclosing that the account is carried on a fully disclosed basis for the Broker;

	(c)
	Settle
contracts and transactions in securities (i) between Broker and other brokers and dealers, (ii) between Broker and its customers and (iii) between Broker
and third persons; and

	(d)
	Perform
cashiering functions for such customers' accounts, including receipt and delivery of securities purchased, sold, borrowed and loaned; make and receive payments therefor,
provide custody and safekeeping of securities and cash; and handle margin accounts dividends and exchanges, and rights and tender offers with respect to such securities.

	(e)
	Mail
to each customer a copy of the Notice to Customers as required by New York Stock Exchange Rule 382(c). 

Notwithstanding
subparagraph (a) through (d) above, Pershing may, in its sole discretion, after giving reasonable notice and for reasonable cause, refuse to open an account for a
specific customer; close an
account already opened; refuse to confirm and/or cancel a confirmation; reject a delivery or receipt of securities and/or money; refuse to clear any trade executed by Broker; or refuse to execute any
trade for the account of a customer introduced by Broker. 

Broker
acknowledges that in connection with the performance of the above described services, Pershing may retain, at its option, one or more independent data processing service bureaus to perform any
of the required functions, and agrees that Pershing shall not be responsible for any losses, damages, liability or expenses incurred by or claims made by the Broker or its customers arising from the
failure of any such service bureau to perform said functions accurately, in accordance with specifications, or within the customary time periods. Pershing's only obligation will be to cause any such
service bureau to correct any processing error in its next regularly scheduled processing and to deliver any overdue work as soon as reasonably practicable. In no event shall Pershing be responsible
for indirect or consequential damages. 

Pershing
may authorize certain of Broker's employees designated by Broker in writing, to sign checks to Broker's customers for amounts due and requested by them with respect to their accounts. All
checks must be signed by two of such authorized employees and no check or checks payable in any one day to any one customer shall exceed $100,000 in the aggregate without the prior written approval of
Pershing. All expenses incurred in connection with such authorization shall be charged to Broker. Any lien on the customer's property granted by the customer to Broker or Pershing shall extend to any
funds which may be segregated in a separate account to carry out the purposes of this paragraph. 

4.     Services for which Pershing is not Responsible  

Unless
otherwise expressly agreed in writing, Pershing will not provide nor be responsible for providing any services specifically enumerated in this Paragraph: 

	(a)
	Accounting,
bookkeeping or record keeping, cashiering, or other services in respect to commodity transactions, or any other transaction not involving securities;

	(b)
	Preparation
of Broker's payroll records, financial statements or any analysis thereof; 

2

  

	(c)
	Preparation
or issuance of checks in payment of Broker's expenses, other than expenses incurred by Pershing on behalf of Broker pursuant to this Agreement;

	(d)
	Payment
of commissions to Broker's salesmen;

	(e)
	Preparation
or filing of any of Broker's reports to the Securities and Exchange Commission, any state securities commission, or any securities exchange, securities association or
other membership to which Broker is subject; but Pershing will, at the request of Broker, furnish Broker with any necessary information and data contained in records kept by Pershing and not otherwise
available to Broker for use in making such reports by Broker; and

	(f)
	Verification
of address changes of Broker's customers. 

5.     Duties, Obligations and Responsibilities of Broker  

	(a)
	Information
to be supplied by Broker: 

Broker
will provide Pershing with such basic data and documents, including (without limitation) copies of records of any receipts of customers' funds and securities received directly by Broker as
shall be necessary or appropriate to permit Pershing to discharge its service obligations hereunder. In all cases, such data and documents must be compatible with the requirements of Pershing's
bookkeeping system. In addition, Broker will furnish Pershing such information and signatures as are requested by Pershing for the opening and carrying of customer accounts on forms which have been
approved by Pershing. All
accounts shall be opened in accordance with Pershing's requirements, and the acceptance of an opening of an account without such requirements being fulfilled shall not be deemed to be waiver of such
requirements. A duly authorized principal executive officer of Broker will approve in writing the opening of each customer's account. Broker shall be responsible for maintaining proper customer
addresses and Pershing may for all purposes rely on such addresses as they are furnished by Broker. 

	(b)
	Receipt
of money and securities: 

In
all cash accounts, Broker shall be responsible for purchases for customers until actual and complete payment therefor has been received by Pershing, and in the case of checks representing such
payment received by Pershing, Broker shall be responsible until they shall have been paid and the proceeds actually received and credited to Pershing by its bank. Pershing agrees to use due diligence
in depositing such checks promptly. 

Broker
shall be responsible for sales until acceptable deliveries to Pershing of the securities involved have been made. Broker agrees to turn over promptly to Pershing funds or securities received by
Broker from its customers, together with such information as may be relevant or necessary to enable Pershing to promptly and properly to record such remittances and receipts in the respective customer
accounts. Broker shall arrange for timely settlement of "delivery versus payment" transactions and shall not introduce any retail or individual accounts requiring settlement on a "delivery vs.
payment" or, "receive versus payment" basis without the prior written approval of Pershing. Broker shall obtain each customer's agreement to accept "partial deliveries" and to abide by other clearance
arrangements as may be directed by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or the NASD. Pershing may at its option charge, for late payments or deliveries,
interest at 1%, or such other rate as may be agreed upon in writing, above the broker's call rate. 

Pershing
reserves the right to give prior oral or written notice to Broker and to any customer of failure to make timely settlement and Pershing's intention to take remedial action. In the case of the
purchase or sale of securities "when issued" or where distribution or delivery is 

3

 

otherwise
delayed in an account other than a margin account, Broker shall be responsible for the transaction until necessary and satisfactory margin has been received by Pershing and for checks
representing such margin until they shall have been paid and the proceeds actually received and credited to Pershing by its bank. 

With
respect to any settlements which involve the drafting of securities; draft charges, including interest expense, will be borne by Broker. Interest costs on settling in locations not herein
specified will be borne as Pershing and Broker may mutually agree in writing, with the general understanding that
Pershing will bear the interest costs associated with delivering securities within New York City and Broker will bear the costs associated with the movement of securities from or to New York City to
or from any other location. 

	(c)
	Communication
with customers: 

Broker
and Pershing each agree to forward to the other any written complaint received from a customer. 

	(d)
	Duties
of Broker with respect to customers: 

The
customer shall remain the customer of Broker, and Broker shall be responsible for obtaining all of the essential facts relative to every customer, every cash or margin account, every order, and
every person holding power of attorney over any account accepted by Broker. Broker shall also be responsible for the conduct of customer accounts and the supervision thereof, including but not limited
to, assessing the suitability of a transaction for the customer when required under applicable rules, the authenticity of all orders, signatures and endorsements, the frequency of trading by a
customer and the genuineness of all signatures, certificates and papers, the status under the Securities Act of 1933 of securities proposed to be sold or margined by a customer, and reviewing the
accounts for, among other things, manipulative practice and insider trading, and compliance with all federal, state, securities exchange and association laws, rules and regulations to which Broker and
the customer are subject. 

Broker
undertakes to comply with Rule 405(1), (2) and (3) of the New York Stock Exchange, Inc. and other rules of regulatory organizations having jurisdiction over Broker
and to diligently supervise compliance through the use of a compliance manual or other written procedures. It is understood that Broker will establish adequate procedures regarding Rule 405 and
will make a diligent attempt in every case to conform to this rule. 

Broker
must notify Pershing in each case where Broker and a customer authorize a Registered Representative of Broker to exercise discretion in an account. In addition, Broker will advise Pershing at
the time an order is placed if such order is for a discretionary account of one of Broker's Registered Representatives. 

It
is understood that Broker warrants that, to its best knowledge, the customers introduced to Pershing by Broker shall not be minors and shall not be such as to come under any prohibition referred to
in Rule 407 of the New York Stock Exchange, Inc., or in any other law, rule or regulation of any other
regulatory authority; that Broker's customers shall in fact be the owners of accounts opened by Pershing in their names, and that any orders and instructions given by Broker or any of Broker's
employees shall have been previously fully and properly authorized. 

Prior
to engaging in option trading for any of Broker's customers, Broker will deliver to such customer a current prospectus of the Options Clearing Corporation together with any effective supplements
thereto. Broker will take all appropriate steps to assure that customers engaging in such trading are sophisticated investors, fully aware of the risks involved, and that option 

4

 

trading
is suitable for such customers. Broker will comply in all respects with Pershing's options compliance program, including the obtaining of information, written approval of option accounts by
the Senior Registered Options Principal of Broker, and execution of forms required by Pershing. Pershing shall not be required to endorse any put or call options for any account unless the account is
satisfactory to Pershing. 

This
agreement places the responsibility for "knowing the customer" and "suitability" on the Broker. It permits Pershing to satisfy itself, for its own benefit, that Broker has the ability to comply
itself, for its own benefit, and that Broker has the ability to comply and has complied with the requirements of Rule 405 of the New York Stock Exchange, Inc. and comparable requirements
of similar rules of any other self-regulatory organization to which Broker belongs. It is understood that the preparation and possession of surveillance records or any new data, including
exception reports, by Pershing on behalf of or for the use of Broker shall neither obligate Pershing to review such material nor make Pershing responsible to know its contents. 

	(e)
	Financial
Data 

Broker
agrees to furnish Pershing a copy of all FOCUS Reports at the same time Broker files such with its primary examining authority. 

	(f)
	Broker
shall make and maintain reports, records and regulatory filings required to be kept by the Broker by any entity that regulates it, including any reports and records required to
be made or kept under the Currency and Foreign Transactions Reporting Act of 1970, the Money Laundering Act of 1986, and any rules and regulations promulgated pursuant thereto. 

6.     Broker Indemnification  

Broker
hereby agrees to indemnify, defend and hold harmless Pershing from and against all claims, demands, proceedings, suits and actions made or brought against Pershing and to indemnify Pershing's
liabilities, losses, damages, expenses, attorneys' fees and costs arising out of one or more of the following: 

	(a)
	Failure
of Broker or the Broker's customer to make payment when due for securities purchased or to deliver when due securities sold for the account of Broker or the Broker's
customers;

	(b)
	Failure
of a customer of Broker to meet any initial margin call or any maintenance call, except that Pershing shall be responsible only for the portion of any such losses that are
directly attributable to Pershing's failure to give proper and timely notification to the customer of any maintenance call;

	(c)
	Failure
of Broker to properly perform its duties, obligations and responsibilities with respect to customer accounts (as set forth in Paragraph 5, above), it being understood
that the participation of any employee of Pershing in any transactions referred to in Paragraph 5 shall not affect Broker's indemnification obligations hereunder, unless such participation by
Pershing's employee was fraudulent or negligent;

	(d)
	Any
dishonest, fraudulent, negligent or criminal act or omission on the part of any of Broker's officers, partners, employees, agents or customers; 

5

  

	(e)
	All
claims or disputes between Broker and its customer with respect to the matters set forth in Paragraph 5 (d), it being understood: (i) that Broker guarantees the
validity of customer orders in the form such orders are transmitted to Pershing by Broker and guarantees to Pershing that each customer will promptly and fully perform his commitments and obligations
with respect to all transactions in all of his accounts carried by Pershing hereunder and, (ii) that checks received by Pershing from Broker's customer shall not constitute payment until they
have been paid and the proceeds actually received and credited to Pershing by its bank;

	(f)
	Any
adverse claims with respect to any customer securities delivered or cleared by Pershing it being understood that Pershing shall be deemed to be an intermediary between Broker and
customer and shall be deemed to make no warranties other than as provided in Section 8-306(3) of the Uniform Commercial Code;

	(g)
	The
default by any over-the-counter broker with whom the Broker deals on a principal basis, giving up Pershing for clearance;

	(h)
	The
default by any third-party broker with whom the Broker rather than Pershing executes a transaction for itself or a customer;

	(i)
	The
negligence, malfeasance, or mistakes of any employee of Broker with respect to the use of the check-signing authority granted under Paragraph 3;

	(j)
	The
breach by the Broker of any warranty made by it under this Agreement;

	(k)
	Pershing's
guarantee of any signatures with respect to transactions in the accounts of Broker's customers;

	(l)
	The
failure of Broker's customers to fulfill their obligations to the Broker or to Pershing (whether or not such failure is in the Broker's control). 

If
within 30 days or such lesser time as required by law after receiving notice thereof in writing, Broker shall fail to properly institute the defense of Pershing against any claim, demand,
suit, proceeding or action arising out of one or more of the above matters, Pershing will have the right to defend against the same at Broker's cost and expense, or in its sole discretion, to settle
the same at Broker's cost and expense. 

7.     Commission Payments  

	(a)
	Pershing
shall charge each of Broker's customers the commission which Broker directs it to charge for each transaction. If specific instructions are not received with respect to a
specific transaction in the time period required by Pershing to implement same, Pershing shall charge the customer the commission prescribed in the basic commission schedule delivered to Pershing by
Broker. Such basic schedule may be amended from time to time by Broker by written instructions delivered to Pershing; provided, however, that such changes shall be implemented only to the extent they
are within the usual capabilities of Pershing's data processing and operations systems and only within such reasonable time limitations as Pershing may deem necessary to avoid disruption of its normal
operating capabilities. For purposes of confirmation preparation, Broker will also furnish from time to time the source and amount of any commission or other payment received by Broker in connection
with transactions in the customers' account.

	(b)
	Commissions
charged Broker's customers shall be collected by Pershing and credited to Broker daily, after deducting Pershing's compensation referred to in Paragraph 9 (and any
other amount owed to Pershing pursuant to this Agreement). Such commissions shall be remitted to Broker on a monthly basis, approximately 10 days after the final settlement date of each month.
More frequent remittances may be made if the estimated current activity in 

6

 

the
accounts and remittance experiences in the past justify such advances, and if agreed to by both parties. 

8.     Compensation

As
compensation for services provided hereunder by Pershing, there shall be deducted from the commissions charged Broker's customers the amounts set forth in the fully disclosed pricing schedule
attached hereto. Said compensation schedule may be changed by Pershing at any time on thirty (30) days prior written notice to Broker or from time to time as may be agreed to by both parties.
However, during the period from the effective date of this Agreement to the second anniversary thereof, the pricing schedule may not be changed except by agreement of the parties. Thereafter any
charge imposed by Pershing shall not be greater in its entirety than that charge generally made by Pershing for all correspondents of a similar size and business mix. 

9.     Margin Accounts  

	(a)
	Any
transaction for a customer will be considered a cash transaction until such time as Broker has furnished Pershing with an executed customer's margin agreement and consent to loan
of securities in a form acceptable to Pershing.

	(b)
	All
margin accounts introduced by Broker shall be subject to Pershing's "house margin requirements." Pershing currently imposes a 30% maintenance requirement, but said requirement and
other margin requirements may be changed at any time by giving the Broker 10 days prior written notice of such change. In all such margin accounts, Broker shall be responsible for the initial
margin requirement for any transaction until such initial margin has been received by Pershing in acceptable form. Pershing reserves the right to refuse to accept any transaction in a margin account
after the initial transaction, without the actual receipt of the necessary margin, and to impose a higher margin requirement, when, in Pershing's opinion, the past history or nature of such account or
the securities therein justifies such action. Pershing shall endeavor to notify Broker in advance of all margin calls, and shall provide Broker with copies of such calls. In the event that
satisfactory margin is not provided within the time specified by Pershing, Pershing shall be at liberty to take such actions as Pershing may in its judgment deem best. After such initial margin has
been received, subsequent margin calls may be made by Pershing. Broker agrees to cooperate with Pershing in complying with and obtaining margin on subsequent calls.

	(c)
	Interest
charged with respect to debit balance in customers' accounts shall be determined in accordance with the fully disclosed pricing schedule attached hereto.

	(d)
	Broker
shall be responsible for any failure on the part of a customer to meet a "maintenance call", except to the extent directly attributable to Pershing's failure to give proper and
timely notification to the customer. An officer of Broker who has been designated by Broker (and acknowledged in writing by Pershing) may request, to the extent permitted by the margin rules, that
Pershing withhold temporarily any contemplated action to "Sell-out" or "Buy-in" accounts which have failed to meet a margin call. Such requests shall be made in writing and
shall clearly set forth the period of time during which the contemplated action be withheld. Should Pershing comply in whole or in part with such request, Broker guarantees to reimburse Pershing
immediately for the maximum amount of loss or liability which Pershing may sustain or incur by reason of any compliance with such request, by depositing sufficient funds with Pershing in a reserve or
other appropriate account at a bank of Pershing's choosing over which Pershing shall be a signatory, to reimburse Pershing for the loss or unsecured indebtedness held in the account of the particular
customer; provided, however, that compliance with such a request shall not be deemed a waiver by Pershing of any of its rights 

7

 

hereunder,
including but not limited to, the right to close out a contract or position, if in Pershing's judgment, changing conditions render such action advisable. 

	(e)
	Broker
shall be responsible for sending to each margin customer a written statement at the time of the opening of a margin account in compliance with Rule 10b-16
under the Securities Exchange Act of 1934.

	(f)
	Broker
shall obtain from each margin account introduced to Pershing a margin agreement, including a hypothecation authority, in a form and substance acceptable to Pershing. 

10.   Unsecured Debits or Unsecured Short Positions

Unsecured
debit or short position (on a "mark to market" basis) in a customer's account not resolved by payment or delivery within thirty calendar days shall be charged to the account of the Broker
maintained by Pershing to which Pershing credits the Broker with commissions due Broker. Such
unpaid debits or short positions shall be netted against commissions due on a monthly basis. Any excess of such unpaid debits or short positions over commissions due shall be applied against Broker's
Deposit Account and be considered a claim against Broker pursuant to paragraph 7 of this Agreement. 

11.   Responsibilities and Rights of Pershing

Pershing
will maintain prescribed books and records of all transactions executed or cleared through it. Pershing also undertakes to perform in good faith the services agreed to be performed in this
Agreement including the foregoing, but shall not be bound to make any investigation into the facts surrounding any transaction that it may have with Broker or that Broker may have with its customer or
other persons, nor shall Pershing be under any responsibility for compliance by Broker with any laws or regulations which may be applicable to Broker. 

Nothing
herein shall be deemed to restrict in any way the right of Pershing or any affiliate of Pershing to compete with Broker in any or all respects of Broker's business. 

12.   Pershing Indemnification

Pershing
shall have no liability to any of Broker's customers for any loss suffered by any customer. Pershing's liability will be only to Broker and then only to the extent hereinafter expressly set
forth. Pershing hereby agrees to indemnify, defend and hold harmless Broker from and against all claims, demands, proceedings, suits and actions and all liabilities, expenses, attorney fees, and costs
in connection therewith arising out of any negligent, dishonest, fraudulent, or criminal act or omission on the part of any of its officers, partners or employees with respect to the services provided
by Pershing under this Agreement. 

13.   Employees

Without
the prior written consent of Pershing, Broker will not during the period of this Agreement and for one year thereafter, hire or attempt to hire any person who is employed by Pershing on the
termination of this Agreement or whose employment with Pershing terminated within the one year period prior to the termination of this Agreement. 

14.   Construction of Agreement

Neither
this Agreement nor the performance of the services hereunder shall be considered to create a joint venture or partnership between Pershing and Broker or between Broker and other brokers for
whom Pershing may perform the same or similar service. Neither Pershing nor Broker will utilize the name of the other in any way without the other's consent and under no 

8

 

circumstances
shall either party employ the other's name in such a manner as to create the impression that the relationship created or intended between them is anything other than that of clearing
broker and correspondent broker. 

During
the term of this Agreement, Broker will not enter into any other similar Agreement or obtain the services contemplated by this Agreement from any other party, without prior written notice to
Pershing. 

15.   Confidentiality

Broker
agrees not to disclose the terms of this Agreement to any outside parties except to regulatory bodies with appropriate jurisdiction and to authorized employees of the Broker on a
need-to-know basis. Any other publication or disclosure of the terms of this Agreement may be made only with the prior written consent of Pershing. 

Pershing
represents and warrants that the names and addresses of the Broker's customers that have or may come to its attention in connection with the clearing and related functions it has assumed
under this Agreement are confidential and shall not be utilized by Pershing except in connection with the functions performed by Pershing pursuant to this Agreement. 

Pershing
shall keep confidential any information it may acquire as a result of this Agreement regarding the business and affairs of the broker, which requirement shall survive the life of this
Agreement. 

16.   Termination

This
Agreement shall continue until terminated as hereinafter provided 

	(a)
	Upon
any unilateral change of more than 5% per annum as per Paragraph 8, by Pershing in the compensation schedule pursuant to Paragraph 9 hereof, Broker may, upon
fifteen (15) days prior written notice to Pershing, terminate this Agreement on the effective date of such unilateral change.

	(b)
	This
Agreement may be terminated by either party without cause upon ninety (90) days written notice delivered in person or by registered or certified mail. 

If
either party terminates the Agreement pursuant to this subparagraph, Pershing shall have the right to impose reasonable limitations upon Broker's activities during the period between the giving of
notice and the transfer of Broker's accounts. 

	(c)
	In
the event either party defaults in the performance of its obligations under this Agreement, the nondefaulting party may terminate this Agreement on the following terms and
conditions. Written notice must be delivered to the defaulting party specifying the nature of the default and notifying the defaulting party that unless the default is cured within a period of thirty
(30) days from receipt of the notice, this Agreement may be terminated without further proceedings by the nondefaulting party.

	(d)
	This
Agreement may be terminated by Pershing or Broker immediately in the event that the other party is enjoined, disabled, suspended, prohibited or otherwise unable to engage in the
securities business or any part of it as a result of any administrative or judicial proceeding or action by the Securities and Exchange Commission, any state securities law administrator or any
self-regulatory organization having jurisdiction. 

9

  

	(e)
	Termination
of this Agreement however caused shall not release Broker or Pershing from any liability or responsibility to the other with respect to transactions effected prior to the
effective date of such termination, whether or not claims relating to such transactions shall have been made before or after such termination.

	(f)
	If
prior to one year from the date set forth in Paragraph 1, Broker terminates this Agreement pursuant to subparagraph (b) above, or Pershing terminates this Agreement
pursuant to subparagraph (c) or (d) above, Broker will pay to Pershing termination fee equal to the reasonable expenses incurred by Pershing (i) in establishing systems procedures
and capacity for servicing Broker and its customers, and (ii) in discontinuing the clearing arrangement; provided, however, that in no event shall said termination fee be less than $5,000. Said
fee shall be paid within 10 days after receipt of Pershing's statement setting forth in reasonable detail the expenses incurred by Pershing. 

17.   Action Against Customers

Pershing
shall have the right upon written notice to Broker, in its sole discretion (but shall not be obliged), and at its sole expense to institute and prosecute in its name, any action or proceeding
against any of Broker's customers as to any controversy or claim arising out of Pershing's transactions with Broker or with Broker's customers, and nothing contained in this Agreement shall be deemed
or construed to impair or prejudice such right in any way whatsoever, nor shall the institution or prosecution of any such action or proceeding relieve Broker of any liability or responsibility which
Broker would otherwise have had under this Agreement. Broker shall assign to Pershing its rights against its customers to the extent requested by Pershing and necessary to carry out the intent of this
Paragraph. 

18.   Notices

Any
notice or request required or permitted to be given under this Agreement shall be sufficient if in writing and sent by hand or by certified mail, in either case, return receipt requested, to the
parties at the following address: 

	Broker:	 	Keefe, Bruyette & Woods, Inc.

2 World Trade Center

New York, NY 10048
	

Attn:	
 	

Guy Woelk

Senior Vice President & CFO
	

or	
 	

Randy Resnick

Operations Manager

Pershing:

Pershing Division

Donaldson, Lufkin & Jenrette Securities Corporation

One Pershing Plaza

Jersey City, N.J. 07399

Attn:    Peter Farkas, Senior Vice President 

19.   Amendments

This
Agreement represents the entire Agreement between the parties with respect to the subject matter contained herein. This Agreement may not be changed orally, but only by an agreement in writing
and signed by the parties. 

10

 

20.   Exchange Regulation

The
parties acknowledge they will be subject to the rules of the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and any other securities exchanges or associations of
which either party is or may or may become a member, and of any governmental agencies to whose jurisdiction either party may be subject. 

21.   Assignment

This
Agreement shall be binding upon and shall inure to the benefit of the respective successors and assigns of Broker and Pershing. 

22.   Applicable Law

This
Agreement shall be governed by and construed in accordance with the laws of the State of New York. 

23.   ARBITRATION DISCLOSURE

	•
	ARBITRATION IS FINAL AND BINDING ON THE PARTIES.

	•
	THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL.

	•
	PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS.

	•
	THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.

	•
	THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY.

24.   ARBITRATION AGREEMENT

ANY CONTROVERSY BETWEEN US ARISING OUT OF YOUR BUSINESS OR THIS AGREEMENT SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE NEW YORK STOCK EXCHANGE, INC. OR THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AS PERSHING MAY ELECT AND IN ACCORDANCE WITH THE RULES OBTAINING OF THE SELECTED ORGANIZATION. ARBITRATION MUST BE COMMENCED BY SERVICE UPON THE
OTHER PARTY OF A WRITTEN DEMAND FOR ARBITRATION OR A WRITTEN NOTICE OF INTENTION TO ARBITRATE, THEREIN ELECTING THE ARBITRATION TRIBUNAL.

	25.
	This
Agreement shall be submitted to and/or approved by any National Securities Exchange, or other regulatory and self-regulatory bodies vested with the authority to
review and/or approve this Agreement or any amendment or modifications hereto. In the event of any such disapproval, the parties hereto agree to bargain in good faith to achieve the requisite
approval.

	26.
	If
any provision or condition of this Agreement shall be held to be invalid or unenforceable by any court, or regulatory or self-regulatory agency or body, such invalidity
or unenforceability shall attach only to such provision or condition. The validity of the remaining provisions and conditions shall not be affected thereby and this Agreement shall be carried out as
if any such invalid or unenforceable provision or condition were not contained herein. 

11

 
	27.
	This
Agreement is between the parties and is not intended to confer any benefits on third parties, including, but not limited to, customers of Broker.

	28.
	Addendum
dated 11/9/93. 

        IN WITNESS WHEREOF the parties have hereto affixed their hands and seals on the day and year first above written. 

        This
Agreement contains a pre-dispute arbitration clause in paragraph 25 on page 15. I acknowledge receiving a copy of this Agreement. 

	BROKER:	 	Keefe, Bruyette & Woods, Inc.

2 World Trade Center

New York, NY 10048
	

 	
 	

/s/ Guy Woelk
	By:	 	Guy Woelk
	Title:	 	Senior Vice President & Treasurer
	
PERSHING DIVISION

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
	

 	
 	

/s/ Peter Farkas
	By:	 	Peter Farkas
	Title:	 	Senior Vice President

12

PROPRIETARY ACCOUNTS OF INTRODUCING BROKERS AND DEALERS (PAIB)  

Responsibilities of the Parties  

        Pershing agrees to establish a separate reserve account for proprietary assets held by Broker so that Broker can treat these assets as allowable assets under SEC
Rule 15c3-l. Pershing agrees to perform the required computation on behalf of Broker in accordance with the following provisions, procedures and interpretations set forth in the
SEC's No-Action Letter regarding Proprietary Accounts of Introducing Brokers and Dealers (PAIB) dated November 3, 1998: 

	1
	Pershing
will perform a separate computation for PAIB assets (PAIB reserve computation) of Broker in accordance with the customer reserve computation set forth in SEC
Rule 15c3-3 (customer reserve formula) with the following modifications:

	A.
	Any
credit (including a credit applied to reduce a debit) that is included in the customer reserve formula will not be included as a credit in the PAIB reserve computation;

	B.
	Note E(3)
to Rule 15c3-3a which reduces debit balances by one percent under the basic method and subparagraph (a)(l)(ii)(A) of Rule 15c3-1
which reduces debit balances by three percent under the alternative method will not apply; and

	C.
	Neither
Note E(l) to Rule 15c3-3a nor NYSE Interpretation /04 to Item 10 of Rule 15c3-3a regarding securities concentration charges is
applicable to the PAIB reserve computation.

	2
	The
PAIB reserve computation will Include all the proprietary accounts of Broker. All PAIB assets will be kept separate and distinct from customer assets under the customer reserve
computation set forth in SEC Rule 15c3-3.

	3
	The
PAIB reserve computation will be prepared within the same time frames as those prescribed by Rule 15c3-3 for the customer reserve formula.

	4
	Pershing
will establish and maintain a separate "Special Reserve Account for the Exclusive Benefit of PAIB Customers" with a bank in conformity with the standards of
Rule 15c3-3(f) (PAIB Reserve Account). Cash and/or qualified securities as defined in the Rule will be maintained in the PAIB Reserve Account in an amount equal to the PAIB reserve
requirement.

	5
	If
the PAIB reserve computation results in a deposit requirement, the requirement can be satisfied to the extent of any excess debit in the customer reserve formula of the same date.
However, a deposit requirement resulting from the customer reserve formula cannot be satisfied with excess debits from the PAIB reserve computation.

	6
	Within
two business days of entering into this agreement, Broker must notify its designated examining authority (DEA) in writing that it has entered into a PAIB agreement with its
clearing broker-dealer.

	7
	Upon
discovery that any deposit made to the PAIB Reserve Account did not satisfy its deposit requirement, Pershing will immediately notify its DEA and the SEC. Unless a corrective plan
is found to be acceptable by the SEC and the DEA, Pershing will provide written notification within five business days of the date of discovery to Broker that PAIB assets held by Pershing will not be
deemed allowable assets for net capital purposes. 

	BROKER: KEEFE, BRUYETTE & WOODS, INC.	 	 
	

By:	
 	

/s/ [ILLEGIBLE]
	
 	

 	
 	

Two World Trade Ctr.

85th Fl.
	Title:	 	EVP & CFO	 	 	 	N.Y. 10048-8598
	

PERSHING DIVISION

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION	
 	

 
	

By:	
 	

/s/ [ILLEGIBLE]	
 	

 	
 	

 
	 	 	
	 	 	 	 
	Title:	 	Senior Vice President	 	 	 	 

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FULLY DISCLOSED CLEARING AGREEMENT OF PERSHING DIVISION DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

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