Document:

EX-10.16

Exhibit 10.16

This exhibit amends and restates the agreement between KBW, Inc. and the executive that was
included as an exhibit to KBW Inc.’s previously filed periodic reports with the Securities and
Exchange Commission. The agreement was amended and restated as set forth below in order to comply
with certain technical requirements of Section 409A of the Internal Revenue Code.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          This AMENDED AND RESTATED EMPOLOYMENT AGREEMENT by and between KBW, Inc. (the
“Company”) and Andrew M. Senchak (the “Executive”), dated as of December 31, 2008.

          WHEREAS, the Company and the Executive are parties to that certain employment agreement dated
as of November 1, 2006 (the “Prior Agreement”); and

          WHEREAS, the Company is desirous of continuing to employ the Executive in an executive
capacity on the terms and conditions, and for the consideration, hereinafter set forth, and the
Executive is desirous of being employed by the Company on such terms and conditions and for such
consideration; and

          WHEREAS, certain revisions to the Prior Agreement are necessary to cause it to comply with, or
to cause it not to be subject to, Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the final regulations thereunder;

          NOW, THEREFORE, in order to comply with, or cause it not to be subject to, Section 409A of the
Code and final regulations thereunder, the Prior Agreement is hereby amended and restated as of the
date first written above as follows:

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1. Employment Period. The Company hereby agrees to continue to employ the Executive,
and the Executive hereby agrees to continue to serve the Company, subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date (as defined below)
and ending on the third anniversary thereof, subject to earlier termination in accordance with the
provision of Section 3 hereof (the “Employment Period”). “Effective Date” shall
mean the date immediately prior to the date on which the registration statement filed by the
Company under the Securities Act of 1933, as amended, registering the initial public offering of
the common stock of the Company, par value $0.01, is effective.

          2. Terms of Employment.

          (a) Position and Duties. (i) During the Employment Period, the Executive shall serve
as Vice Chairman, President and Co-Head of Investment Banking of the Company, with such duties and
responsibilities as are commensurate and consistent with such title and position, report directly
and exclusively to the Chief Executive Officer of the Company and

 

 

perform his services at the headquarters of the Company in New York, New York. In addition,
the Company shall cause the Executive to be appointed as a member of the Board of Directors of the
Company (the “Board of Directors”), and shall nominate the Executive for election and
re-election to the Board of Directors as and when the Executive’s term expires while the Executive
remains employed under this Agreement.

          (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially all of his attention
and time during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period, it shall not be a violation of this Agreement for the Executive to
serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking
engagements or teach at educational institutions and manage personal investments, so long as such
activities do not significantly interfere with the performance of the Executive’s responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.

          (b) Compensation (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base Salary”) of not less than the
Executive’s annual base salary as in effect immediately prior to the Effective Date, in accordance
with the Company’s normal payroll policies. The Executive’s Annual Base Salary shall be reviewed
for increase (but not decrease) at least annually by the Compensation Committee of the Board of
Directors (the “Compensation Committee”) pursuant to its normal performance review policies
for senior executives. Any increase in Annual Base Salary shall not serve to limit or reduce any
other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced
after any increase and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.

          (ii) Annual Bonus. In addition to the Annual Base Salary, the Executive shall be
eligible to be awarded, for each fiscal year of the Company or portion of a fiscal year ending
during the Employment Period, an annual bonus (the “Annual Bonus”) pursuant to the terms of
the Company’s Annual Incentive Plan, as in effect from time to time. “Annual Bonus” for any given
fiscal year shall mean the amount, if any, of annual bonus earned by the Executive with respect to
the applicable fiscal year of the Company, including amounts deferred and/or paid in the form of
equity compensation. Each such Annual Bonus shall be paid no later than two and a half months
after the end of the fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus pursuant to an arrangement that meets the
requirements of Section 409A of the Code.

          (iii) Other Benefits. During the Employment Period: (A) the Executive shall be
entitled to participate in incentive, savings and retirement plans, practices, policies and
programs of the Company to the same extent as provided generally to similarly situated

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executives of the Company; and (B) the Executive and/or the Executive’s family, as the case
may be, shall be eligible for participation in, and shall receive benefits under, welfare benefit
plans, practices, policies and programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs) to the same extent as provided
generally to similarly situated executives of the Company.

          (iv) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the Company’s policies.

          (v) Office and Support Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments and with
secretarial and support staff, no less favorable than that provided similarly situated executives
of the Company.

          3. Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability (as defined below) of the Executive has
occurred during the Employment Period, it may provide the Executive with written notice in
accordance with Section 11(b) of this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties with the
Company on a full-time basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative.

          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Period either with or without Cause. For purposes of this Agreement, “Cause” shall mean:

     (i) the willful and continued failure substantially to perform the Executive’s duties
(other than as a result of physical or mental illness or injury), after the Chief Executive
Officer of the Company delivers to the Executive a written demand for substantial
performance that specifically identifies the manner in which the Chief Executive Officer of
the Company believes that the Executive has not substantially performed the Executive’s
duties; or

     (ii) illegal conduct or gross misconduct by the Executive, in either case that is
willful and results in material and demonstrable damage to the business or reputation of the
Company; or

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     (iii) conviction of, or plea of guilty or nolo contendere to, a charge of commission of
a felony.

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board of Directors or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the
best interests of the Company. The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board of Directors at a meeting of the Board of Directors called and held for
such purpose (after reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board of Directors), finding that, in
the good faith opinion of the Board of Directors, the Executive is guilty of the conduct described
in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

          (c) Good Reason. The Executive’s employment may be terminated by the Executive with
or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the
absence of the prior written consent of the Executive:

     (i) the failure of the Company to nominate the Executive for election and re-election
to the Board of Directors, or the assignment to the Executive of any duties inconsistent in
any respect with the Executive’s job description, or any other action by the Company that
results in a diminution in the Executive’s position, authority, duties or responsibilities,
other than an isolated, insubstantial and inadvertent action that is not taken in bad faith
and is remedied by the Company promptly after receipt of notice thereof from the Executive;

     (ii) any failure by the Company to comply with any of the provisions of Section 2(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

     (iii) any requirement by the Company that the Executive’s services be rendered
primarily at a location or locations other than the location set forth in this Agreement;

     (iv) any purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or

     (v) any failure by the Company to comply with and satisfy Section 9(c) of this
Agreement.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination (as defined below) to the
other party hereto given in accordance with Section 11(b) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i)

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indicates the specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

          (e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive with or without Good Reason,
the date of receipt of the Notice of Termination or any later date specified therein within 30 days
of such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in no event
shall the Date of Termination occur until the Executive experiences a “separation from service”
within the meaning of Section 409A of the Code, and the date on which such separation from service
takes place shall be the “Date of Termination.”

          4. Obligations of the Company upon Termination. (a) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the
Executive’s employment other than for Cause, death or Disability or the Executive shall terminate
employment for Good Reason:

     (i) the Company shall pay to the Executive the aggregate of the following amounts in a
lump sum in cash within 30 days after the Date of Termination:

     A. the sum of (1) the Executive’s Annual Base Salary and any accrued vacation
pay through the Date of Termination, (2) the Executive’s Annual Bonus for the fiscal
year immediately preceding the fiscal year in which the Date of Termination occurs
if such bonus has not been paid as of the Date of Termination, and (3) the
Executive’s business expenses that have not been reimbursed by the Company as of the
Date of Termination that were incurred by the Executive prior to the Date of
Termination in accordance with the applicable Company policy, in each case, to the
extent not theretofore paid (the sum of the amounts described in clauses (1) through
(3), shall be hereinafter referred to as the “Accrued Obligations”);
provided, that notwithstanding the foregoing, if the Executive has made an
irrevocable election under any deferred compensation arrangement subject to Section
409A of the Code to defer any portion of the Annual Base Salary or Annual Bonus
described in clause (1) or clause (3) above, then for all purposes of this Section 4
(including, without limitation, Sections 4(b) through 4(d)), such deferral election,
and the terms of the applicable arrangement

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shall apply to the same portion of the amount described in such clause (1) or
clause (3), and such portion shall not be considered as part of the “Accrued
Obligations” but shall instead be an “Other Benefit” (as defined below); and

     B. the product of (1) the highest Annual Bonus earned by the Executive for the
last three full fiscal years of the Company ending prior to the year in which the
Date of Termination occurs (including any amounts deferred or satisfied with equity
award grants) (the “Highest Annual Bonus”) and (2) a fraction, the numerator
of which is the number of days in the fiscal year in which the Date of Termination
occurs through the Date of Termination, and the denominator of which is 365 (the
“Pro-rata Bonus”); and

     C. an amount equal to three times the sum of (1) the Executive’s Annual Base
Salary, (2) the Highest Annual Bonus and (3) the Company’s contribution on behalf of
the Executive to the Company’s Profit Sharing Retirement Plan (or successor plan)
for the plan year ending immediately prior to the plan year during which the Date of
Termination occurs; and

     (ii) during the three-year period following the Date of Termination or such longer
period as may be provided by the terms of the appropriate plan, program, practice or policy,
but, to the extent required in order to comply with Section 409A, in no event beyond the end
of the second calendar year that begins after the Executive’s “separation from service”
within the meaning of Section 409A (the “Benefit Continuation Period”), the
Executive and/or the Executive’s family shall be provided with welfare benefits at least as
favorable, and at the after-tax same cost to the Executive and/or the Executive’s family, as
those that would have been provided to them under Section 2(b)(iii)(B) of this Agreement if
the Executive’s employment had continued until the end of the Continuation Period;
provided, however, that during any period when the Executive is eligible to
receive such benefits under another employer-provided plan, the benefits provided by the
Company under this Section 4(a)(ii) may be made secondary to those provided under such other
plan. The Executive’s entitlement to COBRA continuation coverage under Section 4980B of the
Code (“COBRA Coverage”) shall not be offset by the provision of benefits under this
Section 4(a)(ii) and the period of COBRA Coverage shall commence at the end of the Benefit
Continuation Period. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have remained
employed until the end of the Benefit Continuation Period and to have retired on the last
day of such period; and

     (iii) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies through the Date of
Termination (such other amounts and benefits shall be hereinafter referred to as the
“Other Benefits”).

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Notwithstanding the foregoing provisions of this Section 4(a), to the extent required in order to
comply with Section 409A of the Code, cash amounts that would otherwise be payable under this
Section 4(a) during the six-month period immediately following the Date of Termination shall
instead be paid, with interest on any delayed payment at the applicable federal rate provided for
in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after the date
that is six months following the Executive’s “separation from service” within the meaning of
Section 409A.

          (b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. In addition, the Executive
shall be entitled to the Pro-rata Bonus. Accrued Obligations and the Pro-rata Bonus shall be paid
to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits
as utilized in this Section 4(b) shall include death benefits as in effect on the date of the
Executive’s death with respect to similarly situated executives of the Company and their
beneficiaries.

          (c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. In addition, the Executive shall be entitled to the Pro-rata
Bonus. Accrued Obligations and the Pro-rata Bonus shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination, provided, that to the extent required in
order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under
this Section 4(c) shall be paid, with Interest, or provided to the Executive on the first business
day after the date that is six months following the Executive’s “separation from service” within
the meaning of Section 409A. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 4(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits as in effect at any time
thereafter generally with respect to similarly situated executives of the Company.

          (d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment other than for Good Reason during
the Employment Period, this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive (i) the Accrued Obligations through the Date of
Termination and (ii) Other Benefits, in each case to the extent theretofore unpaid. Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination, provided, that to the extent required in order to comply with Section 409A of
the Code, amounts and benefits to be paid or provided under this sentence of this Section 4(d)
shall be paid, with Interest, or provided to the Executive on the first business day after the date
that is six months following the Executive’s “separation from service” within the meaning of
Section 409A.

          5. Non-exclusivity of Rights. Except as specifically provided, nothing in this
Agreement shall prevent or limit the Executive’s continuing or future participation in any plan,

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program, policy or practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts that are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.

          6. Full Settlement. The Company’s obligation to make the payments provided for in,
and otherwise to perform its obligations under, this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may
have against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and, except as specifically provided in Section
4(a)(ii), such amounts shall not be reduced, regardless of whether the Executive obtains other
employment.

          7. Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall be determined that
any Payment (as defined below) would be subject to the Excise Tax (as defined below), then the
Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an
amount such that, after payment by the Executive of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, but excluding any income taxes and penalties imposed pursuant to Section 409A of the Code,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 7(a), if it shall be determined
that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value (as defined
below) of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment
shall be made to the Executive and the amounts payable under this Agreement shall be reduced so
that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount (as
defined below). The reduction of the amounts payable hereunder, if applicable, shall be made by
reducing the payments and benefits under the following sections in the following order: (i) Section
4(a)(i)(C), (ii) Section 4(a)(i)(B) and (iii) Section 4(a)(ii). For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not
result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts
payable under the Agreement shall be reduced pursuant to this Section 7(a). The Company’s
obligation to make Gross-Up Payments under this Section 7 shall not be conditioned upon the
Executive’s termination of employment.

          (b) Subject to the provisions of Section 7(c), all determinations required to be made under
this Section 7, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting firm

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designated by the Executive and reasonably acceptable to the Company (the “Accounting
Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the Executive that there
has been a Payment or such earlier time as is requested by the Company. All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company
should have been made (the “Underpayment”), consistent with the calculations required to be
made hereunder. In the event the Company exhausts its remedies pursuant to Section 7(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

          (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no later than ten business days after
the Executive is informed in writing of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to contest such claim, the
Executive shall:

     (i) give the Company any information reasonably requested by the Company relating to
such claim,

     (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,

     (iii) cooperate with the Company in good faith in order effectively to contest such
claim, and

     (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest,
and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of this Section
7(c), the Company shall control all proceedings taken in connection with such contest, and, at its
sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and

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conferences with the applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the
Executive and direct the Executive to sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that, if the Company pays such
claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such payment or with respect to any imputed income in connection
with such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

          (d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of
an amount on the Executive’s behalf pursuant to Section 7(c), the Executive becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 7(c), if applicable) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after
payment by the Company of an amount on the Executive’s behalf pursuant to Section 7(c), a
determination is made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of 30 days after such determination, then the amount of such
payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the
Company to the Executive within five days of the receipt of the Accounting Firm’s determination;
provided, that the Gross-Up Payment shall in all events be paid no later than the end of
the Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax
(and any income or other related taxes or interest or penalties thereon) on a Payment are remitted
to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts
relating to a claim described in Section 7(c) that does not result in the remittance of any
federal, state, local and foreign income, excise, social security and other taxes, the calendar
year in which the claim is finally settled or otherwise resolved. Notwithstanding any other
provision of this Section 7, the Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.

          (f) Definitions. The following terms shall have the following meanings for purposes
of this Section 7:

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     (i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.

     (ii) “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the portion of such
Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by
the Accounting Firm for purposes of determining whether and to what extent the Excise Tax
will apply to such Payment.

     (iii) A “Payment” shall mean any payment, distribution or benefit in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit
of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

     (iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code.

          8. Restrictive Covenants. (a) Confidential Information. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the Executive’s employment by
the Company or any of its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to anyone other than
the Company and those designated by it.

          (b) Non-competition. While employed by the Company and during the two-year period
following the Executive’s termination of employment with the Company (the “Covenant
Period”), the Executive shall not:

     (i) form, or acquire a five percent or greater equity ownership, voting or profit
participation interest in, any Competitive Enterprise (as defined below); or

     (ii) associate (including, but not limited to, association as an officer, employee,
partner, director, consultant, agent or advisor) with any Competitive Enterprise and in
connection with such association engage in, or directly or indirectly manage or supervise
personnel engaged in, any activity:

     A. which is similar or substantially related to any activity in which the
Executive was engaged, in whole or in part, at the Company,

     B. for which the Executive had direct or indirect managerial or supervisory
responsibility at the Company, or

     C. which calls for the application of the same or similar specialized knowledge
or skills as those utilized by the Executive in the Executive’s activities

11

 

at the Company, and, in any such case, irrespective of the purpose of the
activity or whether the activity is or was in furtherance of advisory, agency,
proprietary or fiduciary business of either the Company or the Competitive
Enterprise.

For purposes of the Executive Covenants (as defined below), a “Competitive Enterprise” is a
business enterprise that engages in, or owns or controls a significant interest in any entity that
engages in financial services such as investment banking, public or private finance, financial
advisory services, private investing (for anyone other than the Executive and members of the
Executive’s family), merchant banking, asset or hedge fund management, securities brokerage, sales,
lending, custody, clearance, settlement or trading. It is the intention of the parties to restrict
the activities of the Executive under this Section 8(b) only to the extent necessary for the
protection of the legitimate business interests of the Company.

     (c) Non-Solicitation of Clients.

     (i) the Executive hereby agrees that during the Covenant Period, the Executive will
not, in any manner, directly or indirectly, (A) Solicit (as defined below) a Client (as
defined below) to transact business with a Competitive Enterprise or to reduce or refrain
from doing any business with the Company or (B) interfere with or damage (or attempt to
interfere with or damage) any relationship between the Company and a Client.

     (ii) For purposes of this Section 8, the term “Solicit” means any direct or
indirect communication of any kind whatsoever, regardless of by whom initiated, inviting,
advising, encouraging or requesting any person or entity, in any manner, to take or refrain
from taking any action.

     (iii) For purposes of this Section 8, the term “Client” means any client or
prospective client of the Company to whom the Executive provided services, or for whom the
Executive transacted business, or whose identity became known to the Executive in connection
with the Executive’s relationship with or employment by the Company.

          (d) Nonsolicitation of Employees. The Executive hereby agrees that during the
Covenant Period, the Executive will not, in any manner, directly or indirectly, Solicit any person
who is an employee of the Company or any of its subsidiaries (or was an employee of the Company or
any of its subsidiaries at any time during the six-month period prior to any such solicitation) to
resign from the Company or any of its subsidiaries or to apply for or accept employment with any
Competitive Enterprise.

          (e) Transfer of Client Relationships. During the portion of the Covenant Period
following the date of the Executive’s termination of employment, the Executive hereby agrees to
take all actions and do all such things as may be reasonably requested by the Company from time to
time to maintain for the Company the business, goodwill and business relationships with any of the
Company’s Clients with whom the Executive worked during the Employment Period.

          (f) Prior Notice Required. The Executive hereby agrees that prior to accepting
employment with any other person or entity during the Covenant Period, the Executive

12

 

will provide such prospective employer with written notice of the provisions of this
Agreement, with a copy of such notice delivered simultaneously to the General Counsel of the
Company.

     (g) Executive Covenants Generally.

     (i) The Executive’s covenants as set forth in this Section 8 are from time to time
referred to herein as the “Executive Covenants.” If any of the Executive Covenants
is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such
Executive Covenant shall be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining Executive Covenants shall not
be affected thereby; provided, however, that if any of the Executive
Covenants is finally held to be invalid, illegal or unenforceable because it exceeds the
maximum scope determined to be acceptable to permit such provision to be enforceable, such
Executive Covenant will be deemed to be modified to the minimum extent necessary to modify
such scope in order to make such provision enforceable hereunder.

     (ii) The Executive understands that the Executive Covenants may limit the Executive’s
ability to earn a livelihood in a business similar to the business of the Company.

          (h) Remedies. The Executive acknowledges that the Company would be irreparably
injured by a violation of this Section 8 and that it is impossible to measure in money the damages
that will accrue to the Company by reason of a failure by the Executive to perform any of his
obligations under this Section 8. Accordingly, if the Company institutes any action or proceeding
to enforce any of the provisions of this Section 8, to the extent permitted by applicable law, the
Executive hereby waives the claim or defense that the Company has an adequate remedy at law, and
the Executive shall not urge in any such action or proceeding the defense that any such remedy
exists at law. Furthermore, in addition to other remedies that may be available, the Company shall
be entitled to specific performance and other injunctive relief, without the requirement to post
bond.

          9. Successors. (a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. As used in this

13

 

Agreement, the term “affiliated companies” shall include any company controlled by,
controlling or under common control with the Company.

          10. Attorneys’ Fees. The Company agrees to pay, as incurred (within ten business days
of receipt of an invoice from the Executive), to the fullest extent permitted by law, all legal
fees and expenses that the Executive may reasonably incur as a result of any contest by the
Company, the Executive or others of the validity or enforceability of or liability under, or
otherwise involving, any provision of this Agreement (whether such contest is between the Company
and the Executive or between either of them and any third party), together with Interest.

          11. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

	 	 	 
	If to the Executive:

	 	At the most recent address
	 

	 	on file at the Company.
	 
	 	 
	If to the Company:

	 	KBW, Inc.
	 

	 	787 Seventh Avenue
	 

	 	New York, New York 10019
	 

	 	Attention: Mitchell B. Kleinman, Esq.
	 

	 	Executive Vice President and General Counsel
	 

	 	Facsimile: (212) 541-6668

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

          (d) The Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

          (e) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason pursuant to Section 3(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this Agreement.

14

 

          (f) If any compensation or benefits provided by this Agreement may result in the application
of Section 409A of the Code, the Company shall, in consultation with the Executive, modify the
Agreement in the least restrictive manner necessary in order to exclude such compensation from the
definition of “deferred compensation” within the meaning of such Section 409A or in order to comply
with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules,
regulations or other regulatory guidance issued under such statutory provisions and without any
diminution in the value of the payments to the Executive. All reimbursements, legal fee and
expense payments and in-kind benefits provided under this Agreement that constitute deferred
compensation within the meaning of Section 409A of the Code shall be made or provided in accordance
with the requirements of Section 409A of the Code, including, without limitation, that (i) in no
event shall such reimbursements and payments by the Company under this Agreement be made later than
the end of the calendar year next following the calendar year in which the applicable fees and
expenses were incurred, provided, that the Executive shall have submitted an invoice for
such fees and expenses at least 10 days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred; (ii) the amount of such
reimbursements, payments and in-kind benefits that the Company is obligated to pay or provide in
any given calendar year shall not affect the reimbursements, payments and in-kind benefits that the
Company is obligated to pay or provide in any other calendar year; (iii) the Executive’s right to
have the Company pay or provide such reimbursements, payments and in-kind benefits may not be
liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations
to make such reimbursements and payments or to provide such in-kind benefits apply later than the
Executive’s remaining lifetime (or if longer, through the 20th anniversary of the Effective Date).

          (g) Any provision of this Agreement that by its terms continues after the expiration of the
Employment Period or the termination of the Executive’s employment shall survive in accordance with
its terms. From and after the date first written above, except as specifically provided herein,
this Agreement shall supersede any other agreement between the parties with respect to the subject
matter hereof, including, without limitation, the Prior Agreement.

[Remainder of page intentionally left blank]

15

 

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from its Board of Directors, the Company has caused these presents to be executed in
its name on its behalf, all as of the day and year first above written.

	 	 	 	 	 	 
	 	 	ANDREW M. SENCHAK	 
	 
	 	 	 	 	 
	 	 	/s/ Andrew M. Senchak	 
	 	 	 	 
	 
	 	 	 	 	 
	 	 	KBW, INC.	 
	 
	 	 	 	 	 
	 

	 	By	 	/s/ Mitchell B. Kleinman	 
	 

	 	 	 	 
	 

	 	Name:	Mitchell B. Kleinman	 
	 

	 	Title:	General Counsel & Executive
Vice President	 

16EX-10.17

Exhibit 10.17

This exhibit amends and restates the agreement between KBW, Inc. and the executive that was
included as an exhibit to KBW Inc.’s previously filed periodic reports with the Securities and
Exchange Commission. The agreement was amended and restated as set forth below in order to comply
with certain technical requirements of Section 409A of the Internal Revenue Code.

AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT

          AGREEMENT, dated as of the 31st day of December, 2008 (this “Agreement”), by and
between KBW, Inc., a Delaware corporation (the “Company”), and Robert Giambrone, Executive Vice
President and Chief Financial and Administrative Officer (the “Executive”).

          WHEREAS, the Board of Directors of the Company (the “Board”), has determined that it is in the
best interests of the Company and its stockholders to assure that the Company will have the
continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined herein). The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the Executive’s full attention and
dedication to the Company in the event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements upon a Change of Control that
ensure that the compensation and benefits expectations of the Executive will be satisfied and that
provide the Executive with compensation and benefits arrangements that are competitive with those
of other corporations. Therefore, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          Section 1. Certain Definitions. (a) “Effective Date” means the first date during the
Change of Control Period (as defined herein) on which a Change of Control occurs. Notwithstanding
anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive’s
employment with the Company is terminated prior to the date on which the Change of Control occurs,
and if it is reasonably demonstrated by the Executive that such termination of employment (1) was
at the request of a third party that has taken steps reasonably calculated to effect a Change of
Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then
“Effective Date” means the date immediately prior to the date of such termination of employment.

          (b) “Change of Control Period” means the period commencing on the date hereof and ending on
the third anniversary of the date hereof; provided, however, that, commencing on the date one year
after the date hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof, the “Renewal Date”), unless previously terminated, the Change of Control
Period shall be automatically extended so as to terminate three
years from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the Company

 

 

shall give notice to the Executive that the Change of Control Period shall not be so extended. The
Change of Control Period shall terminate upon termination of the Executive’s employment with the
Company if such termination of employment occurs prior to the date on which a Change of Control
occurs, unless the Effective Date precedes or coincides with such termination pursuant to clause
(1) or (2) of Section 1(a)

          (c) “Affiliated Company” means any company controlled by, controlling or under common control
with the Company.

          (d) “Change of Control” means:

          (1) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (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 1(d), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any
acquisition by any corporation pursuant to a transaction that complies with Sections 1(d)(3)(A),
1(d)(3)(B) and 1(d)(3)(C);

          (2) Any time at which individuals who, as of the date hereof, 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 the date hereof 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;

          (3) 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

2

 

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) at least a
majority of the members of the board of directors (or, for a non-corporate entity, equivalent
governing body) of the entity resulting from such Business Combination 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; or

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

          Section 2. Employment Period. The Company hereby agrees to continue the Executive in
its employ, subject to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (the “Employment Period”).
The Employment Period shall terminate upon the Executive’s termination of employment for any
reason.

          Section 3. Terms of Employment. (a) Position and Duties. (1) During the
Employment Period, (A) the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Effective Date and (B) the Executive’s services
shall be performed at the headquarters of the Company located in the City of New York or at any
other such headquarters location less than 25 miles from the office where the Executive was
employed immediately preceding the Effective Date.

          (2) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period, it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that, to the extent that any such
activities have been conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall

3

 

not thereafter be deemed to interfere with the performance
of the Executive’s responsibilities to the Company.

          (b) Compensation. (1) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (the “Annual Base Salary”) at an annual rate at least
equal to 12 times the highest monthly base salary paid or payable, including any base salary that
has been earned but deferred, to the Executive by the Company and the Affiliated Companies in
respect of the 12-month period immediately preceding the month in which the Effective Date occurs.
The Annual Base Salary shall be paid at such intervals as the Company pays executive salaries
generally. During the Employment Period, the Annual Base Salary shall be reviewed at least
annually, beginning no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date. Any increase in the Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term “Annual Base Salary” shall refer to the Annual
Base Salary as so increased.

          (2) Annual Bonus. In addition to the Annual Base Salary, the Executive shall be
awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the Executive’s highest bonus earned under the Company’s Annual
Incentive Plan, as in effect from time to time, or any comparable bonus under any predecessor or
successor plan, for the last three full fiscal years prior to the Effective Date (or for such
lesser number of full fiscal years prior to the Effective Date for which the Executive was eligible
to earn such a bonus, and annualized in the case of any pro rata bonus earned for a partial fiscal
year) (the “Recent Annual Bonus”). (If the Executive has not been eligible to earn such a bonus
for any period prior to the Effective Date, the “Recent Annual Bonus” shall mean the Executive’s
target annual bonus for the year in which the Effective Date occurs.) Each such Annual Bonus shall
be paid no later than two and a half months after the end of the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus
pursuant to an arrangement that meets the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”).

          (3) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all cash incentive, equity incentive, savings and
retirement plans, practices, policies, and programs applicable generally to other peer executives
of the Company and the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the Company and the
Affiliated Companies for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the Effective Date to other
peer executives of the Company and the Affiliated Companies.

          (4) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs provided by the

4

 

Company and the Affiliated Companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the Company and the
Affiliated Companies, but in no event shall such plans, practices, policies and programs provide
the Executive with benefits that are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer executives of the
Company and the Affiliated Companies.

          (5) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the Company’s policies.

          (6) Office and Support Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments and with
secretarial and support staff, no less favorable than that provided similarly situated executives
of the Company.

          (7) Vacation. During the Employment Period, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and the Affiliated Companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
the Affiliated Companies.

          (8) Indemnification and D&O Insurance. During the Employment Period and for seven (7)
years following the Date of Termination (as defined herein), the Company shall provide the
Executive with indemnification and directors’ and officers’ liability insurance coverage as in
effect at any time during the 120-day period immediately preceding the Effective Date, or, if more
favorable to the Executive, as in effect generally at any time thereafter with respect to other
peer executives, or directors, of the Company and the Affiliated Companies.

          Section 4. Termination of Employment. (a) Death or Disability. The
Executive’s employment shall terminate automatically if the Executive dies during the Employment
Period. If the Company determines in good faith that the Disability (as defined herein) of the
Executive has occurred during the Employment Period (pursuant to the definition of “Disability”),
it may give to the Executive written notice in accordance with Section 11(b) of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive (the
“Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. “Disability” means the
absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to
mental or physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal
representative. The foregoing to the contrary notwithstanding, if the Executive’s employment

5

 

would otherwise be considered to have terminated by reason of the Executive’s death or Disability, but
circumstances described in clause (1), (2), (3), (4) or (5) of Section 4(c) (definition of Good
Reason) occurred on or before the date of the Executive’s death or the Executive’s Disability
Effective Date, as the case may be, the Executive’s employment with the Company shall be deemed to
have been terminated by the Executive for Good Reason.

          (b) Cause. The Company may terminate the Executive’s employment during the Employment
Period with or without Cause. “Cause” means:

     (1) the willful and continued failure substantially to perform the Executive’s duties
(as contemplated by Section 3(a)(1)(A)) with the Company or any Affiliated Company (other
than as a result of physical or mental illness or injury or following the Executive’s
delivery of a Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive Officer of the
Company that specifically identifies the manner in which the Board or the Chief Executive
Officer of the Company believes that the Executive has not substantially performed the
Executive’s duties;

     (2) illegal conduct or gross misconduct by the Executive, in either case that is
willful and results in material and demonstrable damage to the business or reputation of the
Company; or

     (3) conviction of, or plea of guilty or nolo contendere to, a charge of commission of a
felony.

For purposes of this Section 4(b), no act, or failure to act, on the part of the Executive shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority (A) given pursuant to a resolution duly
adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliated
Companies and is not publicly-traded, the board of directors of the ultimate parent of the Company
(the “Applicable Board”), (B) upon the instructions of the Chief Executive Officer of the Company
or a senior officer of the Company or (C) based upon the advice of counsel for the Company, shall
be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in
the best interests of the Company. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until (I) the Executive has been given notice in reasonable
detail by the Company of the existence of the circumstances claimed to constitute Cause within
ninety (90) days following the initial existence of such circumstances, and given an opportunity of
thirty (30) days to cure, and such circumstances remain uncured at the end of such thirty (30)-day
period, and (II) there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire membership of the
Applicable Board (excluding the Executive, if the Executive is a
member of the Applicable Board) at a meeting of the Applicable Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard before the Applicable Board),
finding that, in the good faith opinion of the board, the Executive is guilty of the conduct
described in Section 4(b)(1), (2) or (3), and specifying the particulars thereof in detail.

6

 

          (c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason or by the Executive voluntarily without Good Reason. “Good Reason” means:

(1) the assignment to the Executive of any duties materially inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 3(a), or any
other material diminution in such position, authority, duties or responsibilities (whether
or not occurring solely as a result of the Company’s ceasing to be a publicly traded
entity);

(2) any material failure by the Company to comply with any of the provisions of Section
3(b);

(3) the Company’s requiring the Executive (i) to be based at any office or location other
than as provided in Section 3(a)(1)(B), (ii) to be based at a location other than the
principal executive offices of the Company if the Executive was employed at such location
immediately preceding the Effective Date, or (iii) to travel on Company business to a
substantially greater extent than required immediately prior to the Effective Date;

(4) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or

(5) any failure by the Company to comply with and satisfy Section 10(c).

The Executive’s employment shall not be deemed to have been terminated by the Executive for Good
Reason unless he has provided the Company with written notice of the existence of the circumstances
claimed to constitute Good Reason within ninety (90) days following the initial existence of such
circumstances, and the Company has not remedied such circumstances within thirty (30) days of its
receipt of such notice from the Executive. The Executive’s mental or physical incapacity following
the occurrence of an event described above in clauses (1) through (5) shall not affect the
Executive’s ability to terminate employment for Good Reason.

          (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 11(b). “Notice of Termination” means a written notice that (1)
indicates the specific termination provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive’s employment under the provision so indicated, and (3) if the Date
of Termination is other than the date of receipt of such notice, specifies the Date of Termination
(which Date of Termination shall be not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance that contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s respective rights hereunder.

7

 

          (e) Date of Termination. “Date of Termination” means (1) if the Executive’s employment
is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified in the Notice of Termination, (which date
shall not be more than 30 days after the giving of such notice), as the case may be, (2) if the
Executive’s employment is terminated by the Company other than for Cause or Disability, the date on
which the Company notifies the Executive of such termination, (3) if the Executive resigns without
Good Reason, the date on which the Executive notifies the Company of such termination, and (4) if
the Executive’s employment is terminated by reason of death or Disability, the date of death of the
Executive or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in
no event shall the Date of Termination occur until the Executive experiences a “separation from
service” within the meaning of Section 409A of the Code, and the date on which such separation from
service takes place shall be the “Date of Termination.”

          (f) Compensation During Dispute. With respect to any termination of the Executive’s
employment during the Employment Period, if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination, the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning the termination,
the Company shall continue to pay the Executive the full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, Annual Base Salary) and
continue the Executive as a participant in all compensation, benefit and insurance plans in which
the Executive was participating when the notice giving rise to the dispute was given, until the
earlier of (i) the date on which the Employment Period ends or (ii) the date on which the dispute
is finally resolved, either by mutual written agreement of the parties or by a final judgment,
order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that this Section 4(f) shall be applicable in the event of a notice of dispute
given by the Executive only if such notice is given in good faith and the Executive pursues the
resolution of such dispute with reasonable diligence. Amounts paid under this Section 4(f) are in
addition to other amounts due under this Agreement and shall not, for example, be offset against
or reduce any amounts otherwise due under Section 5(a) hereof.

          Section 5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the Company terminates
the Executive’s employment other than for Cause, death or Disability or the Executive terminates
employment for Good Reason:

(1) the Company shall pay to the Executive, in a lump sum in cash within 30 days after the
Date of Termination, the aggregate of the following amounts:

     (A) the sum of (i) the Executive’s Annual Base Salary and any accrued vacation
pay through the Date of Termination, (ii) the Executive’s Annual Bonus
for the fiscal year immediately preceding the fiscal year in which the Date of
Termination occurs if such bonus has not been paid as of the Date of Termination,
and (iii) the Executive’s business expenses that have not been reimbursed by the
Company as of the Date of Termination that were incurred by the Executive prior to
the Date of Termination in accordance with the applicable Company policy (the

8

 

sum of
the amounts described in subclauses (i) through (iii), the “Accrued Obligations”);
provided, that notwithstanding the foregoing, if the Executive has made an
irrevocable election under any deferred compensation arrangement subject to Section
409A of the Code to defer any portion of the Annual Base Salary or Annual Bonus
described in clause (i) or clause (iii) above, then for all purposes of this Section
5 (including, without limitation, Sections 5(b) through 5(d)), such deferral
election, and the terms of the applicable arrangement shall apply to the same
portion of the amount described in such clause (i) or clause (iii), and such portion
shall not be considered as part of the “Accrued Obligations” but shall instead be an
“Other Benefit” (as defined below);

     (B) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the
Annual Bonus paid or payable, including any bonus or portion thereof that has been
earned but deferred (and annualized for any fiscal year consisting of less than 12
full months or during which the Executive was employed for less than 12 full
months), for the most recently completed fiscal year during the Employment Period,
if any (such higher amount, the “Highest Annual Bonus”) and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the Date
of Termination and the denominator of which is 365; and

     (C) an amount equal to two and one-half times the sum of (1) the Executive’s
Annual Base Salary, (2) the Highest Annual Bonus and (3) the Company’s contribution
on behalf of the Executive to the Company’s Profit Sharing Retirement Plan (or
successor plan) for the year ending immediately prior to the plan year during which
the Date of Termination occurs;

(2) for eighteen months after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or policy, but, to
the extent required in order to comply with Section 409A, in no event beyond the end of the
second calendar year that begins after the Executive’s “separation from service” within the
meaning of Section 409A (the applicable period hereinafter referred to as the “Benefit
Continuation Period”), the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to, and at the after-tax same cost to the Executive and/or
the Executive’s family, as those that would have been provided to them in accordance with
the plans, programs, practices and policies described in Section 3(b)(4) if the Executive’s
employment had not been terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the Company and
the Affiliated Companies and their families; provided, however, that, if the Executive
becomes reemployed with another employer and is eligible to receive such benefits under
another employer provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such applicable period of
eligibility. The Executive’s entitlement to
COBRA continuation coverage under Section 4980B of the Code (“COBRA Coverage”) shall not be
offset by the provision of benefits under this Section 5(a)(2) and the period of COBRA
Coverage shall commence at the end of the Benefit Continuation Period. For purposes of
determining eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the

9

 

Executive
shall be considered to have remained employed until the end of the Benefit Continuation
Period and to have retired on the last day of such period; and

(3) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive any Other Benefits (as defined in Section 6).

Notwithstanding the foregoing provisions of this Section 5(a), to the extent required in order to
comply with Section 409A of the Code, cash amounts that would otherwise be payable under this
Section 5(a) during the six-month period immediately following the Date of Termination shall
instead be paid, with interest on any delayed payment at the applicable federal rate provided for
in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after the date that is
six months following the Executive’s “separation from service” within the meaning of Section 409A
of the Code.

Notwithstanding the foregoing, the Company’s obligations to pay or provide any amounts or benefits
required by Section 5(a)(1)(C) or (a)(2) shall be conditioned on the Executive signing a general
release of claims in favor of the Company and its affiliates in the form attached hereto as Exhibit
A and the expiration of any revocation period provided for in such release, within sixty (60) days
following the Date of Termination.

          (b) Death. Except as set forth in Section 4(a), if the Executive’s employment is
terminated by reason of the Executive’s death during the Employment Period, the Company shall
provide the Executive’s estate or beneficiaries with the Accrued Obligations and the timely payment
or delivery of the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the
provision of the Other Benefits, the term “Other Benefits” as utilized in this Section 5(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the Company and the
Affiliated Companies to the estates and beneficiaries of peer executives of the Company and the
Affiliated Companies under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their beneficiaries at any time
during the 120-day period immediately preceding the Effective Date or, if more favorable to the
Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and the Affiliated Companies
and their beneficiaries.

          (c) Disability. Except as set forth in Section 4(a), if the Executive’s employment is
terminated by reason of the Executive’s Disability during the Employment Period, the Company shall
provide the Executive with the Accrued Obligations and the timely payment or delivery of the Other
Benefits, and shall have no other severance obligations under this Agreement. The Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination, provided that to the extent required in order to
comply with Section 409A of the Code, amounts and benefits to be paid or provided under this
Section 5(c) shall be paid, with Interest, or provided to the Executive on the first business day
after the date that is six months following the Executive’s “separation from service” within the
meaning of Section 409A of the Code. With respect to the provision of the Other Benefits, the

10

 

term “Other Benefits” as utilized in this Section 6(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the Affiliated Companies
to disabled executives and/or their families in accordance with such plans, programs, practices and
policies relating to disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the Company and the
Affiliated Companies and their families.

          (d) Cause; Other Than for Good Reason. If the Executive’s employment is terminated
for Cause during the Employment Period, the Company shall provide the Executive with the
Executive’s Annual Base Salary through the Date of Termination within 30 days of the Date of
Termination, and the timely payment or delivery of the Other Benefits, and shall have no other
severance obligations under this Agreement. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for Good Reason, the Company shall provide to
the Executive the Accrued Obligations and the timely payment or delivery of the Other Benefits, and
shall have no other severance obligations under this Agreement. In such case, all the Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination, provided that to the extent required in order to comply with Section 409A of the Code,
amounts and benefits to be paid or provided under this sentence of Section 5(d) shall be paid, with
Interest, or provided to the Executive on the first business day after the date that is six months
following the Executive’s “separation from service” within the meaning of Section 409A of the Code.

          Section 6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program, policy or practice
provided by the Company or the Affiliated Companies and for which the Executive may qualify, nor,
subject to Section 11(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any other contract or agreement with the Company
or the Affiliated Companies at or subsequent to the Date of Termination (“Other Benefits”) shall be
payable in accordance with such plan, policy, practice or program or contract or agreement, except
as explicitly modified by this Agreement. Without limiting the generality of the foregoing, the
Executive’s resignation under this Agreement with or without Good Reason, shall in no way affect
the Executive’s ability to terminate employment by reason of the Executive’s “retirement” under any
compensation and benefits plans, programs or arrangements of the Affiliated Companies, including
without limitation any retirement or pension plans or arrangements or to be eligible to receive
benefits under any compensation or benefit plans, programs or arrangements of the Affiliated
Companies, including without limitation any retirement or pension plan or arrangement of the
Affiliated Companies or substitute plans adopted by the Company or its successors, and any
termination which otherwise qualifies as Good Reason shall be treated as such even if it is also a
“retirement” for purposes of any such plan. Notwithstanding the foregoing, if the Executive
receives payments and benefits pursuant to Section 5(a) of this Agreement, the Executive shall
not be entitled to any severance pay or benefits under any severance plan, program or policy of the
Company and the Affiliated

11

 

Companies, unless otherwise specifically provided therein in a specific
reference to this Agreement.

          Section 7. Full Settlement. The Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company
may have against the Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement, and such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay as incurred
(within 10 days following the Company’s receipt of an invoice from the Executive; provided,
however, that in no event shall any such payments be made later than the last day of the
Executive’s taxable year following the taxable year in which the fee or expense was incurred), to
the full extent permitted by law, all legal fees and expenses that the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any provision of this Agreement
or any guarantee of performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 or 409A of the Code to any
payment or benefit provided hereunder or otherwise by the Company or any Affiliated Company or
otherwise relating to the Executive’s employment, or termination from employment, with the Company
or any Affiliated Company, plus, in each case, Interest.

          Section 8. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
such that, after payment by the Executive of all taxes (and any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but
excluding any income taxes and penalties imposed pursuant to Section 409A of the Code, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined
that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all
Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to
the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute
Value of all Payments, in the aggregate, equals the Safe Harbor Amount (the “Capped Benefit”). The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments
and benefits under the following sections in the following order: (i) Section 5(a)(1)(C); (ii)
Section 5(a)(1)(B) and (iii) Section 5(a)(2). For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not
result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts
payable under the Agreement shall be reduced pursuant to this Section 8(a). The Company’s
obligation to make

12

 

Gross-Up Payments under this Section 8 shall not be conditioned upon the
Executive’s termination of employment.

          (b) Subject to the provisions of Section 8(c), all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting firm designated by the Executive and
reasonably acceptable to the Company (the “Accounting Firm”). The Accounting Firm shall provide
detailed supporting calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the Executive may
appoint another nationally recognized accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been
made by the Company should have been made (the “Underpayment”), consistent with the calculations
required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section
8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred (including, if such
redetermination causes the Capped Benefit to no longer apply, the full amount of the Excise Tax)
and any such Underpayment (plus any interest, penalties or additions payable by the Executive with
respect to such Underpayment) shall be promptly paid by the Company to or for the benefit of the
Executive.

          (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no later than 10 business days after
the Executive is informed in writing of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to contest such claim, the
Executive shall:

(1) give the Company any information reasonably requested by the Company relating to such
claim,

(2) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,

13

 

(3) cooperate with the Company in good faith in order effectively to contest such claim, and

(4) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest, and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall
control all proceedings taken in connection with such contest, and, at its sole discretion, may
pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the
Executive to sue for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company shall determine;
provided, however, that, if the Company pays such claim and directs the Executive to sue for a
refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment
or with respect to any imputed income in connection with such payment; and provided, further, that
any extension of the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive
shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

          (d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of
an amount on the Executive’s behalf pursuant to Section 8(c), the Executive receives any refund
with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Company’s complying with the requirements of Section
8(c), if applicable) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Executive’s behalf pursuant to Section 8(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then the amount of such payment shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of the Accounting Firm’s determination;
provided that, the Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which the Excise Tax (and
any income or other related taxes or interest or penalties thereon) on a Payment

14

 

are remitted to
the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts
relating to a claim described in Section 8(c) that does not result in the remittance of any
federal, state, local and foreign income, excise, social security and other taxes, the calendar
year in which the claim is finally settled or otherwise resolved. Notwithstanding any other
provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.

          (f) Definitions. The following terms shall have the following meanings for purposes
of this Section 8.

          (i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with
any interest or penalties imposed with respect to such excise tax.

          (ii) “Parachute Value” of a Payment shall mean the present value as of the date of the change
of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes
a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes
of determining whether and to what extent the Excise Tax will apply to such Payment.

          (iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within
the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid
or payable pursuant to this Agreement or otherwise.

          (iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.

          Section 9. Confidential Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge or data relating
to the Company or the Affiliated Companies, and their respective businesses, which information,
knowledge or data shall have been obtained by the Executive during the Executive’s employment by
the Company or the Affiliated Companies and which information, knowledge or data shall not be or
become public knowledge or known within the relevant trade or industry (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement). After termination
of the Executive’s employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process or by any
administrative or legislative body (including any committee thereof) with actual or apparent
jurisdiction to order such information, knowledge or data to be disclosed, and then only to the
extent required, after prompt notice, if permitted by law, to the Company of any such order, or in
connection with
any litigation involving this Agreement, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated by the Company. In
no event shall an asserted violation of the provisions of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

15

 

          Section 10. Successors. (a) This Agreement is personal to the Executive, and,
without the prior written consent of the Company, shall not be assignable by the Executive other
than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive’s legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. Except as provided in Section 10(c), without the prior written consent of
the Executive this Agreement shall not be assignable by the Company.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
“Company” means the Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

          Section 11. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. Subject to the last sentence of Section 11(g), this Agreement may not be amended or
modified other than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

          if to the Executive:

At the most recent address on file at the Company.

          if to the Company:

KBW, Inc.

787 Seventh Avenue

New York, New York 10019

Attention: Mitchell B. Kleinman, Esq.

Executive Vice President and General Counsel

Facsimile: (212) 541-6668

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

16

 

          (d) The Company may withhold from any amounts payable under this Agreement such United States
federal, state or local or foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.

          (e) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.

          (f) The Executive and the Company acknowledge that, except as may otherwise be provided under
any other written agreement between the Executive and the Company, the employment of the Executive
by the Company is “at will” and, subject to Section 1(a), prior to the Effective Date, the
Executive’s employment may be terminated by either the Executive or the Company at any time prior
to the Effective Date, in which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date, except as specifically provided herein, this
Agreement shall supersede any other agreement between the parties with respect to the subject
matter hereof.

          (g) Compensation or benefits provided by this Agreement are intended to comply with, or be
exempt from, Section 409A of the Code, and this Agreement shall be interpreted and administered in
a manner that is consistent with such intention. If any compensation or benefits provided by this
Agreement may result in the application of Section 409A of the Code, the Company shall, in
consultation with the Executive, modify the Agreement in the least restrictive manner necessary in
order to exclude such compensation from the definition of “deferred compensation” within the
meaning of such Section 409A or in order to comply with the provisions of Section 409A, other
applicable provision(s) of the Code
and/or any rules, regulations or other regulatory guidance issued under such statutory
provisions and without any diminution in the value of the payments to the Executive. All
reimbursements, legal fee and expense payments and in-kind benefits provided under this Agreement
that constitute deferred compensation within the meaning of Section 409A of the Code shall be made
or provided in accordance with the requirements of Section 409A of the Code, including, without
limitation, that (i) in no event shall such reimbursements and payments by the Company under this
Agreement be made later than the end of the calendar year next following the calendar year in which
the applicable fees and expenses were incurred, provided, that the Executive shall have submitted
an invoice for such fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred; (ii) the amount of such
reimbursements, payments and in-kind benefits that the Company is obligated to pay or provide in
any given calendar year shall not affect the reimbursements, payments and in-kind benefits that the
Company is obligated to pay or provide in any other calendar year; (iii) the Executive’s right to
have the Company pay or provide such reimbursements, payments and in-kind benefits may not be
liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations
to make such reimbursements and payments or to provide such in-kind benefits apply later than the
Executive’s remaining lifetime (or if longer, through the 20th anniversary of the Effective Date).

17

 

          (h) The respective rights and obligations of the parties to this Agreement hereunder shall
survive any termination of this Agreement or the Executive’s employment with the Company or any
Affiliated Company.

          (i) This Agreement may be executed in several counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same instrument.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from the Board, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	/s/ Robert Giambrone	 	 
	 	 	 	 	 
	 	 	Robert Giambrone
	 	 
	 
	 	 	 	 	 	 
	 	 	KBW, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	/s/ Mitchell
B. Kleinman	 	 
	 

	 	Name:
	  Mitchell
B. Kleinman 

	 	 
	 

	 	Title:	General Counsel & Executive
Vice President	 	 

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Exhibit A

 SEPARATION AND RELEASE AGREEMENT

                                                                      
(“Employee”) and Keefe, Bruyette & Woods, Inc., its parents,
subsidiaries, affiliated companies and related entities (collectively, “KBW”), hereby knowingly and
voluntarily agree to enter into this Separation and Release Agreement (“Agreement’) in order to
resolve all outstanding issues and set forth all the obligations between the parties. Employee and
KBW acknowledge and agree that this Agreement constitutes the sole obligation of each to the other,
that no other promises, commitments or representations have been made with or by each of the
parties to the other and that they have not relied on any other promises, commitments or
representations in signing this Agreement.

          1. Employee’s employment with KBW terminated [terminates] effective                                         , and
all compensation and benefits cease as of this date (except as expressly provided herein or as
otherwise required by law). Employee acknowledges that Employee has been paid [will be paid]
Employee’s regular rate of pay, less applicable payroll and other deductions, through that date.
Employee further acknowledges that Employee has been paid [will be paid]                     , less applicable
payroll and other deductions, representing payment for                      days of accrued and unused
vacation. Employee may continue health insurance benefits at Employee’s own expense pursuant to
COBRA and will receive additional information regarding COBRA under separate cover. Employee also
will receive additional information regarding any KBW savings and/or pension plan under separate
cover and Employee’s rights to benefits under such plan(s) will be determined by law and in
accordance with the terms of such plan(s). Employee acknowledges that Employee is not entitled to
any other benefits, payments or wages except as expressly provided in this paragraph.

          2. In consideration for Employee entering into this Agreement and other valuable
consideration, KBW will pay Employee $                                        , less applicable payroll and other deductions
(“Severance Payment”). All obligations under this Agreement shall commence only after this
Agreement has been executed and the seven (7) calendar day revocation period provided in paragraph
15, below, has expired.

          3. Employee will return all KBW property (whether owned or leased), documents, records and
other information of any type whatsoever concerning or relating to the business and affairs of KBW
or any successor.

          4. In consideration for the Severance Payment and other valuable consideration to which the
Employee would not otherwise be entitled, Employee agrees that acceptance of this Agreement
constitutes a full, complete and knowing waiver and release of any claims asserted or non-asserted
that Employee may have against KBW and its parents, subsidiaries, direct and indirect partners,
shareholders, affiliated companies and related entities, and successors and assigns, and each of
their respective present and former directors, officers, employees, shareholders, representatives,
agents, assigns, attorneys, employees, and all persons acting by, through, under or in concert with
any of them (collectively, “Releasees”), or any of them, individually and in their official
capacities, from any and all complaints, claims, controversies, damages, actions, causes of action,
suits, rights, demands, costs,

19

 

losses, debts and expenses (including attorneys’ fees and costs actually incurred), of any
nature whatsoever, known or unknown, from the beginning of time until the date thereof, arising out
of or in any manner relating to Employee’s employment and separation of employment (other than
Employee’s vested rights, if any, under KBW’s pension plan), against each of the Releasees.

          This waiver and release includes, but is not limited to, any claims Employee may have under
applicable laws for torts, public policy, contracts or employment agreements (whether oral or
written, express or implied) or common law, or under any other federal, state, or local statute,
regulation, rule, ordinance or order which covers or purports to cover or relates to any aspect of
employment and separation of employment (including, but not limited to, discrimination based on
race, sex, age, religion, national origin, sexual orientation, physical, medical or mental
condition, or marital status) under, among other statutes (each as amended), the National Labor
Relations Act; Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act
of 1967; the Civil Rights Acts of 1866 and 1991; Sections 1981 through 1988 of Title 42 of the
United States Code; the Employee Retirement Income Security Act of 1974 (other than with respect to
Employee’s vested rights, if any, under KBW’s pension plan); the Fair Credit Reporting Act; the
Immigration Reform Control Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act
of 1973; the Occupational Safety and Health Act; the Family and Medical Leave Act of 1993; the
Equal Pay Act of 1963; the Older Workers Benefit Protection Act of 1990; the Occupational Safety
and Health Act of 1970; the Sarbanes-Oxley Act of 2002; the Uniformed Services Employment and
Reemployment Rights Act; the Worker Adjustment and Retraining Notification Act; the Employee
Polygraph Protection Act; the New York State Human Rights Law; the New York State Labor Law and the
New York City Human Rights Law; and any other similar federal, state and/or local laws.

          5. Notwithstanding anything herein to the contrary, this Agreement does not affect Employee’s
right to file a charge or complaint with any state, local or federal agency or to participate or
cooperate in such a matter. Employee further acknowledges that Employee is not entitled to, and
hereby waives any right to, monetary damages or other personal recovery resulting from actions
brought by state, local or federal agencies (including with respect to charges or complaints filed
by Employee with respect to matters arising out of or relating to Employee’s employment and
separation of employment).

          6. In the course of Employee’s employment with KBW prior to the date hereof, Employee may have
had access to confidential and proprietary information and records, data and other trade secrets of
KBW (“Confidential Information”). Confidential Information shall include, without limitation, the
following types of information or material, both existing and contemplated, regarding KBW or its
parents, subsidiaries or affiliated companies or related entities: corporate information,
including plans, strategies, policies, resolutions and any litigation or negotiations;
marketing information, including strategies, methods, current or prospective customer
lists, market research data; financial information, including cost and performance data,
debt arrangement, equity structure, investors and holdings; and personnel information,
including personnel lists, resumes, personnel data, organizational structure, compensation
structure and performance evaluations. Employee shall not directly or indirectly disclose
Confidential Information to any person or entity or use any Confidential Information in any way.
For purposes of this paragraph, Confidential Information does not include any information that
becomes public other than through Employee’s breach of this paragraph, or any information or other
rights that Employee had or owned prior to employment with KBW.

20

 

          7. Employee acknowledges that the terms of this Agreement and all discussions relating to it
are confidential and agrees that Employee will not divulge the terms of this Agreement to any third
party, except Employee’s immediate family, financial advisor, attorney or as required by court
order or as otherwise required by law.

          8. This Agreement shall be governed by, and interpreted and construed in accordance with, the
laws of the State of New York, and any claims relating to this Agreement, Employee’s employment or
separation thereof must be brought in a state or federal court located in New York City. The
parties hereby waive any objection either may have to the jurisdiction of, or venue in, such court,
including without limitation the objection that such forum is inconvenient.

          9. Employee agrees not to directly or indirectly take, support, encourage or participate in
any act or attempted act which in any way would damage the reputation of KBW, its parents,
subsidiaries, direct and indirect shareholders, affiliated companies or related entities, and their
respective shareholders, directors, officers and employees. Nothing in this paragraph is intended
to prohibit Employee from bringing an action to challenge the enforceability of the waiver and
release (contained in paragraph 4 above) pursuant to the federal Older Worker Benefit Protection
Act.

          10. Nothing contained in this Agreement nor the fact that the parties have signed this
Agreement shall be considered an admission by either party.

          11. Employee agrees that Employee will cooperate in any legal disputes, proceedings or
business matters relating to issues or incidents which took place during Employee’s term of
employment. Such cooperation may include appearances in court or discovery proceedings.
Employee’s reasonable and pre-approved out-of-pocket expenses incurred in connection therewith
shall be reimbursed by KBW. Such expenses, however, will not include reimbursement for lost wages
or attorney’s fees and costs. KBW will provide Employee with reasonable notice whenever possible
of the need for Employee’s cooperation.

          12. In the event of any breach by Employee of any provision of this Agreement, including,
without limitation, paragraphs 4, 6, 7 and 9 hereof, KBW shall be entitled to seek a decree of
specific performance and/or injunctive relief against Employee (without the necessity of proving
actual damages or posting a bond or other security). Such remedy, however, shall be cumulative and
non-exclusive and shall be in addition to any other remedy to which KBW may be entitled.

          13. If any portion of this Agreement is found to be illegal, void or unenforceable but such
portion would be enforceable if some part thereof were deleted or modified, then portion shall
apply with such deletion or modification as is necessary to make it enforceable to the fullest
extent permitted by law. If any such portion (other than the release in paragraph 5) cannot be
deleted or modified to be enforceable, such portion shall be deemed severed from this Agreement and
shall not affect the validity or enforceability of the remainder of this Agreement.

          14. This Agreement contains the entire understanding of the parties relating to the subject
matter hereof, and supersedes any and all previous agreements and plans, whether written or oral,
between Employee and KBW (excluding only any KBW savings and/or pension plan). This Agreement may
be modified only in a document signed by the parties and referring specifically hereto.

21

 

          15. Since Employee’s execution of this Agreement waives and releases the Releasees from all
claims Employee may have, Employee should review this Agreement carefully and is advised to consult
with an attorney before signing it. Employee represents and warrants that Employee is fully
competent to enter into this Agreement and acknowledges that Employee has been afforded the
opportunity to review this Agreement for at least twenty-one (21) calendar days, that Employee has
consulted with, or had a reasonable opportunity to consult with, Employee’s attorney prior to
executing this Agreement, that Employee has read completely, and fully understands the terms of
this Agreement, and that Employee has signed this Agreement freely and voluntarily. Employee
agrees that any changes, whether material or not, to this Agreement will not restart the twenty-one
(21) calendar day period set forth above.

          Employee further acknowledges that Employee has the opportunity to revoke this Agreement
within seven (7) calendar days of signing it and that, if Employee revokes this Agreement, Employee
will not be entitled to the Severance Payment and other benefits provided in this Agreement (other
than those provided for in paragraph 1 above). Employee understands that if Employee does revoke
this Agreement, Employee must deliver written notice to Elise Johnson via email at
ejohnson@kbw.com AND via facsimile at 212-247-9479. To be effective, such revocation must
be received by Elise Runck no later than 11:59 p.m. (New York City time) on the seventh
(7th) calendar day following the execution by Employee of this Agreement.

          This Agreement was first provided to Employee on                                         , [          
          ]. To receive the
Severance Payment and other benefits described above, Employee must sign and return this Agreement
no later than                                         , [                    ]. This Agreement should be returned to Elise Runck,
                                        , Keefe, Bruyette & Woods, Inc.,                                    
     ,
                                                             .

          PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. To
signify the parties’ agreement to the terms of this Agreement, the parties have executed this
Agreement on the date set forth opposite their signatures which appear below.

	 	 	 	 	 	 	 	 	 	 	 
	[EMPLOYEE’S NAME]	 	 	 	KEEFE, BRUYETTE & WOODS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

22

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