Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

AGREEMENT by and between KBW, Inc. (the “Company”)
and Andrew M. Senchak (the “Executive”), dated as of the 1st of November,
2006.

 

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.

 

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.

 

(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 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 

 

2

 

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 

 

(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:

 

3

 

(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) 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.

 

4

 

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”); 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 

 

5

 

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”).

 

Notwithstanding the foregoing provisions of this
Section 4(a), to the extent required in order to comply with Section 409A of
the Internal Revenue Code of 1986, as amended (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 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 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.

 

6

 

(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, 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

 

7

 

payable hereunder, if applicable, shall be
made by first reducing the payments under Section 4(a)(i)(C), unless an alternative
method of reduction is elected by the Executive, and in any event shall be made
in such a manner as to maximize the Value (as defined below) of all Payments
actually made to the Executive.  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 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 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.  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,

 

8

 

(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
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.

 

9

 

(e)           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:

 

(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.

 

(g)           “Value” of a Payment shall mean the economic present
value of a Payment as of the date of the change of control for purposes of
Section 280G of the Code, as determined by the Accounting Firm using the
discount rate required by Section 280G(d)(4) 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 

 

10

 

(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 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 

 

11

 

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 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 

 

12

 

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 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.

 

13

 

(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.

 

(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.

 

(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.

 

 

[Remainder of page
intentionally left blank]

 

14

 

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

  	
   

  
				

 

15Exhibit 10.4

 

KBW, INC.

2006 INCENTIVE PLAN

 

SECTION
1.                 Purpose; Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

SECTION
2.                 Administration

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

(ix)           to otherwise administer the Plan.

 

(b)           Procedures.

 

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

 

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

 

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

 

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

 

5

 

SECTION
3.                 Common Stock Subject to
Plan

 

(a)           Maximum Number of
Shares. The maximum
number of Shares that may be delivered pursuant to Awards under the Plan shall
be 6,150,000.

 

(b)           Rules for Calculating
Shares Delivered.

 

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

 

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

 

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

 

6

 

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

 

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

 

SECTION
4.                 Eligibility

 

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

 

SECTION
5.                 Options and Stock
Appreciation Rights

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION
6.                 Restricted Stock

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

SECTION
7.                 Stock Units

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

SECTION
8.                 Other Equity-Based
Awards

 

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

 

SECTION
9.                 Change in Control
Provisions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

SECTION
10.               Section 16(b)

 

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

 

SECTION
11.               Section 409A of the Code

 

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

 

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

 

15

 

SECTION
12.               Term, Amendment and
Termination

 

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

 

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

 

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

 

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

 

SECTION
13.               Unfunded Status of Plan

 

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

 

SECTION
14.               General Provisions

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]