Document:

Unassociated Document

    Exhibit 10.1

     

    

      KBW,
INC. 2009 INCENTIVE COMPENSATION PLAN

       

      KBW,
Inc., a Delaware corporation (the “Company”), has
adopted the KBW, Inc. 2009 Incentive Compensation Plan (the “Plan”) for the
benefit of non-employee directors of the Company, officers and eligible
employees and consultants of the Company and any Subsidiaries and Affiliates (as
each term defined below) as follows:

       

      ARTICLE
I.

      ESTABLISHMENT; PURPOSES; AND
DURATION

       

      1.1. Establishment of the
Plan.  The Company hereby establishes this incentive
compensation plan to be known as the “KBW, Inc. 2009 Incentive Compensation
Plan,” as set forth in this document.  The Plan permits the grant
of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance
Shares, Cash-Based Awards and Other Stock-Based Awards.  Following
adoption of the Plan by the Board of Directors, the Plan shall become effective
upon the date on which the Plan is approved by the stockholders of the Company
(the “Effective
Date”), which approval must occur within the period ending twelve (12)
months after the date the Plan is adopted by the Board.  The Plan
shall remain in effect as provided in Section 1.3.

       

      1.2. Purposes of the
Plan.  The purposes of the Plan are to provide additional
incentives to non-employee directors of the Company and to those officers,
employees and consultants of the Company, Subsidiaries and Affiliates whose
substantial contributions are essential to the continued growth and success of
the business of the Company and the Subsidiaries and Affiliates, in order to
strengthen their commitment to the Company and the Subsidiaries and Affiliates,
and to attract and retain competent and dedicated individuals whose efforts will
result in the long-term growth and profitability of the Company and to further
align the interests of such non-employee directors, officers, employees and
consultants with the interests of the stockholders of the Company.  To
accomplish such purposes, the Plan provides that the Company may grant
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares,
Cash-Based Awards and Other Stock-Based Awards.

       

      1.3. Duration of the
Plan.  The Plan shall commence on the Effective Date and shall
remain in effect, subject to the right of the Board of Directors to amend or
terminate the Plan at any time pursuant to Article XVI, until all Shares
subject to it shall have been delivered, and any restrictions on such Shares
have lapsed, pursuant to the Plan’s provisions.  However, in no event
may an Award be granted under the Plan on or after ten years from the Effective
Date.

       

      ARTICLE
II.

      DEFINITIONS

       

      Certain
terms used herein have the 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:

       

      2.1. “Affiliate” means any
entity other than the Company and any Subsidiary that is affiliated with the
Company through stock or equity ownership or otherwise and is designated as an
Affiliate for purposes of the Plan by the Committee.

       

      2.2. “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.

       

      2.3. “Award” means,
individually or collectively, a grant under the Plan of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Restricted Stock Units, Performance Shares, Performance Units,
Cash-Based Awards, and Other Stock-Based Awards. 

       

      2.4. “Award Agreement”
means either: (a) a written agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award
granted under the Plan, or (b) a written or electronic statement issued by the
Company to a Participant describing the terms and provisions of such Award,
including any amendment or modification thereof.  The Committee may
provide for the use of electronic, internet or other non-paper Award Agreements,
and the use of electronic, internet or other non-paper means for the acceptance
thereof and actions thereunder by a Participant.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.5. “Board” or “Board of Directors”
means the Board of Directors of the Company.

       

      2.6. “Cash-Based Award”
means an Award, whose value is determined by the Committee, granted to a
Participant, as described in Article IX.

       

      2.7. “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 a Subsidiary or Affiliate or that legally
prohibits the Participant from working for the Company or any Subsidiary or
Affiliate; (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 the Subsidiaries and 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 or any Subsidiary or
Affiliate in any material respect, or (3) to follow specific reasonable
directions received from the Company or any Subsidiary or Affiliate; 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.  Any
determination by the Committee as to whether “Cause” exists shall be subject to
de novo
review.

       

      2.8. “Change in Control”
means the occurrence of any of the following:

       

      (a) 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 2.8, the following acquisitions shall not constitute a
Change in Control:  (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary or Affiliate or (iv) any acquisition by any corporation pursuant to a
transaction that complies with Sections 2.8(c)(3)(A), 2.8(c)(3)(B) and
2.8(c)(3)(C);

       

      (b) 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 the 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;

       

      (c) Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any Subsidiary, 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
Subsidiary (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) at least
a majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the 

       

       

      
        
          
          

        

        
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      Incumbent
Board at the time of the execution of the initial agreement or of the action of
the Board providing for such Business Combination; or

       

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

       

      2.9. “Change in Control
Price” means the price per share offered in respect of the Common Stock
in conjunction with any transaction resulting in a Change in Control on a
fully-diluted basis (as determined by the Board or the Committee as constituted
before the Change in Control, if any part of the offered price is payable other
than in cash) or, in the case of a Change in Control occurring solely by reason
of a change in the composition of the Board, the highest Fair Market Value of a
Share on any of the 30 trading days immediately preceding the date on which a
Change in Control occurs.

       

      2.10. “Code” means the
Internal Revenue Code of 1986, as it may be amended from time to time, including
rules and regulations promulgated thereunder and successor provisions and rules
and regulations thereto.

       

      2.11. “Committee” means the
Compensation Committee of the Board of Directors or a subcommittee thereof, or
such other committee designated by the Board to administer the
Plan.

       

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

       

      2.13. “Consultant” means a
consultant, advisor or other independent contractor who is a natural person and
performs services for the Company or a Subsidiary or Affiliate in a capacity
other than as an Employee or Director.

       

      2.14. “Covered Employee”
means any Participant who the Committee determines is at the Grant Date of an
Award granted to such Participant, or may be as of the end of the taxable year
in which the Company or a Subsidiary would claim a tax deduction in connection
with such Award, a “covered employee” within the meaning of Section 162(m) of
the Code, and successor provisions. 

       

      2.15. “Director” means any
individual who is a member of the Board of Directors of the
Company.

       

      2.16. “Disability” means (i)
“Disability” as defined in the applicable Award Agreement, or 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, or a Subsidiary’s or Affiliate’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.

       

      2.17. “Disaffiliation” means
a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any
reason (including as a result of a public offering, or a spin-off or sale by the
Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of
the Company or a Subsidiary or Affiliate.

       

      2.18. “Dividend Equivalents”
means the equivalent value (in cash or Shares) of dividends that would otherwise
be paid on the Shares subject to an Award but that have not been issued or
delivered, as described in Article XI.

       

      2.19. “Effective Date” shall
have the meaning ascribed to such term in Section 1.1.

       

      2.20. “Eligible Individual”
means any Employee, Non-Employee Director or Consultant, and any prospective
Employee and Consultant who has accepted an offer of employment or consultancy
from the Company or any Subsidiary or Affiliate.

       

      2.21. “Employee” means any
person designated as an employee of the Company, a Subsidiary and/or an
Affiliate on the payroll records thereof.  An Employee shall not
include any individual during any period he or she is classified or treated by
the Company, a Subsidiary or an Affiliate as an independent contractor, a
consultant, or any employee of an employment, consulting, or temporary agency or
any other entity other than the Company, a Subsidiary and/or an Affiliate
without regard to whether such individual is subsequently determined to have
been, or is subsequently retroactively reclassified as a common-law employee of
the Company, a Subsidiary and/or an Affiliate during such period.  For
the avoidance of doubt, a Director who would otherwise be an “Employee” within
the meaning of this Section 2.20 shall be considered an Employee for purposes of
the Plan.

       

      2.22. “Exchange Act” means
the Securities Exchange Act of 1934, as it may be amended from time to time,
including the rules and regulations promulgated thereunder and successor
provisions and rules and regulations thereto.

       

       

      
        
          
          

        

        
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      2.23. “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 are
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.

       

      2.24. “Fiscal Year” means
the calendar year, or such other consecutive twelve-month period as the
Committee may select.

       

      2.25. “Freestanding SAR”
means an SAR that is granted independently of any Options, as described in
Article VII.

       

      2.26. “Good Reason” means,
unless otherwise provided in an Award Agreement, (i) “Good Reason” 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 Good
Reason:  (A) a material reduction by the Company, a Subsidiary or an
Affiliate in the Participant’s rate of annual base salary from that in effect
immediately prior to the Change in Control; (B) a material reduction by the
Company or a Subsidiary or Affiliate in the Participant’s annual target bonus
opportunity from that in effect immediately prior to the Change in Control; or
(C) the Company, a Subsidiary or an Affiliate requires the Participant to change
the Participant’s principal location of work to a location that is in excess of
fifty (50) miles from the location thereof immediately prior to the Change in
Control.  Notwithstanding the foregoing, a Termination of a
Participant for Good Reason shall not have occurred unless (i) the Participant
gives written notice to the Company, a Subsidiary or an Affiliate, as
applicable, of Termination within thirty (30) days after the Participant first
becomes aware of the occurrence of the circumstances constituting Good Reason,
specifying in reasonable detail the circumstances constituting Good Reason, and
(ii) the Company, the Subsidiary or the Affiliate, as the case may be, has
failed within thirty (30) days after receipt of such notice to cure the
circumstances constituting Good Reason.

       

      2.27. “Grant Date” means (a)
the date on which the Committee (or its designee) by resolution, written consent
or other appropriate action selects an Eligible Individual to receive a grant of
an Award, determines the number of Shares or other amount to be subject to such
Award and, if applicable, determines the Option Price or Grant Price of such
Award, or (b) such later date as the Committee (or such designee) shall provide
in such resolution, consent or action.

       

      2.28. “Grant Price” means
the price established as of the Grant Date of an SAR pursuant to Article VII
used to determine whether there is any payment due upon exercise of the
SAR.

       

      2.29. “Incentive Stock
Option” or “ISO” means a right to
purchase Shares under the Plan in accordance with the terms and conditions set
forth in Article VI and which is designated as an Incentive Stock Option and
which is intended to meet the requirements of Section 422 of the
Code.

       

      2.30. “Individual Agreement”
means an employment, change of control, consulting or similar agreement between
a Participant and the Company, a Subsidiary or an Affiliate that is in effect as
of the Grant Date of an Award hereunder.

       

      2.31. “Insider” means an
individual who is, on the relevant date, an officer, director or ten percent
(10%) beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of any class of the Company’s equity securities that is registered
pursuant to Section 12 of the Exchange Act, as determined by the Committee in
accordance with Section 16 of the Exchange Act.

       

      2.32. “New Employer” means,
after a Change in Control, a Participant’s employer, or any direct or indirect
parent or any direct or indirect majority-owned subsidiary of such
employer.

       

      2.33. “Non-Employee
Director” means a Director who is not an Employee.

       

      2.34. “Nonqualified Stock
Option” or “NQSO” means a right
to purchase Shares under the Plan in accordance with the terms and conditions
set forth in Article VI and which is not intended to meet the requirements of
Section 422 of the Code or otherwise does not meet such
requirements.

       

      2.35. “Notice” means notice
provided by a Participant to the Company in a manner prescribed by the
Committee.

       

       

      
        
          
          

        

        
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      2.36. “Option” or “Stock Option” means
an Incentive Stock Option or a Nonqualified Stock Option, as described in
Article VI.

       

      2.37. “Option Price” means
the price at which a Share may be purchased by a Participant pursuant to an
Option.

       

      2.38. “Other Stock-Based
Award” means an equity-based or equity-related Award described in Section
10.1, granted in accordance with the terms and conditions set forth in Article
X.

       

      2.39. “Participant” means
any eligible individual as set forth in Article V who holds one or more
outstanding Awards.

       

      2.40. “Performance-Based
Compensation” means compensation under an Award that is intended to
satisfy the requirements of Code Section 162(m) for certain performance-based
compensation paid to Covered Employees.  Notwithstanding the
foregoing, nothing in the Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for any other
purpose, such as Code Section 409A.

       

      2.41. “Performance Measure” means any
performance criteria or measures as described in Section 12.1 on which the
performance goals described in Article XII are based and which are approved by
the Company’s shareholders pursuant to the Plan in order to qualify certain
Awards as Performance-Based Compensation in accordance with Article
XII.

       

      2.42. “Performance Period”
means the period of time during which the performance goals must be met in order
to determine the degree of payout and/or vesting with respect to, or the amount
or entitlement to, an Award.

       

      2.43. “Performance Share”
means an Award granted pursuant to Article IX of a contractual right to receive
a payment equal to (a) the Fair Market Value of a Share on a date specified by
the Committee to the extent applicable performance goals are achieved in
accordance with Article IX or (b) the Change in Control Price in accordance with
Article XV.

       

      2.44. “Performance Unit”
means a fixed or variable dollar denominated unit granted pursuant to Article
IX, the value of which is determined by the Committee, payable, in whole or in
part, to the extent applicable performance goals are achieved in accordance with
Article IX.

       

      2.45. “Period of
Restriction” means the period during which Shares of Restricted Stock or
Restricted Stock Units are subject to a substantial risk of forfeiture, and, in
the case of Restricted Stock, the transfer of Shares of Restricted Stock is
limited in some way, as provided in Article VIII.

       

      2.46. “Restricted Stock”
means an Award granted to a Participant, subject to the Period of Restriction,
pursuant to Article VIII.

       

      2.47. “Restricted Stock
Unit” means an Award, whose value is equal to a Share, granted to a
Participant, subject to the Period of Restriction, pursuant to Article
VIII.

       

      2.48. “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,
a Subsidiary or an Affiliate.

       

      2.49. “Rule 16b-3” means
Rule 16b-3 under the Exchange Act, or any successor rule, as the same may be
amended from time to time.

       

      2.50. “SEC” means the
Securities and Exchange Commission.

       

      2.51. “Securities Act” means
the Securities Act of 1933, as it may be amended from time to time, including
the rules and regulations promulgated thereunder and successor provisions and
rules and regulations thereto.

       

      2.52. “Share” means a share
of Common Stock (including any new, additional or different stock or securities
resulting from any change in corporate capitalization as listed in Section
4.4).

       

       

      
        
          
          

        

        
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      2.53. “Stock Appreciation
Right” or “SAR” means an Award,
granted alone (a “Freestanding SAR”) or
in connection with a related Option (a “Tandem SAR”),
designated as an SAR, pursuant to the terms of Article VII.

       

      2.54. “Subsidiary” means any
present or future corporation which is or would be a “subsidiary corporation” of
the Company as the term is defined in Section 424(f) of the Code.

       

      2.55. “Substitute Awards”
means Awards granted or Shares issued by the Company in assumption of, or in
substitution or exchange for, options or other awards previously granted, or the
right or obligation to grant future options or other awards, by a company
acquired by the Company, a Subsidiary and/or an Affiliate or with which the
Company, a Subsidiary and/or an Affiliate combines, or otherwise in connection
with any merger, consolidation, acquisition of property or stock, or
reorganization involving the Company, a Subsidiary or an Affiliate, including a
transaction described in Code Section 424(a).

       

      2.56. “Termination” means
the termination of the applicable Participant’s employment with, or performance
of services for, the Company or any Affiliate or Subsidiary under any
circumstances.  Unless otherwise determined by the Committee, if a
Participant’s employment  with the Company or a Subsidiary or
Affiliate terminates, but such Participant continues to provide services to the
Company or a Subsidiary or Affiliate in a non-employee capacity, such change in
status shall not be deemed a Termination, except pursuant to limitations
applicable to ISOs under the Code.  A Participant employed by, or
performing services for, a Subsidiary or Affiliate or a division of the Company
or of a Subsidiary or Affiliate shall be deemed to incur a Termination if, as a
result of a Disaffiliation, such Subsidiary, Affiliate or division ceases to be
a Subsidiary or Affiliate or such a 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.  

       

      ARTICLE
III.

      ADMINISTRATION

       

      3.1. General.  The
Committee shall have exclusive authority to operate, manage and administer the
Plan in accordance with its terms and conditions.  Notwithstanding the
foregoing, in its absolute discretion, the Board may at any time and from time
to time exercise any and all rights, duties and responsibilities of the
Committee under the Plan, including establishing procedures to be followed by
the Committee, but excluding matters which under any applicable law, regulation
or rule, including any exemptive rule under Section 16 of the Exchange Act
(including Rule 16b-3), are required to be determined in the sole discretion of
the Committee.  If and to the extent that the Committee does not exist
or cannot function, the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee, subject to the limitations set
forth in the immediately preceding sentence.

       

      3.2. Committee.  The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors.  The Committee
shall consist of not less than two (2) non-employee members of the Board, each
of whom satisfies such criteria of independence as the Board may establish and
such additional regulatory or listing requirements as the Board may determine to
be applicable or appropriate.  Appointment of Committee members shall
be effective upon their acceptance of such appointment.  Committee
members may be removed by the Board at any time either with or without cause,
and such members may resign at any time by delivering notice thereof to the
Board.  Any vacancy on the Committee, whether due to action of the
Board or any other reason, shall be filled by the Board.  The
Committee shall keep minutes of its meetings.  A majority of the
Committee shall constitute a quorum and a majority of a quorum may authorize any
action.  Any decision reduced to writing and signed by a majority of
the members of the Committee shall be fully effective as if it has been made at
a meeting duly held.

       

      3.3. Authority of the
Committee.  The Committee shall have full discretionary
authority to grant, pursuant to the terms of the Plan, Awards to those
individuals who are eligible to receive Awards under the Plan.  Except
as limited by law or by the Certificate of Incorporation or By-Laws of the
Company, and subject to the provisions herein, the Committee shall have full
power, in accordance with the other terms and provisions of the Plan,
to:

       

      (a) select
Eligible Individuals who may receive Awards under the Plan and become
Participants;

       

      (b) determine
eligibility for participation in the Plan and decide all questions concerning
eligibility for, and the amount of, Awards under the Plan;

       

      (c) determine
the sizes and types of Awards;

       

       

      
        
          
          

        

        
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      (d) determine
the terms and conditions of Awards, including the Option Prices of Options and
the Grant Prices of SARs;

       

      (e) grant
Awards as an alternative to, or as the form of payment for grants or rights
earned or payable under, other bonus or compensation plans, arrangements or
policies of the Company or a Subsidiary or Affiliate;

       

      (f) grant
Substitute Awards on such terms and conditions as the Committee may prescribe,
subject to compliance with the ISO rules under Code Section 422 and the
nonqualified deferred compensation rules under Code Section 409A, where
applicable;

       

      (g) make all
determinations under the Plan concerning Termination of any Participant’s
employment or service with the Company or a Subsidiary or Affiliate, including
whether such Termination occurs by reason of Cause, Good Reason, Disability,
Retirement or in connection with a Change in Control, and whether a leave
constitutes a Termination;

       

      (h) determine
whether a Change in Control shall have occurred;

       

      (i) construe
and interpret the Plan and any agreement or instru­ment entered into under
the Plan, including any Award Agreement;

       

      (j) establish
and administer any terms, conditions, restrictions, limitations, forfeiture,
vesting or exercise schedule, and other provisions of or relating to any
Award;

       

      (k) establish
and administer any performance goals in connection with any Awards, including
related Performance Measures or other performance criteria and applicable
Performance Periods, determine the extent to which any performance goals and/or
other terms and conditions of an Award are attained or are not attained, and
certify whether, and to what extent, any such performance goals and other
material terms applicable to Awards intended to qualify as Performance-Based
Compensation were in fact satisfied;

       

      (l) construe
any ambiguous provisions, correct any defects, supply any omissions and
reconcile any inconsistencies in the Plan and/or any Award Agreement or any
other instrument relating to any Awards;

       

      (m) establish,
adopt, amend, waive and/or rescind rules, regulations, procedures, guidelines,
forms and/or instruments for the Plan’s operation or
administration;

       

      (n) make all
valuation determinations relating to Awards and the payment or settlement
thereof;

       

      (o) grant
waivers of terms, conditions, restrictions and limitations under the Plan or
applicable to any Award, or accelerate the vesting or exercisability of any
Award;

       

      (p) amend or
adjust the terms and conditions of any outstanding Award and/or adjust the
number and/or class of shares of stock subject to any outstanding
Award;

       

      (q) at any
time and from time to time after the granting of an Award, specify such
additional terms, conditions and restrictions with respect to such Award as may
be deemed necessary or appropriate to ensure compliance with any and all
applicable laws or rules, including terms, restrictions and conditions for
compliance with applicable securities laws or listing rules, methods of
withholding or providing for the payment of required taxes and restrictions
regarding a Participant’s ability to exercise Options through a cashless
(broker-assisted) exercise;

       

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

       

      (s) exercise
all such other authorities, take all such other actions and make all such other
determinations as it deems necessary or advisable for the proper operation
and/or administration of the Plan.

       

      3.4. Award
Agreements.  The Committee shall, subject to applicable laws
and rules, determine the date an Award is granted.  Each Award shall
be evidenced by an Award Agreement; however, two or more
Awards granted to a single Participant may 

       

       

      
        
          
          

        

        
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      be
combined in a single Award Agreement.  An Award Agreement shall not be
a precondition to the granting of an Award; provided, however, that (a) the
Committee may, but need not, require as a condition to any Award Agreement’s
effectiveness, that such Award Agreement be executed on behalf of the Company
and/or by the Participant to whom the Award evidenced thereby shall have been
granted (including by electronic signature or other electronic indication of
acceptance), and such executed Award Agreement be delivered to the Company, and
(b) no person shall have any rights under any Award unless and until the
Participant to whom such Award shall have been granted has complied with the
applicable terms and conditions of the Award.  The Committee shall
prescribe the form of all Award Agreements, and, subject to the terms and
conditions of the Plan, shall determine the content of all Award
Agreements.  Subject to the other provisions of the Plan, any Award
Agreement may be supplemented or amended in writing from time to time as
approved by the Committee; provided that the
terms and conditions of any such Award Agreement as supplemented or amended are
not inconsistent with the provisions of the Plan.  In the event of any
dispute or discrepancy concerning the terms of an Award, the records of the
Committee or its designee shall be determinative.

       

      3.5. Discretionary Authority;
Decisions Binding.  The Committee shall have full discretionary
authority in all matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan.  All determinations,
decisions, actions and interpretations by the Committee with respect to the Plan
and any Award Agreement, and all related orders and resolutions of the Committee
shall be final, conclusive and binding on all Participants, the Company and its
stockholders, any Subsidiary or Affiliate and all persons having or claiming to
have any right or interest in or under the Plan and/or any Award
Agreement.  The Committee shall consider such factors as it deems
relevant to making or taking such decisions, determinations, actions and
interpretations, including the recommendations or advice of any Director or
officer or employee of the Company, any director, officer or employee of a
Subsidiary or Affiliate and such attorneys, consultants and accountants as the
Committee may select.  A Participant or other holder of an Award may
contest a decision or action by the Committee with respect to such person or
Award only on the grounds that such decision or action was arbitrary or
capricious or was unlawful, and any review of such decision or action shall be
limited to determining whether the Committee’s decision or action was arbitrary
or capricious or was unlawful.

       

      3.6. Attorneys;
Consultants.  The Committee may consult with counsel who may be
counsel to the Company.  The Committee may, with the approval of the
Board, employ such other attorneys and/or consultants, accountants, appraisers,
brokers, agents and other persons, any of whom may be an Eligible Individual, as
the Committee deems necessary or appropriate.  The Committee, the
Company and its officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons.  The Committee
shall not incur any liability for any action taken in good faith in reliance
upon the advice of such counsel or other persons.

       

      3.7. Delegation of
Administration.  Except to the extent prohibited by applicable
law, including any applicable exemptive rule under Section 16 of the Exchange
Act (including Rule 16b-3), or the applicable rules of a stock exchange, the
Committee may, in its discretion, allocate all or any portion of its
responsibilities and powers under this Article III to any one or more of its
members and/or delegate all or any part of its responsibilities and powers under
this Article III to any person or persons selected by it; provided, however, that the
Committee may not (a) delegate to any executive officer of the Company or an
Affiliate, or a committee that includes any such executive officer, the
Committee’s authority to grant Awards, or the Committee’s authority otherwise
concerning Awards, awarded to executive officers of the Company or an Affiliate;
(b) delegate the Committee’s authority to grant Awards to consultants unless any
such Award is subject to approval by the Committee; or (c) delegate its
authority to correct defects, omissions or inconsistencies in the
Plan.  Any such authority delegated or allocated by the Committee
under this Section 3.7 shall be exercised in accordance with the terms and
conditions of the Plan and any rules, regulations or administrative guidelines
that may from time to time be established by the Committee, and any such
allocation or delegation may be revoked by the Committee at any
time.

       

      ARTICLE
IV.

      SHARES SUBJECT TO THE
PLAN

       

      4.1. Number of Shares Available
for Grants.  The shares of stock subject to Awards granted
under the Plan shall be Shares.  Such Shares subject to the Plan may
be either authorized and unissued shares (which will not be subject to
preemptive rights) or previously issued shares acquired by the Company or any
Subsidiary.  Subject to adjustment as provided in Section 4.4,
the total number of Shares that may be delivered pursuant to Awards under the
Plan shall be 6,641,638 Shares, which includes 641,638 Shares available for
issuance under the KBW, Inc. 2006 Equity Incentive Plan (the “Prior Plan”), as
previously approved by the stockholders of the Company, but not subject to any
outstanding awards under the Prior Plan as of April 13, 2009.  In
addition, up to 4,706,401 Shares subject to outstanding awards under the Prior
Plan as of April 13, 2009 may be delivered pursuant to Awards under the Plan, to
the extent that on or after such date any such awards under the Prior Plan are
forfeited or settled or terminate without a distribution of Shares (whether or
not cash, other awards or other property is distributed with respect to such
awards under the Prior Plan).  From and 

       

       

      
        
          
          

        

        
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      after the
Effective Date, no further grants or awards shall be made under the Prior Plan;
however, grants or awards made under the Prior Plan before the Effective Date
shall continue in effect in accordance with their terms.

       

      4.2. Rules for Calculating Shares
Delivered.  Subject to, in the case of ISOs, any limitations
applicable thereto under the Code, if (a) any Shares are subject to an Option,
SAR, or other Award which for any reason expires or is terminated or canceled
without having been fully exercised or satisfied, or are subject to any
Restricted Stock Award (including any Shares subject to a Participant’s
Restricted Stock Award that are repurchased by the Company at the Participant’s
cost), Restricted Stock Unit Award or other Award granted under the Plan which
are forfeited, or (b) any Award based on Shares is settled for cash, expires or
otherwise terminates without the issuance of such Shares, the Shares subject to
such Award shall, to the extent of any such expiration, termination,
cancellation, forfeiture or cash settlement, be available for delivery in
connection with future Awards under the Plan.  If the Option Price of
any Option and/or tax withholding obligations relating to any Award (or any
award under the Prior Plan) 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 4.1.  To the extent any
Shares subject to an Award (or any award under the Prior Plan) are withheld to
satisfy the Option Price (in the case of an Option) and/or the tax withholding
obligations relating to such Award (or award under the Prior Plan), such Shares
shall not be deemed to have been delivered for purposes of the limits set forth
in Section 4.1.  Upon the exercise of a SAR, only the number of
Shares, if any, issued upon such exercise shall reduce the number of Shares
available for delivery under the Plan.  Any Shares delivered under the
Plan upon exercise or satisfaction of Substitute Awards shall not reduce the
Shares available for delivery under the Plan; provided, however, that the
total number of Shares that may be delivered pursuant to Incentive Stock Options
granted under the Plan shall be the number of Shares set forth in Section 4.1,
as adjusted pursuant to this Section 4.2, but without application of the
foregoing provisions of this sentence.

       

      4.3. Award
Limits.  The following limits shall apply to grants of all
Awards under the Plan:

       

      (a) Options:  The
maximum aggregate number of Shares that may be subject to Options granted in any
Fiscal Year to any one Participant shall be 1,000,000 Shares.

       

      (b) SARs:  The
maximum aggregate number of Shares that may be subject to Stock Appreciation
Rights granted in any Fiscal Year to any one Participant shall be 1,000,000
Shares.  Any Shares covered by Options which include Tandem SARs
granted to one Participant in any Fiscal Year shall reduce this limit on the
number of Shares subject to SARs that can be granted to such Participant in such
Fiscal Year.

       

      (c) Restricted Stock and
Restricted Stock Units:  The maximum aggregate number of Shares
that may be subject to all Awards of Restricted Stock and Restricted Stock Units
granted in any Fiscal Year to any one Participant shall be 1,000,000
Shares.

       

      (d) Performance
Shares:  The maximum aggregate grant with respect to Awards of
Performance Shares granted in any Fiscal Year to any one Participant shall be
1,000,000 Shares.

       

      (e) Performance
Units:  The maximum aggregate amount awarded with respect to
Performance Units made in any Fiscal Year to any one Participant shall not
exceed $10,000,000.

       

      (f) Cash-Based
Awards:  The maximum aggregate amount awarded with respect to
Cash-Based Awards made in any Fiscal Year to any one Participant shall not
exceed $10,000,000.

       

      (g) Other Stock-Based
Awards:  The maximum aggregate grant with respect to Other
Stock-Based Awards made in any Fiscal Year to any one Participant shall be
1,000,000 Shares (or cash amounts based on the Fair Market Value of such number
of Shares on the Grant Date).

       

      To the
extent required by Section 162(m) of the Code, Shares subject to Options or SARs
which are canceled shall continue to be counted against the limits set forth in
paragraphs (a) and (b) immediately preceding.

       

      4.4. Adjustment
Provisions.  In the event of a stock dividend, stock split,
reverse stock split, share combination or exchange, 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, spin-off, split-up, other distribution of stock or property

       

       

      
        
          
          

        

        
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      (including
any extraordinary cash or stock dividend), reorganization, stock rights
offering, liquidation, Disaffiliation, or similar event affecting the Company or
any Subsidiary (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, class and kind of Shares or other securities reserved for issuance and
delivery under the Plan, (B) the number, class and kind of Shares or other
securities subject to outstanding Awards; (C) the Option Price, Grant Price or
other price of securities subject to outstanding Options, Stock Appreciation
Rights and, to the extent applicable, other Awards; and (D) the Award limits set
forth in Section 4.3; provided, however, that the
number of Shares subject to any Award shall always be a whole
number.  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 discretion (it being understood that in the case
of a Corporate Transaction with respect to which holders 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 be equal
to 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 awards based on other property or other securities (including 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).  The Committee shall also make appropriate adjustments
and modifications in the terms of any outstanding Awards to reflect, or related
to, any such events, adjustments, substitutions or changes, including
modifications of performance goals and changes in the length of Performance
Periods, subject to the requirements of Article
XII in the case of Awards intended to qualify as Performance-Based
Compensation.  The Committee shall determine any adjustment,
substitution or change pursuant to this Section 4.4 (a) with respect to an Award
that provides for Performance-Based Compensation consistent with the intent that
such Award qualify for the performance-based compensation exception under
Section 162(m) of the Code, and (b) after taking into account, among other
things, to the extent applicable, the provisions of the Code applicable to
Incentive Stock Options and the provisions of Section 409A of the
Code.  All determinations of the Committee as to adjustments,
substitutions and changes, if any, under this Section 4.4 shall be conclusive
and binding on the Participants.

       

      4.5. No Limitation on Corporate
Actions.  The existence of the Plan and any Awards granted
hereunder shall not affect in any way the right or power of the Company, any
Subsidiary or any Affiliate to make or authorize any adjustment,
recapitalization, reorganization or other change in its capital structure or
business structure, any merger or consolidation, any issuance of debt, preferred
or prior preference stock ahead of or affecting the Shares, additional shares of
capital stock or other securities or subscription rights thereto, any
dissolution or liquidation, any sale or transfer of all or part of its assets or
business or any other corporate act or proceeding.

       

      ARTICLE
V.

      ELIGIBILITY AND
PARTICIPATION

       

      5.1. Eligibility.  Eligible
Individuals shall be eligible to become Participants and receive Awards in
accordance with the terms and conditions of the Plan, subject to the limitations
on the granting of ISOs set forth in Section 6.9(a).

       

      5.2. Actual
Participation.  Subject to the provisions of the Plan, the
Committee may, from time to time, select Participants from all Eligible
Individuals and shall determine the nature and amount of each
Award.

       

      ARTICLE
VI.

      STOCK
OPTIONS

       

      6.1. Grant of
Options.  Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number (subject to Article IV),
and upon such terms, and at any time and from time to time as shall be
determined by the Committee.  The Committee may grant an Option or
provide for the grant of an Option, either from time to time in the discretion
of the Committee or automatically upon the occurrence of specified events,
including the achievement of performance goals, the satisfaction of an event or
condition within the control of the recipient of the Option or within the
control of others.  

       

      6.2. Award
Agreement.  Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the maximum duration of the
Option, the number of Shares to which the Option pertains, the conditions upon
which the Option 

       

       

      
        
          
          

        

        
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      shall
become exercisable and such other provisions as the Committee shall determine,
which are not inconsistent with the terms of the Plan.  The Award
Agreement also shall specify whether the Option is intended to be an ISO or an
NQSO.  To the extent that any Option does not qualify as an ISO
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Option, or the portion thereof which does not so qualify, shall
constitute a separate NQSO.

       

      6.3. Option
Price.  The Option Price for each Option shall be determined by
the Committee and set forth in the Award Agreement; provided that,
subject to Section 6.9(c), the Option Price of an Option shall be not less than
one hundred percent (100%) of the Fair Market Value of a Share on the Grant
Date of such Option; provided further, that
Substitute Awards or Awards granted in connection with an adjustment provided
for in Section 4.4, in the form of stock options, shall have an Option Price per
Share that is intended to maintain the economic value of the Award that was
replaced or adjusted, as determined by the Committee.

       

      6.4. Duration of
Options.  Each Option granted to a Participant shall expire at
such time as the Committee shall determine as of the Grant Date and set forth in
the Award Agreement; provided, however, that no
Incentive Stock Option shall be exercisable later than the tenth (10th)
anniversary of its Grant Date.

       

      6.5. Exercise of
Options.  Options shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance determine and set forth in the Award Agreement, which need not be the
same for each grant or for each Option or Participant.  An Award
Agreement may provide that the period of time over which an Option other than an
ISO may be exercised shall be automatically extended if on the scheduled
expiration date of such Option the Participant’s exercise of such Option would
violate an applicable law; provided, however, that during
such extended exercise period the Option may only be exercised to the extent the
Option was exercisable in accordance with its terms immediately prior to such
scheduled expiration date; provided further, however, that such
extended exercise period shall end not later than thirty (30) days after the
exercise of such Option first would no longer violate such law.

       

      6.6. Payment.  Options
shall be exercised by the delivery of a written notice of exercise to the
Company, in a form specified or accepted by the Committee, or by complying with
any alternative exercise procedures that may be authorized by the Committee,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for such Shares, which shall include
applicable taxes, if any, in accordance with Article XVII.  The Option
Price upon exercise of any Option shall be payable to the Company in full by
certified or bank check or such other instrument as the Committee may
accept.  If approved by the Committee, and subject to any such terms,
conditions and limitations as the Committee may prescribe and to the extent
permitted by applicable law, payment of the Option Price, in full or in part,
may also be made as follows:

       

      (a) Payment
may be made in the form of unrestricted and unencumbered Shares (by actual
delivery of such Shares or by attestation) already owned by the Participant
exercising such Option, or by such Participant and his or her spouse
jointly  (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
such already owned Shares may be authorized only as of the Grant Date of such
Incentive Stock Option and provided further that such
already owned Shares must have been either held by the Participant for at least
six (6) months at the time of exercise or purchased on the open
market.

       

      (b) 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 Option
Price, and, if requested, the amount of any federal, state, local or non-United
States 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.

       

      (c) Payment
may be made by instructing the Committee to withhold a number of Shares
otherwise deliverable to the Participant pursuant to the Option having an
aggregate Fair Market Value on the date of exercise equal to the product
of:  (i) Option Price multiplied by (ii) the number of Shares in
respect of which the Option shall have been exercised.

       

      (d) Payment
may be made by any other method approved or accepted by the Committee in its
discretion.

       

      Subject
to any governing rules or regulations, as soon as practicable after receipt of a
written notifi­cation of exercise and full payment in accordance with the
preceding provisions of this Section 6.6 and satisfaction of tax obligations in
accordance with Article XVII, the Company shall deliver to the Participant
exercising an Option, in the Participant’s name, evidence of book entry Shares,
or, upon the Participant’s request, Share certificates, in an appropriate amount
based upon the number of Shares purchased under the Option, 

       

       

      
        
          
          

        

        
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      subject
to Section 20.9.  Unless otherwise determined by the Committee, all
payments under all of the methods described above shall be paid in United States
dollars.

       

      6.7. Rights as a
Stockholder.  No Participant or other person shall become the
beneficial owner of any Shares subject to an Option, nor have any rights to
dividends or other rights of a stockholder with respect to any such Shares,
until the Participant has actually received such Shares following exercise of
his or her Option in accordance with the provisions of the Plan and the
applicable Award Agreement.

       

      6.8. Termination of Employment or
Service.  The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions on which an Option shall
remain exercisable, if at all, upon a Termination of the
Participant.  The Committee may waive or modify these provisions at
any time.  To the extent that a Participant is not entitled to
exercise an Option at the date of his or her Termination, or if the Participant
(or other person entitled to exercise the Option) does not exercise the Option
to the extent so entitled within the time specified in the Award Agreement or
below (as applicable), effective as of the date of such Termination, the Option
shall terminate and the Shares underlying the unexercised portion of the Option
shall revert to the Plan and become available for future Awards.  In
no event may an Option be exercised after the expiration date of such Option
specified in the applicable Award Agreement, except as provided in the last
sentence of Section 6.5.  Subject to the last sentence of this Section
6.8, a Participant’s Option shall be forfeited upon his or her Termination,
except as set forth below:

       

      (a) Death.  Upon
a Participant’s Termination by reason of death, any Option held by such
Participant that was exercisable immediately before such Termination may be
exercised at any time until the earlier of (A) the first (1st) anniversary of
the date of such death and (B) the expiration date of such Option specified in
the applicable Award Agreement.

       

      (b) Disability.   Upon
a Participant’s Termination by reason of Disability, any Option held by such
Participant that was exercisable immediately before such Termination may be
exercised at any time until the earlier of (A) the third (3rd) anniversary of
such Termination and (B) the expiration date of such Option specified in the
applicable Award Agreement.

       

      (c) Retirement.  Upon
a Participant’s Termination by reason of Retirement, any Option held by such
Participant that was exercisable immediately before such Termination may be
exercised at any time until the earlier of (A) the fifth (5th) anniversary of
such Termination and (B) the expiration date of such Option specified in the
applicable Award Agreement.

       

      (d) Cause.  Upon
a Participant’s Termination for Cause, any Option held by such Participant shall
be forfeited, effective as of such Termination.

       

      (e) Other than Death,
Disability, Retirement or Cause.  Upon a Participant’s
Termination for any reason other than death, Disability, Retirement or for
Cause, any Option held by such Participant that was exercisable immediately
before such Termination may be exercised at any time until the earlier of (A)
the ninetieth (90th) day following  such Termination and (B) the
expiration date of such Option specified in the applicable Award
Agreement.

       

      (f) Death after
Termination.  Notwithstanding the above provisions of this
Section 6.8, if a Participant dies after such Participant’s Termination, but
while his or her Option remains exercisable as set forth above, such Option 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) the expiration date of such Option
specified in the applicable Award Agreement, and (B) the last date on which such
Option would have been exercisable, absent this Section 6.8(f).

       

      Notwithstanding
the foregoing provisions of this Section 6.8, the Committee shall have the
power, in its discretion, to apply different rules concerning the consequences
of a Termination; provided, however, that such
rules shall be set forth in the applicable Award Agreement.

       

      6.9. Limitations on Incentive
Stock Options.

       

      (a) General.  No
ISO shall be granted to any Eligible Individual who is not an Employee of the
Company or a Subsidiary on the Grant Date of such Option.  Any ISO
granted under the Plan shall contain such terms and conditions, consistent with
the Plan, as the Committee may determine to be necessary to qualify such Option
as an “incentive stock option” under Section 422 of the Code.  Any ISO
granted under the Plan may be modified by the Committee to disqualify such
Option from treatment as an “incentive stock option” under Section 422 of the
Code.

       

       

      
        
          
          

        

        
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      (b) $100,000 Per Year
Limitation.  Notwithstanding any intent to grant ISOs, an
Option granted under the Plan will not be considered an ISO to the extent that
it, together with any other “incentive stock options” (within the meaning of
Section 422 of the Code, but without regard to subsection (d) of such Section)
under the Plan and any other “incentive stock option” plans of the Company, any
Subsidiary and any “parent corporation” of the Company within the meaning of
Section 424(e) of the Code, are exercisable for the first time by any
Participant during any calendar year with respect to Shares having an aggregate
Fair Market Value in excess of $100,000 (or such other limit as may be required
by the Code) as of the Grant Date of the Option with respect to such
Shares.  The rule set forth in the preceding sentence shall be applied
by taking Options into account in the order in which they were
granted.

       

      (c) Options Granted to Certain
Stockholders.  No ISO shall be granted to an individual
otherwise eligible to participate in the Plan who owns (within the meaning of
Section 424(d) of the Code), at the Grant Date of such Option is granted, more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or a Subsidiary or any “parent corporation” of the Company
within the meaning of Section 424(e) of the Code.  This restriction
does not apply if at the Grant Date of such ISO the Option Price of the ISO is
at least 110% of the Fair Market Value of a Share on the Grant Date such ISO,
and the ISO by its terms is not exercisable after the expiration of five years
from such Grant Date.

       

      ARTICLE
VII.

      STOCK APPRECIATION
RIGHTS

       

      7.1. Grant of
SARs.  Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee.  The Committee may grant an SAR (a) in
connection with, and at the Grant Date of, a related Option (a Tandem SAR), or
(b) independent of, and unrelated to, an Option (a Freestanding
SAR).  The Committee shall have complete discretion in
determin­ing the number of Shares to which a SAR pertains (subject to
Article IV) and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to any SAR.

       

      7.2. Grant
Price.  The Grant Price for each SAR shall be determined by the
Committee and set forth in the Award Agreement, subject to the limitations of
this Section 7.2.  The Grant Price for each Freestanding SAR shall be
not less than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date of such Freestanding SAR, except in the case of
Substitute Awards or Awards granted in connection with an adjustment provided
for in Section 4.4.  The Grant Price of a Tandem SAR shall be equal to
the Option Price of the related Option.

       

      7.3. Exercise of Tandem
SARs.  Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise
the equivalent portion of the related Option.  A Tandem SAR shall be
exercisable only when and to the extent the related Option is exercisable and
may be exercised only with respect to the Shares for which the related Option is
then exercisable.  A Tandem SAR shall entitle a Participant to elect,
in the manner set forth in the Plan and the applicable Award Agreement, in lieu
of exercising his or her unexercised related Option for all or a portion of the
Shares for which such Option is then exercisable pursuant to its terms, to
surrender such Option to the Company with respect to any or all of such Shares
and to receive from the Company in exchange therefor a payment described in
Section 7.7.  An Option with respect to which a Participant has
elected to exercise a Tandem SAR shall, to the extent of the Shares covered by
such exercise, be canceled automatically and surrendered to the
Company.  Such Option shall thereafter remain exercisable according to
its terms only with respect to the number of Shares as to which it would
otherwise be exercisable, less the number of Shares with respect to which such
Tandem SAR has been so exercised.  Notwithstanding any other provision
of the Plan to the contrary, with respect to a Tandem SAR granted in connection
with an ISO:  (a) the Tandem SAR will expire no later than the
expira­tion of the related ISO; (b) the value of the payment with respect to
the Tandem SAR may not exceed the difference between the Fair Market Value of
the Shares subject to the related ISO at the time the Tandem SAR is exercised
and the Option Price of the related ISO; and (c) the Tandem SAR may be exercised
only when the Fair Market Value of the Shares subject to the ISO exceeds the
Option Price of the ISO.

       

      7.4. Exercise of Freestanding
SARs.  Freestanding SARs may be exercised upon whatever terms
and conditions the Committee, in its sole discretion, in accordance with the
Plan, determines and sets forth in the Award Agreement.  An Agreement
may provide that the period of time over which a Freestanding SAR may be
exercised shall be automatically extended if on the scheduled expiration date of
such SAR the Participant’s exercise of such SAR would violate an applicable law;
provided, however, that during
such extended exercise period the SAR may only be exercised to the extent the
SAR was exercisable in accordance with its terms immediately prior to such
scheduled expiration date; provided further, however, that such
extended exercise period shall end not later than thirty (30) days after the
exercise of such SAR first would no longer violate such law.

       

       

      
        
          
          

        

        
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      7.5. Award
Agreement.  Each SAR grant shall be evidenced by an Award
Agreement that shall specify the number of Shares to which the SAR pertains, the
Grant Price, the term of the SAR, and such other terms and conditions as the
Committee shall determine in accordance with the Plan.

       

      7.6. Term of
SARs.  The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discre­tion; provided, however, that the
term of any Tandem SAR shall be the same as the related Option.

       

      7.7. Payment of SAR
Amount.  An election to exercise SARs shall be deemed to have
been made on the date of Notice of such election to the Company.  As
soon as practicable following such Notice, the Participant shall be entitled to
receive payment from the Company in an amount determined by
multiplying:

       

      (a) The
excess of the Fair Market Value of a Share on the date of exercise over the
Grant Price of the SAR; by

       

      (b) The
number of Shares with respect to which the SAR is exercised.

       

      Notwithstanding
the foregoing provisions of this Section 7.7 to the contrary, the Committee may
establish and set forth in the applicable Award Agreement a maximum amount per
Share that will be payable upon the exercise of a SAR.  At the
discretion of the Committee, such payment upon exercise of a SAR shall be in
cash, in Shares of equivalent Fair Market Value, or in some combination
thereof.

       

      7.8. Rights as a
Stockholder.  A Participant receiving a SAR shall have the
rights of a stockholder only as to Shares, if any, actually issued to such
Participant upon satisfaction or achievement of the terms and conditions of the
Award, and in accordance with the provisions of the Plan and the applicable
Award Agreement, and not with respect to Shares to which such Award relates but
which are not actually issued to such Participant.

       

      7.9. Termination of Employment or
Service.  The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions under which a SAR shall
remain exercisable, if at all, upon a Termination of the Participant; provided, however, that in no
event may a SAR be exercised after the expiration date of such SAR specified in
the applicable Award Agreement, except as provided in the last sentence of
Section 6.5 (in the case of Tandem SARs) or in the last sentence of Section 7.4
(in the case of Freestanding SARs).  The provisions of Section 6.8
above shall apply to any SAR if the Award Agreement evidencing such SAR does not
specify the terms and conditions upon which such SAR shall be forfeited or be
exercisable or  terminate upon, or after, a Termination of the
Participant.

       

      ARTICLE
VIII.              

      RESTRICTED STOCK AND
RESTRICTED STOCK UNITS

       

      8.1. Awards of Restricted Stock
and Restricted Stock Units.  Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock and/or Restricted Stock Units to Participants
in such amounts as the Committee shall determine.  Subject to the
terms and conditions of this Article VIII and the Award Agreement, upon delivery
of Shares of Restricted Stock to a Participant, or creation of a book entry
evidencing a Participant’s ownership of Shares of Restricted Stock, pursuant to
Section 8.6, the Participant shall have all of the rights of a stockholder with
respect to such Shares, subject to the terms and restrictions set forth in this
Article VIII or the applicable Award Agreement or as determined by the
Committee.  Restricted Stock Units shall be similar to Restricted
Stock, except no Shares are actually awarded to a Participant who is granted
Restricted Stock Units on the Grant Date thereof, and such Participant shall
have no rights of a stockholder with respect to such Restricted Stock
Units.

       

      8.2. Award
Agreement.  Each Restricted Stock and/or Restricted Stock Unit
Award shall be evidenced by an Award Agreement that shall specify the Period of
Restriction, the number of Shares of Restricted Stock or the number of
Restricted Stock Units granted, and such other provisions as the Committee shall
determine in accordance with the Plan.  

       

      8.3. Nontransferability of
Restricted Stock.  Except as provided in this Article VIII,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned,
encumbered, alienated, hypothecated or otherwise disposed of until the end of
the applicable Period of Restriction established by the Committee and specified
in the Restricted Stock Award Agreement.

       

       

      
        
          
          

        

        
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      8.4. Period of Restriction and
Other Restrictions.  The Period of Restriction shall lapse
based on a Participant’s continuing service or employment with the Company, a
Subsidiary or an Affiliate, the achievement of performance goals, the
satisfaction of other conditions or restrictions or upon the occurrence of other
events, in each case, as determined by the Committee, at its discretion, and
stated in the Award Agreement.

       

      8.5. Delivery of Shares, Payment
of Restricted Stock Units.  Subject to Section 20.9, after the
last day of the Period of Restriction applicable to a Participant’s Shares of
Restricted Stock, and after all conditions and restrictions applicable to such
Shares of Restricted Stock have been satisfied or lapse (including satisfaction
of any applicable withholding tax obligations), pursuant to the applicable Award
Agreement, such Shares of Restricted Stock shall become freely transferable by
such Participant.  After the last day of the Period of Restriction
applicable to a Participant’s Restricted Stock Units, and after all conditions
and restrictions applicable to Restricted Stock Units have been satisfied or
lapse (including satisfaction of any applicable withholding tax obligations),
pursuant to the applicable Award Agreement, such Restricted Stock Units shall be
settled by delivery of Shares, a cash payment determined by reference to the
then-current Fair Market Value of Shares or a combination of Shares and such
cash payment as the Committee, in its sole discretion, shall determine, either
by the terms of the Award Agreement or otherwise.

       

      8.6. Forms of Restricted Stock
Awards.  Each Participant who receives an Award of Shares of
Restricted Stock shall be issued a stock certificate or certificates evidencing
the Shares covered by such Award registered in the name of such Participant,
which certificate or certificates shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such Award, substantially
in the following form:

       

      “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.
2009 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 a Participant who receives a certificate or certificates
evidencing a Restricted Stock Award to immediately deposit such certificate or
certificates, together with a stock power or other appropriate instrument of
transfer, endorsed in blank by the Participant, with signatures guaranteed in
accordance with the Exchange Act if required by the Committee, with the
Secretary of the Company or an escrow holder as provided in the immediately
following sentence.  The Secretary of the Company or such escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing a Restricted Stock Award until the Period of
Restriction and any other restrictions imposed by the Committee or under the
Award Agreement with respect to the Shares evidenced by such certificate expire
or shall have been removed.  The foregoing to the contrary
notwithstanding, the Committee may, in its discretion, provide that a
Participant’s ownership of Shares of Restricted Stock prior to the lapse of the
Period of Restriction or any other applicable restrictions shall, in lieu of
such certificates, be evidenced by a “book entry” (i.e., a computerized
or manual entry) in the records of the Company or its designated agent in the
name of the Participant who has received such Award.  Such records of
the Company or such agent shall, absent manifest error, be binding on all
Participants who receive Restricted Stock Awards evidenced in such
manner.  The holding of Shares of Restricted Stock by the Company or
such an escrow holder, or the use of book entries to evidence the ownership of
Shares of Restricted Stock, in accordance with this Section 8.6, shall not
affect the rights of Participants as owners of the Shares of Restricted Stock
awarded to them, nor affect the restrictions applicable to such shares under the
Award Agreement or the Plan, including the Period of Restriction.

       

      8.7. Voting
Rights.  Unless otherwise determined by the Committee and set
forth in a Participant’s Award Agreement, to the extent permitted or required by
law, as determined by the Committee, Participants holding Shares of Restricted
Stock shall be granted the right to exercise full voting rights with respect to
those Shares during the Period of Restriction.  A Participant shall
have no voting rights with respect to any Restricted Stock Units.

       

      8.8. Dividends and Other
Distributions.  During the Period of Restriction, Participants
holding Shares of Restricted Stock shall be credited with any cash dividends
paid with respect to such Shares while they are so held, unless determined
otherwise by the Committee and set forth in the Award Agreement.  The
Committee may apply any restrictions to such dividends that the Committee deems
appropriate.  Except as set forth in the Award Agreement, in the event
of (a) any adjustment as provided in Section 4.4, or (b) any shares or
securities are received as a dividend, or an extraordinary dividend is paid in
cash, on Shares of Restricted Stock, any new or additional Shares or securities
or any extraordinary dividends paid in cash received by a recipient of
Restricted Stock shall be subject to the same terms and conditions, including
the Period of Restriction, as relate to the original Shares of Restricted
Stock.

       

      8.9. Termination of Employment or
Service.  Except as otherwise provided in this Section 8.9,
during the Period of Restriction, any Restricted Stock Units and/or Shares of
Restricted Stock held by a Participant shall be forfeited and revert to the
Company (or, if Shares of Restricted Sock were sold to the Participant, the
Participant shall be required to resell such Shares to the Company at cost) upon
the Participant’s Termination or the failure to meet or satisfy any applicable
performance goals or other terms, 

       

       

      
        
          
          

        

        
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      conditions
and restrictions to the extent set forth in the applicable Award
Agreement.  Each applicable Award Agreement shall set forth the extent
to which, if any, the Participant shall have the right to retain Restricted
Stock Units and/or Shares of Restricted Stock, then subject to the Period of
Restriction, following such Participant’s Termination.  Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the applicable Award Agreement, need not be uniform among all such
Awards issued pursuant to the Plan, and may reflect distinctions based on the
reasons for, or circumstances of, such Termination.

       

      ARTICLE
IX.

      PERFORMANCE UNITS,
PERFORMANCE SHARES, AND CASH-BASED AWARDS

       

      9.1. Grant of Performance Units,
Performance Shares and Cash-Based Awards.  Subject to the terms
of the Plan, Performance Units, Performance Shares, and/or Cash-Based
Awards may be granted to Participants in such amounts and upon such terms, and
at any time and from time to time, as shall be determined by the Committee, in
accordance with the Plan.  A Performance Unit, Performance Share or
Cash-Based Award entitles the Participant who receives such Award to receive
Shares or cash upon the attainment of applicable performance goals for the
applicable Performance Period, and/or satisfaction of other terms and
conditions, in each case determined by the Committee, and which may be set forth
in the Award Agreement.  Such entitlements of a Participant with
respect to his or her outstanding Performance Unit, Performance Share or
Cash-Based Award shall be reflected by a bookkeeping entry in the records of the
Company, unless otherwise provided by the Award Agreement.  The terms
and conditions of such Awards shall be consistent with the Plan and set forth in
the Award Agreement and need not be uniform among all such Awards or all
Participants receiving such Awards.

       

      9.2. Earned Performance Shares,
Performance Units and Cash-Based Awards.  Performance Shares,
Performance Units and Cash-Based Awards shall become earned, in whole or in
part, based upon the attainment of performance goals specified by the Committee
and/or the occurrence of any event or events and/or satisfaction of such terms
and conditions, including a Change in Control, as the Committee shall determine,
either at or after the Grant Date.  The Committee shall determine the
extent to which any applicable performance goals and/or other terms and
conditions of a Performance Unit, Performance Share or Cash-Based Award are
attained or not attained following conclusion of the applicable Performance
Period.  The Committee may, in its discretion, waive any such
performance goals and/or other terms and conditions relating to any such Award,
subject to Section 12.3.

       

      9.3. Form and Timing of Payment
of Performance Units, Performance Shares and Cash-Based
Awards.  Payment of earned Performance Units, Performance
Shares and Cash-Based Awards shall be as determined by the Committee and as set
forth in the Award Agreement.  Subject to the terms of the
Plan, the Committee, in its sole discretion, may pay earned Performance
Units, Performance Shares and Cash-Based Awards in the form of cash or in Shares
(or in a combination thereof) which have an aggregate Fair Market Value equal to
the value of the earned Performance Units, Performance Shares or Cash-Based
Awards following conclusion of the Performance Period and the Committee’s
determination of attainment of applicable performance goals and/or other terms
and conditions in accordance with Section 9.2.  Such Shares may be
granted subject to any restrictions that may be imposed by the Committee,
including a Period of Restriction or mandatory deferral.  The
determination of the Committee with respect to the form of payment of such
Awards shall be set forth in the Award Agreement pertaining to the grant of the
Award.

       

      9.4. Rights as a
Stockholder.  A Participant receiving a Performance Unit,
Performance Share or Cash-Based Award shall have the rights of a stockholder
only as to Shares, if any, actually received by the Participant upon
satisfaction or achievement of the terms and conditions of such Award and not
with respect to Shares subject to the Award but not actually issued to such
Participant.

       

      9.5. Termination of Employment or
Service.  Each Award Agreement shall set forth the extent to
which the Participant shall have the right to retain Performance Units,
Performance Shares and/or Cash-Based Award following such Participant’s
Termination.  Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the applicable Award
Agreement, need not be uniform among all such Awards issued pursuant to the
Plan, and may reflect distinctions based on the reasons for
Termination.

       

      ARTICLE
X.

      OTHER STOCK-BASED
AWARDS

       

      10.1. Other Stock-Based
Awards.  The Committee may grant types of equity-based or
equity-related Awards not otherwise described by the terms of the Plan
(including the grant or offer for sale of unrestricted Shares), in such amounts
(subject to Article IV) and subject to such terms and conditions, as the
Committee shall determine. Such Other Stock-Based Awards may involve the
transfer of actual Shares to Participants, or payment in cash or otherwise of
amounts based on the value of Shares and may include Awards designed to comply
with or take advantage of the applicable local laws of jurisdictions other than
the United States.

       

       

      
        
          
          

        

        
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      10.2. Value of Other Stock-Based
Awards. Each Other Stock-Based Award shall be expressed in terms of
Shares or units based on Shares, as determined by the Committee. The Committee
may establish performance goals in its discretion, and any such performance
goals shall be set forth in the applicable Award Agreement. If the Committee
exercises its discretion to establish performance goals, the number and/or value
of Other Stock-Based Awards that will be paid out to the Participant will depend
on the extent to which such performance goals are met.

       

      10.3. Payment of Other Stock-Based
Awards.  Payment, if any, with respect to an Other Stock-Based
Award shall be made in accordance with the terms of the Award, as set forth in
the Award Agreement, in cash, Shares or a combination of cash and Shares, as the
Committee determines.

       

      10.4. Termination of Employment or
Service.  The Committee shall determine the extent to which the
Participant shall have the right to receive Other Stock-Based Awards following
the Participant’s Termination. Such provisions shall be determined in the sole
discretion of the Committee, such provisions may be included in the applicable
Award Agreement, but need not be uniform among all Other Stock-Based Awards
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for Termination.

       

      ARTICLE
XI.

      DIVIDEND
EQUIVALENTS

       

      11.1. Dividend
Equivalents.  Unless otherwise provided by the Committee, no
adjustment shall be made in the Shares issuable or taken into account under
Awards on account of cash dividends that may be paid or other rights that may be
issued to the holders of Shares prior to issuance of such Shares under such
Award.  The Committee may grant Dividend Equivalents based on the
dividends declared on Shares that are subject to any Award, including any Award
the payment or settlement of which is deferred pursuant to Section
20.6.  Dividend Equivalents may be credited as of the dividend payment
dates, during the period between the Grant Date of the Award and the date the
Award becomes payable or terminates or expires.  Dividend Equivalents
may be subject to any limitations and/or restrictions determined by the
Committee. Dividend Equivalents shall be converted to cash or additional Shares
by such formula and at such time, and
shall be paid at such times, as may be determined by the
Committee.

       

      ARTICLE
XII.

      PERFORMANCE
MEASURES

       

      12.1. Performance
Measures.  The objective performance goals upon which the
granting, payment and/or vesting of Awards to Covered Employees that are
intended to qualify as Performance-Based Compensation may occur shall be based
on any one or more of the following Performance Measures selected by the
Committee:

       

      (a) earnings
or income, including operating income or profit or earnings before or after
interest, taxes, depreciation, amortization, certain compensation and benefits
expenses and/or extraordinary or special items;

       

      (b) earnings
per Share (basic or diluted);

       

      (c) book
value per Share;

       

      (d) revenue;

       

      (e) expenses;

       

      (f) total
stockholders’ equity;

       

      (g) return on
assets (gross or net), return on investment, return on capital, or return on
equity;

       

      (h) return on
revenues;

       

      (i) cash
flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations or cash flow in excess of cost of capital;

       

      (j) implementation
or completion of critical projects or processes;

       

      (k) execution
of assignments directly related to an individual Participant;

       

      (l) ratio of
certain compensation and benefits expenses to total revenues or net
revenues;

       

      (m)
economic
value created;

       

       

      
        
          
          

        

        
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      (n) operating
margin or profit margin;

       

      (o) Common
Stock price appreciation or total stockholder return;

       

      (p) cost
targets, reductions and savings, productivity and efficiencies; and

       

      (q) strategic
business criteria, consisting of one or more objectives based on meeting
specified market penetration, geographic business expansion, customer
satisfaction, employee satisfaction, human resources management, supervision of
litigation, information technology, and goals relating to acquisitions,
divestitures, joint ventures and similar transactions and budget
comparisons.

       

      Such performance goals shall be established by the
Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Code Section 162(m)(4)(C), or any successor provision
thereto, and the regulations thereunder, for performance-based compensation, and
may be set forth in the applicable Award Agreement.  Any
Performance Measures may be used to measure the performance of the Company
and/or any Affiliates or Subsidiaries as a whole or any business unit, division,
service or product of the Company, its Affiliates, and/or Subsidiaries or any
combination thereof, over such period or periods, as the Committee may deem
appropriate, or any of the above Performance Measures as compared to the
performance of one or more comparator companies, or published or special index
that the Committee, in its sole discretion, deems appropriate, or the Committee
may select any relevant Performance Measure as compared to any stock market
index or indices, growth rates or trends.

       

      12.2. Evaluation of
Performance.  Notwithstanding any
other provision of the Plan, payment or vesting of any such Award that is
intended to qualify as Performance-Based Compensation shall not be made until the Committee certifies in
writing that the applicable performance goals and any other material terms of
such Award were in fact satisfied, except as otherwise provided in Section 12.3.
The Committee may provide in the Award Agreement with respect to any such
Award that any evaluation of performance shall include or exclude any of the
following events that occur during a Performance Period:  (a) gains or
losses on sales or dispositions, (b) asset write-downs, (c) changes in tax law
or rate, including the impact on deferred tax liabilities, (d) the cumulative
effect of changes in accounting principles, (e) extraordinary items described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial performance appearing in the Company’s Annual Report on
Form 10-K, (f) acquisitions occurring after the start of a Performance Period or
unbudgeted costs incurred related to future acquisitions, (g) operations
discontinued, divested or restructured during the Performance Period, including
severance costs, (h) gains or losses on refinancing or extinguishment of debt,
(i) foreign exchange gains and losses and (j) any similar event or condition
specified in such Award Agreement.  To the extent such inclusions or
exclusions affect Awards to Covered Employees, they shall be prescribed in a
form that meets the requirements of Code Section 162(m) for
deductibility.

       

      12.3. Adjustment of
Performance-Based Compensation.  Notwithstanding any provision
of the Plan to the contrary, with respect to any Award that is intended to
qualify as Performance-Based Compensation, (a) the Committee may adjust
downwards, but not upwards, any amount payable, or other benefits granted,
issued, retained and/or vested pursuant to such an Award on account of
satisfaction of the applicable performance goals on the basis of such further
considerations as the Committee in its discretion shall determine, and (b) the
Committee may not waive the achievement of the applicable performance goals,
except in the case of the Participant’s death or disability or a Change in
Control.

       

      12.4. Committee
Discretion.  In the event that applicable tax and/or
securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval.  In addition, in the event that the Committee
determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting of such Awards on performance measures other than
those set forth in Section 12.1.

       

      ARTICLE
XIII.

      TRANSFERABILITY OF AWARDS;
BENEFICIARY DESIGNATION

       

      13.1. Transferability of Incentive
Stock Options.  No ISO or Tandem SAR granted in connection with
an ISO may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution or
in accordance with Section 13.3. Further, all ISOs and Tandem SARs granted in
connection with ISOs granted to a Participant shall be exercisable during his or
her lifetime only by such Participant.

       

      13.2. All Other
Awards.  Except as otherwise provided in Section 8.5 or Section
13.3 or a Participant’s Award Agreement or otherwise determined at any time by
the Committee, no Award granted under the Plan may be sold, transferred,
pledged, assigned, 

       

       

      
        
          
          

        

        
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      or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution; provided that the
Committee may permit further transferability, on a general or a specific basis,
and may impose conditions and limitations on any permitted transferability, subject to Section 13.1 and any applicable Period of
Restriction; provided further, however, that no Award may be transferred for
value or other consideration without first obtaining approval thereof by the
stockholders of the Company. Further, except as otherwise provided in a
Participant’s Award Agreement or otherwise determined at any time by the
Committee, or unless the Committee decides to permit further transferability,
subject to Section 13.1 and any applicable Period
of Restriction, all Awards granted to a Participant under the Plan, and
all rights with respect to such Awards, shall be exercisable or available during
his or her lifetime only by or to such Participant. With respect to those
Awards, if any, that are permitted to be transferred to another individual,
references in the Plan to exercise or payment related to such Awards by or to
the Participant shall be deemed to include, as determined by the Committee, the
Participant’s permitted transferee.  In the event any Award is
exercised by or otherwise paid to the executors, administrators, heirs or
distributees of the estate of a deceased Participant, or such a Participant’s
beneficiary, or the transferee of an Award, in any such case, pursuant to the
terms and conditions of the Plan and the applicable Agreement and in accordance
with such terms and conditions as may be specified from time to time by the
Committee, the Company shall be under no obligation to issue Shares thereunder
unless and until the Company is satisfied, as determined in the discretion of
the Committee, that the person or persons exercising such Award, or to receive
such payment, are the duly appointed legal representative of the deceased
Participant’s estate or the proper legatees or distributees thereof or the named
beneficiary of such Participant, or the valid transferee of such Award, as
applicable.  Any purported assignment, transfer or encumbrance of an
Award that does not comply with this Section 13.2 shall be void and
unenforceable against the Company.

       

      13.3. Beneficiary
Designation.  Each Participant may, from time to time, name any
beneficiary or beneficiaries who shall be permitted to exercise his or her
Option or SAR or to whom any benefit under the Plan is to be paid in case of the
Participant’s death before he or she fully exercises his or her Option or SAR or
receives any or all of such benefit.  Each such designation
shall revoke all prior designations by the same Participant, shall be in a
form prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant’s
lifetime.  In the absence of any such beneficiary designation, a
Participant’s unexercised Option or SAR, or amounts due but remaining unpaid to
such Participant, at the Participant’s death, shall be exercised or paid as
designated by the Participant by will or by the laws of descent and
distribution.

       

      ARTICLE
XIV.

      RIGHTS OF
PARTICIPANTS

       

      14.1. Rights or
Claims.  No person shall have any rights or claims under the
Plan except in accordance with the provisions of the Plan and any applicable
Award Agreement. The liability of the Company and any Subsidiary or Affiliate
under the Plan is limited to the obligations expressly set forth in the Plan,
and no term or provision of the Plan may be construed to impose any further or
additional duties, obligations, or costs on the Company, any Subsidiary or any
Affiliate thereof or the Board or the Committee not expressly set forth in the
Plan.   The grant of an Award under the Plan shall not confer any
rights upon the Participant holding such Award other than such terms, and
subject to such conditions, as are specified in the Plan as being applicable to
such type of Award, or to all Awards, or as are expressly set forth in the Award
Agreement evidencing such Award.  Without limiting the generality of
the foregoing, neither the existence of the Plan nor anything contained in the
Plan or in any Award Agreement shall be deemed to:

       

      (a) Give any
Eligible Individual the right to be retained in the service of the Company, an
Affiliate and/or a Subsidiary, whether in any particular position, at any
particular rate of compensation, for any particular period of time or
otherwise;

       

      (b) Restrict
in any way the right of the Company, an Affiliate and/or a Subsidiary to
terminate, change or modify any Eligible Individual’s employment
or  service at any time with or without Cause;

       

      (c) Confer on
any Eligible Individual any right of continued relationship with the Company, an
Affiliate and/or a Subsidiary, or alter any relationship between them, including
any right of the Company or an Affiliate or Subsidiary to terminate, change or
modify its relationship with an Eligible Individual;

       

      (d) Constitute
a contract of employment or service between the Company or any Affiliate or
Subsidiary and any Eligible Individual, nor shall it constitute a right to
remain in the employ or service of the Company or any Affiliate or
Subsidiary;

       

       

      
        
          
          

        

        
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      (e) Give any
Eligible Individual the right to receive any bonus, whether payable in cash or
in Shares, or in any combination thereof, from the Company, an Affiliate and/or
a Subsidiary, nor be construed as limiting in any way the right of the Company,
an Affiliate and/or a Subsidiary to determine, in its sole discretion, whether
or not it shall pay any Eligible Individual bonuses, and, if so paid, the amount
thereof and the manner of such payment; or

       

      (f) Give any
Participant any rights whatsoever with respect to an Award except as
specifically provided in the Plan and the Award Agreement.

       

      14.2. Adoption of the
Plan.  The adoption of the Plan shall not be deemed to give any
Eligible Individual or any other individual any right to be selected as a
Participant or to be granted an Award, or, having been so selected, to be
selected to receive a future Award.

       

      14.3. Vesting.  Notwithstanding
any other provision of the Plan, a Participant’s right or entitlement to
exercise or otherwise vest in any Award not exercisable or vested at the Grant
Date thereof shall only result from continued services as a Non-Employee
Director or Consultant or continued employment, as the case may be, with the
Company or any Subsidiary or Affiliate, or satisfaction of any other performance
goals or other conditions or restrictions applicable, by its terms, to such
Award, except, in each such case, as the Committee may, in its discretion,
expressly determine otherwise.

       

      14.4. No Effects on Benefits; No
Damages.  Payments and other compensation received by a
Participant under an Award are not part of such Participant’s normal or expected
compensation or salary for any purpose, including calculating termination,
indemnity, severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments under
any laws, plans, contracts, policies, programs, arrangements or
otherwise.  A Participant shall, by participating in the Plan, waive
any and all rights to compensation or damages in consequence of Termination of
such Participant 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.  No claim or entitlement to compensation or
damages arises from the termination of the Plan or diminution in value of any
Award or Shares purchased or otherwise received under the Plan.

       

      14.5. One or More Types of
Awards.  A particular type of Award may be granted to a
Participant either alone or in addition to other Awards under the
Plan.

       

      ARTICLE
XV.

      CHANGE IN
CONTROL

       

      15.1. Alternative
Awards.  The occurrence of a Change in Control will not itself
result in the cancellation, acceleration of exercisability or vesting, lapse of
any Period of Restriction or settlement or other payment with respect to any
outstanding Award to the extent that the Board or the Committee determines in
its discretion, prior to such Change in Control, that such outstanding Award
shall be honored or assumed, or new rights substituted therefor (such honored,
assumed or substituted Award being hereinafter referred to as an “Alternative Award”)
by the New Employer, provided that any
Alternative Award must:

       

      (a) be based
on securities that are traded on an established United States securities market,
or which will be so traded within sixty (60) days following the Change in
Control;

       

      (b) provide
the Participant (or each Participant in a class of Participants) with rights and
entitlements substantially equivalent to or better than the rights, terms and
conditions applicable under such Award, including an identical or better
exercise or vesting schedule and identical or better timing and methods of
payment;

       

      (c) have
substantially equivalent economic value to such Award immediately prior to the
Change in Control (as determined by the Board or the Committee (as constituted
prior to the Change in Control), in its discretion);

       

      (d) have
terms and conditions which provide that if the Participant incurs a Termination
by the New Employer under any circumstances other than involuntary Termination
for Cause or resignation without Good Reason within one (1) year following the
Change in Control, (i) any conditions on a Participant’s rights under, or any
restrictions on transfer or exercisability applicable to, such Alternative Award
shall be waived or shall lapse in full, and such Alternative Award shall become
fully vested and exercisable, as the case may be, and (ii) to the extent
applicable, each such Alternative Award 

       

       

      
        
          
          

        

        
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      outstanding
as of the date of such Termination may thereafter be exercised until the later
of (A) the last date on which such Award would have been exercisable in the
absence of this Section 15.1, and (B) the earlier of (I) the third anniversary
of such Change in Control and (II) expiration of the term of such Award;
and

       

      (e) not
subject the Participant to the assessment of additional taxes or interest under
Section 409A of the Code.

       

      15.2. Accelerated Vesting and
Payment.

       

      (a) In the
event Section 15.1 does not apply, upon a Change in Control, (i) all outstanding
Awards shall become fully vested, nonforfeitable and, to the extent applicable,
exercisable immediately prior to the Change in Control; (ii) the Board or the
Committee (as constituted prior the Change in Control) shall provide that in
connection with the Change in Control (A) each outstanding Option and Stock
Appreciation Right shall be cancelled in exchange for an amount (payable in
accordance with Section 15.2(b)) equal to the excess, if any, of the Fair Market
Value of the Common Stock on the date of the Change in Control over the Option
Price or Grant Price applicable to such Option or Stock Appreciation Right, (B)
each Share of Restricted Stock, each Restricted Stock Unit and each other Award
denominated in Shares shall be cancelled in exchange for an amount (payable in
accordance with Section 15.2(b)) equal to the Change in Control Price multiplied
by the number of Shares covered by such Award, (C) each Award not denominated in
Shares shall be cancelled in exchange for the full amount of such Award (payable
in accordance with Section 15.2(b)), and (D) any Award the payment or settlement
of which was deferred under Section 20.6 or otherwise shall be cancelled in
exchange for the full amount of such deferred Award (payable in accordance with
Section 15.2(b)); (iii) the target performance goals applicable to any
outstanding Awards of Performance Shares, Performance Units, Cash-Based Awards
and other Awards shall be deemed to have been attained in full (unless actual
performance exceeds the target, in which case actual performance shall be used)
for the entire applicable Performance Period then outstanding; and (iv) the
Board or the Committee (as constituted prior the Change in Control) may, in
addition to the consequences otherwise set forth in this Section 15.2(a), make
adjustments and / or settlements of outstanding Awards as it deems appropriate
and consistent with the Plan’s purposes.

       

      (b) Payments.  Payment
of any amounts in accordance with this Section 15.2 shall be made in cash or, if
determined by the Board or the Committee (as constituted prior to the Change in
Control), in securities of the New Employer that are traded on an established
United States securities market, or which will be so traded within sixty (60)
days following the Change in Control, having an aggregate fair market value (as
determined by such Board or Committee) equal to such amount or in a combination
of such securities and cash.  All amounts payable hereunder shall be
payable in full, as soon as reasonably practicable, but in no event later than
ten (10) business days, following the Change in
Control.  

       

      15.3. Certain Terminations Prior
to Change in Control.  Any Participant who incurs a Termination
under any circumstances other than involuntary Termination for Cause or
resignation without Good Reason on or after the date on which the Company
entered into an agreement in principle the consummation of which would
constitute a Change in Control, but prior to such consummation, and such Change
in Control actually occurs, shall be treated, solely for purposes of the Plan
(including this Article XV), as continuing in the Company’s, or the applicable
Subsidiary’s or Affiliate’s, employment or service until the occurrence of such
Change in Control and to have been Terminated under such circumstances
immediately thereafter.

       

      15.4. No Implied Rights; Other
Limitations.  No Participant shall have any right to prevent
the consummation of any of the acts described in Section 4.4 or 15.1 affecting
the number of Shares available to, or other entitlement of, such Participant
under the Plan or such Participant’s Award.  Any actions or
determinations of the Committee under this Article XV need not be uniform as to
all outstanding Awards, nor treat all Participants
identically.  Notwithstanding the adjustments described in Section
15.1, in no event may any ISO be exercised after ten (10) years from the Grant
Date thereof, and any changes to ISOs pursuant to this Article XV shall, unless
the Committee determines otherwise, only be effective to the extent such
adjustments or changes do not cause a “modification” (within the meaning of
Section 424(h)(3) of the Code) of such ISOs or adversely affect the tax status
of such ISOs.

       

       

      
        
          
          

        

        
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      15.5. Termination, Amendment, and
Modifications of Change in Control Provisions.  Notwithstanding
any other provision of the Plan (but subject to the limitations of the last
sentence of Section 16.1 and Section 16.2) or any Award Agreement provision, the
provisions of this Article XV may not be terminated, amended, or modified on or
after the date of a Change in Control to materially impair any Participant’s
Award theretofore granted and then outstanding under the Plan without the prior
written consent of such Participant.

       

      ARTICLE
XVI.

      AMENDMENT, MODIFICATION, AND
TERMINATION

       

      16.1. Amendment, Modification, and
Termination.  The Board may, at any time and with or without
prior notice, amend, alter, suspend, or terminate the Plan, and the Committee
may, to the extent permitted by the Plan, amend the terms of any Award
theretofore granted, including any Award Agreement, in each case, retroactively
or prospectively; provided, however, that no such
amendment, alteration, suspension, or termination of the Plan shall be made
which, without first obtaining approval of the stockholders of the Company
(where such approval is necessary to satisfy (i) the then-applicable
requirements of Rule 16b-3, (ii) any requirements under the Code relating to
ISOs, or (iii) any applicable law, regulation or rule (including the applicable
regulations and rules of the SEC and any national securities exchange)),
would:

       

      (a) except as
is provided in Section 4.4, increase the maximum number of Shares which may be
sold or awarded under the Plan or increase the maximum limitations set forth in
Section 4.3;

       

      (b) except as
is provided in Section 4.4, decrease the minimum Option Price or Grant Price
requirements of Sections 6.3 and 7.2, respectively;

       

      (c) change
the class of persons eligible to receive Awards under the Plan;

       

      (d) change
the Performance Measures set forth in Section 12.1;

       

      (e) extend
the duration of the Plan or the maximum period during which Options or SARs may
be exercised under Section 6.4 or 7.6, as applicable; or

       

      (f) otherwise
require stockholder approval to comply with any applicable law, regulation or
rule (including the applicable regulations and rules of the SEC and any national
securities exchange).

       

      In
addition, (A) no such amendment, alteration, suspension or termination of the
Plan or any Award theretofore granted, including any Award Agreement, shall be
made which would materially impair the previously accrued rights of a
Participant under any outstanding Award without the written consent of such
Participant, provided, however, that the
Board may amend or alter the Plan and the Committee may amend or alter any
Award, including any Agreement, either retroactively or prospectively, without
the consent of the applicable Participant, (x) so as to preserve or come within
any exemptions from liability under Section 16(b) of the Exchange Act, pursuant
to the rules and releases promulgated by the SEC (including Rule 16b-3), and/or
so that any Award that is intended to qualify as
Performance-Based Compensation shall qualify for the performance-based
compensation exception under Code Section 162(m) (or any successor provision), or (y) if the Board
or the Committee determines in its discretion that such amendment or alteration
either (I) is required or advisable for the Company, the Plan or the Award to
satisfy, comply with or meet the requirements of any law, regulation, rule or
accounting standard or (II) is not reasonably likely to significantly diminish
the benefits provided under such Award, or that such diminishment has been or
will be adequately compensated, and (B) except in connection with a Share Change
or Corporate Transaction or as otherwise provided in Section 4.4, but
notwithstanding any other provisions of the Plan, neither the Board nor the
Committee may take any action:  (1) to amend the terms of an
outstanding Option or SAR to reduce the Option Price or Grant Price thereof,
cancel an Option or SAR and replace it with a new Option or SAR with a lower
Option Price or Grant Price, or that has an economic effect that is the same as
any such reduction or cancellation; or (2) to cancel an outstanding Option or
SAR in exchange for the grant of another type of Award, without, in each such
case, first obtaining approval of the stockholders of the Company of such
action.

       

      16.2. Adjustment of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring Events.  The
Board or the Committee shall make such adjustments in the terms and conditions
of, and the criteria included in, Awards as the Board or the Committee deems
appropriate and equitable in recognition of unusual or nonrecurring events
(including the events described in Section 4.4) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations, rules or accounting principles.  The Committee shall determine any adjustment pursuant to this Section 16.2
(a) with respect to an Award that provides for Performance-Based Compensation
consistent with the intent that such Award qualify for the performance-based

       

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      compensation
exception under Section 162(m) of the Code, and (b) after taking into account,
among other things, to the extent applicable, the provisions of the Code
applicable to Incentive Stock Options and the provisions of Section 409A of the
Code.  The determination of the Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under the
Plan.

       

      ARTICLE
XVII.

      TAX WITHHOLDING AND OTHER
TAX MATTERS

       

      17.1. Tax
Withholding.  The Company and/or any Subsidiary or Affiliate
are authorized to withhold from any Award granted or payment due under the Plan
the amount of all Federal, state, local and non-United States taxes due in
respect of such Award or payment and take any such other action as may be
necessary or appropriate, as determined by the Committee, to satisfy all
obligations for the payment of such taxes. No later than the date as of which an
amount first becomes includible in the gross income or wages of a Participant
for federal, state, local, or non-U.S. tax purposes with respect to any Award,
such Participant shall pay to the Company, or make arrangements satisfactory to
the Committee regarding the payment of, any federal, state, local or non-U.S.
taxes or social security (or similar) contributions of any kind required by law
to be withheld with respect to such amount.   The obligations of
the Company under the Plan shall be conditional on such payment or satisfactory
arrangements (as determined by the Committee in its discretion), and the Company
and the Subsidiaries and Affiliates shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment otherwise due to such
Participant, whether or not under the Plan.

       

      17.2. Withholding or Tendering
Shares.  Without limiting the generality of Section 16.1,
subject to any applicable laws, the Committee may in its discretion permit a
Participant to satisfy or arrange to satisfy, in whole or in part, the tax
obligations incident to an Award by:  (a) electing to have the Company
withhold Shares or other property otherwise deliverable to such Participant
pursuant to his or her Award (provided, however, that the
amount of any Shares so withheld shall not exceed the amount necessary to
satisfy required Federal, state, local and non-United States withholding
obligations using the minimum statutory withholding rates for Federal, state,
local and/or non-U.S. tax purposes, including payroll taxes, that are applicable
to supplemental taxable income) and/or (b) tendering to the Company Shares
already owned by such Participant (or by such Participant and his or her spouse
jointly) and either held by the Participant for at least six (6) months at the
time of exercise or purchased on the open market, based, in each case, on the
Fair Market Value of the Common Stock on the payment date as determined by the
Committee.  All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems
appropriate.  The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for settlement of
withholding obligations with Common Stock.

       

      17.3. Restrictions.  The
satisfaction of tax obligations pursuant to this Article XVI shall be subject to
such restrictions as the Committee may impose, including any restrictions
required by applicable law or the rules and regulations of the SEC, and shall be
construed consistent with an intent to comply with any such applicable laws,
rule and regulations.

       

      17.4. Special ISO
Obligations.  The Committee may require a Participant to give
prompt written notice to the Company concerning any disposition of Shares
received upon the exercise of an ISO within:  (i) two (2) years from
the Grant Date such ISO to such Participant or (ii) one (1) year from the
transfer of such Shares to such Participant or (iii) such other period as the
Committee may from time to time determine.  The Committee may direct
that a Participant with respect to an ISO undertake in the applicable Award
Agreement to give such written notice described in the preceding sentence, at
such time and containing such information as the Committee may prescribe, and/or
that the certificates evidencing Shares acquired by exercise of an ISO refer to
such requirement to give such notice.

       

      17.5. Section 83(b)
Election.  If a Participant makes an election under Section
83(b) of the Code to be taxed with respect to an Award as of the date of
transfer of Shares rather than as of the date or dates upon which the
Participant would otherwise be taxable under Section 83(a) of the Code, such
Participant shall deliver a copy of such election to the Company upon or prior
to the filing such election with the Internal Revenue
Service.  Neither the Company nor any Subsidiary or Affiliate shall
have any liability or responsibility relating to or arising out of the filing or
not filing of any such election or any defects in its construction.

       

      17.6. No Guarantee of Favorable
Tax Treatment.  Although the Company intends to administer the
Plan so that Awards will be exempt from, or will comply with, the requirements
of Code Section 409A, the Company does not warrant that any Award under the Plan
will qualify for favorable tax treatment under Code Section 409A or any other
provision of federal, state, local, or non-United States law.  The
Company shall not be liable to any Participant for any tax, interest, or
penalties the Participant might owe as a result of the grant, holding, vesting,
exercise, or payment of any Award under the Plan.

       

       

      
        
          
          

        

        
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      17.7. Nonqualified Deferred
Compensation.

       

      (a) It is the
intention of the Company that no Award shall be deferred compensation subject to
Code Section 409A unless and to the extent that the Committee specifically
determines otherwise as provided in paragraph (b) of this Section 17.7, and the
Plan and the terms and conditions of all Awards shall be interpreted and
administered  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 payment, including
elective or mandatory deferral of the payment or delivery of cash or Shares
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 be intended to comply in all respects with Section 409A of the Code, and
the Plan and the terms and conditions of such Awards shall be interpreted and
administered accordingly.

       

      (c) The
Committee shall not extend the period to exercise an Option or Stock
Appreciation Right to the extent that such extension would cause the Option or
Stock Appreciation Right to become subject to Code Section 409A.

       

      (d) Unless
the Committee provides otherwise in an Award Agreement, each Restricted Stock
Unit, Performance Unit, Performance Share, Cash-Based Award and/or Other
Stock-Based Award shall be paid in full to the Participant no later than the
fifteenth day of the third month after the end of the first calendar year in
which such Award is no longer subject to a “substantial risk of forfeiture”
within the meaning of Code Section 409A.  If the Committee provides in
an Award Agreement that a Restricted Stock Unit, Performance Unit, Performance
Share, Cash-Based Award or Other Stock-Based Award is intended to be subject to
Code Section 409A, the Award Agreement shall include terms that are intended to
comply in all respects with Code Section 409A.

       

      (e) No
Dividend Equivalents shall relate to Shares underlying an Option or SAR unless
such Dividend Equivalent rights are explicitly set forth as a separate
arrangement and do not cause any such Option or SAR to be subject to Code
Section 409A.

       

      (f) Notwithstanding
any other provision of the Plan or an Award Agreement to the contrary, no event
or condition shall constitute a Change in Control with respect to an Award to
the extent that, if it were, a 20% additional income tax would be imposed under
Section 409A of the Code on the Participant who holds such Award; provided that, in
such a case, the event or condition shall continue to constitute a Change in
Control to the maximum extent possible (for example, if applicable, in respect
of vesting without an acceleration of payment of such an Award) without causing
the imposition of such 20% tax

       

      ARTICLE
XVIII.

      LIMITS OF LIABILITY;
INDEMNIFICATION

       

      18.1. Limits of
Liability.  Any liability of the Company or a Subsidiary or
Affiliate to any Participant with respect to any Award shall be based solely
upon contractual obligations created by the Plan and the Award
Agreement.

       

      (a) None of
the Company, any Subsidiary, any Affiliate, any member of the Board or the
Committee or any other person participating in any determination of any question
under the Plan, or in the interpretation, administration or application of the
Plan, shall have any liability, in the absence of bad faith, to any party for
any action taken or not taken in connection with the Plan, except as may
expressly be provided by statute.

       

      (b) Each
member of the Committee, while serving as such, shall be considered to be acting
in his or her capacity as a director of the Company.  Members of the
Board of Directors and members of the Committee acting under the Plan shall be
fully protected in relying in good faith upon the advice of counsel and shall
incur no liability except for gross negligence or willful misconduct in the
performance of their duties.

       

      (c) The
Company shall not be liable to a Participant or any other person as
to:  (i) the non-issuance of Shares as to which the Company has been
unable to obtain from any regulatory body having relevant jurisdiction the
authority deemed by the Committee or the Company’s counsel to be necessary to
the lawful issuance and sale of any Shares hereunder, and (ii) any tax
consequence expected, but not realized, by any Participant or other person due
to the receipt, exercise or settlement of any Option or other
Award.

       

       

      
        
          
          

        

        
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      18.2. Indemnification.  Subject
to the requirements of Delaware law, each individual who is or shall have been a
member of the Committee or of the Board, or an officer of the Company to whom
authority was delegated in accordance with Article III, shall be indemnified and
held harmless by the Company against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her
own behalf, unless such loss, cost, liability, or expense is a result of the
individual’s own willful misconduct or except as provided by
statute.  The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such individual
may be entitled under the Company’s Certificate of Incorporation or By-Laws, as
a matter of law, or otherwise, or any power that the Company may have to
indemnify or hold harmless such individual.

       

      ARTICLE
XIX.

      SUCCESSORS

       

      19.1. General.  All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

       

      ARTICLE
XX.

      MISCELLANEOUS

       

      20.1. Drafting Context;
Captions.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singu­lar shall include the
plural.  The words “Article,” “Section,” and “paragraph” herein shall
refer to provisions of the Plan, unless expressly indicated otherwise. The words
“include,” “includes,” and “including” herein shall be deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of similar import, unless the context otherwise requires.  The
headings and captions appearing herein are inserted only as a matter of
convenience. They do not define, limit, construe, or describe the scope or
intent of the provisions of the Plan.

       

      20.2. Forfeiture
Events.

       

      (a) Notwithstanding
any provision of the Plan to the contrary, the Committee shall have the
authority to determine (and may so provide in any Agreement) that a
Participant’s (including his or her estate’s, beneficiary’s or transferee’s)
rights (including the right to exercise any Option or SAR), payments and
benefits with respect to any Award shall be subject to reduction, cancellation,
forfeiture or recoupment (to the extent permitted by applicable law) in the
event of the Participant’s Termination for Cause; serious misconduct; violation
of the Company’s or a Subsidiary’s or Affiliate’s policies; breach of fiduciary
duty; unauthorized disclosure of any trade secret or confidential information of
the Company or a Subsidiary or Affiliate; breach of applicable noncompetition,
nonsolicitation, confidentiality or other restrictive covenants; or other
conduct or activity that is in competition with the business of the Company or
any Subsidiary or Affiliate, or otherwise detrimental to the business,
reputation or interests of the Company and/or any Subsidiary or Affiliate; or
upon the occurrence of certain events specified in the applicable Award
Agreement (in any such case, whether or not the Participant is then an Employee,
Non-Employee Director or Consultant).  The determination of whether a
Participant’s conduct, activities or circumstances are described in the
immediately preceding sentence shall be made by the Committee in its discretion,
and pending any such determination, the Committee shall have the authority to
suspend the exercise, payment, delivery or settlement of all or any portion of
such Participant’s outstanding Awards pending an investigation of the
matter.

       

      (b) If the
Company is required to prepare an accounting restatement (x) due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and
any  Participant who knowingly engaged in such misconduct, was grossly
negligent in engaging in such misconduct, knowingly failed to prevent such
misconduct or was grossly negligent in failing to prevent such misconduct, shall
reimburse the Company the amount of any payment in settlement of an Award earned
or accrued during the twelve- (12-) month period following the public issuance
or Exchange Act filing (whichever first occurred) of the financial document that
contained such material noncompliance, and (y) the Committee may in its
discretion provide that if the amount earned under any Participant’s Award is
reduced by such restatement, such Participant shall reimburse the Company the
amount of any such reduction previously paid in settlement of such
Award.

       

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      20.3. Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

       

      20.4. Transfer, Leave of
Absence.  For purposes of the Plan, a transfer of an Eligible
Individual from the Company to an Affiliate or Subsidiary (or, for purposes of
any ISO granted under the Plan, only a Subsidiary), or vice versa, or from one
Affiliate or Subsidiary to another (or in the case of an ISO, only from one
Subsidiary to another), and a leave of absence, duly authorized in writing by
the Company or a Subsidiary or Affiliate, shall not be deemed a Termination of
the Eligible Individual for purposes of the Plan or with respect to any Award
(in the case of ISOs, to the extent permitted by the
Code).  

       

      20.5. Exercise and Payment of
Awards.  An Award shall be deemed exercised or claimed when the
Secretary of the Company or any other Company official or other person
designated by the Committee for such purpose receives appropriate written notice
from a Participant, in form acceptable to the Committee, together with payment
of the applicable Option Price, Grant Price or other purchase price, if any, and
compliance with Article XVI, in accordance with the Plan and such Participant’s
Award Agreement.

       

      20.6. Deferrals.  Subject
to applicable law, the Committee may from time to time establish procedures
pursuant to which a Participant may defer on an elective or mandatory basis
receipt of all or a portion of the cash or Shares subject to an Award on such
terms and conditions as the Committee shall determine, including those of any
deferred compensation plan of the Company or any Subsidiary or Affiliate
specified by the Committee for such purpose.

       

      20.7. No Effect on Other
Plans.  Neither the adoption of the Plan nor anything contained
herein shall affect any other compensation or incentive plans or arrangements of
the Company or any Subsidiary or Affiliate, or prevent or limit the right of the
Company or any Subsidiary or Affiliate to establish any other forms of
incentives or compensation for their directors, officers, eligible employees or
consultants or grant or assume options or other rights otherwise than under the
Plan.

       

      20.8. Section 16 of Exchange Act
and Section 162(m) of the Code.  The provisions and operation
of the Plan are intended to ensure that no transaction under the Plan is subject
to (and not exempt from) the short-swing profit recovery rules of Section 16(b)
of the Exchange Act.  Unless otherwise stated in the Award Agreement,
notwithstanding any other provision of the Plan, any Award granted to an Insider
shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16(b) of the Exchange Act (including Rule 16b-3)
that are requirements for the application of such exemptive rule, and the Plan
and the Award Agreement shall be deemed amended to the extent necessary to
conform to such limitations.  Furthermore, notwithstanding any other
provision of the Plan or an Award Agreement, any Award to a Covered Employee
that is intended to qualify as Performance-Based Compensation shall be subject
to any applicable limitations set forth in Code Section 162(m) or any
regulations or rulings issued thereunder (including any amendment to the
foregoing) that are requirements for qualification as “other performance-based
compensation” as described in Code Section 162(m)(4)(C), and the Plan and the
Award Agreement shall be deemed amended to the extent necessary to conform to
such requirements and no action of the Committee that would cause such Award not
to so qualify shall be effective.

       

      20.9. Requirements of Law;
Limitations on Awards.

       

      (a) The
granting of Awards and the issuance of Shares under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be
required.

       

      (b) If at any
time the Committee shall determine, in its discretion, that the listing,
registration and/or qualification of Shares upon any securities exchange or
under any state, Federal or non-United States law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition of,
or in connection with, the sale or purchase of Shares hereunder, the Company
shall have no obligation to allow the grant, exercise or payment of any Award,
or to issue or deliver evidence of title for Shares issued under the Plan, in
whole or in part, unless and until such listing, registration, qualification,
consent and/or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Committee.

       

      (c) If at any
time counsel to the Company shall be of the opinion that any sale or delivery of
Shares pursuant to an Award is or may be in the circumstances unlawful or result
in the imposition of excise taxes on the Company or any Subsidiary or Affiliate
under the statutes, rules or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or delivery, or to make any
application or to effect or to maintain any qualification or registration under
the Securities 

       

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      Act, or
otherwise with respect to Shares or Awards and the right to exercise or payment
of any Option or Award shall be suspended until, in the opinion of such counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company or any Subsidiary or Affiliate.

       

      (d) Upon
termination of any period of suspension under this Section 20.9, any Award
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all Shares available before such suspension and as to
the Shares which would otherwise have become available during the period of such
suspension, but no suspension shall extend the term of any Award.

       

      (e) The
Committee may require each person receiving Shares in connection with any Award
under the Plan to represent and agree with the Company in writing that such
person is acquiring such Shares for investment without a view to the
distribution thereof, and/or provide such other representations and agreements
as the Committee may prescribe.  The Committee, in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the Shares purchasable or otherwise receivable by any person under any Award as
it deems appropriate.  Any such restrictions shall be set forth in the
applicable Award Agreement, and the certificates evidencing such shares may
include any legend that the Committee deems appropriate to reflect any such
restrictions.

       

      (f) An Award
and any Shares received upon the exercise or payment of an Award shall be
subject to such other transfer and/or ownership restrictions and/or legending
requirements as the Committee may establish in its discretion and may be
referred to on the certificates evidencing such Shares, including restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded,
and under any blue sky or state securities laws applicable to such
Shares.

       

      20.10. Participants Deemed to
Accept Plan.  By accepting any benefit under the Plan, each
Participant and each person claiming under or through any such Participant shall
be conclusively deemed to have indicated their acceptance and ratification of,
and consent to, all of the terms and conditions of the Plan and any action taken
under the Plan by the Board, the Committee or the Company, in any case in
accordance with the terms and conditions of the Plan.

       

      20.11. Governing
Law.  Except as to matters concerning the issuance of Shares or
other matters of corporate governance, which shall be determined, and related
Plan and Award provisions, which shall be construed, under the laws of Delaware,
the Plan and each Award Agreement shall be governed by the laws of the State of
New York, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of the Plan to the substantive
law of another jurisdiction.  Unless otherwise provided in the Award
Agreement, Participants are deemed to submit to the exclusive jurisdiction and
venue of the federal or state courts of the State of New York, to resolve any
and all issues that may arise out of or relate to the Plan or any related Award
Agreement.

       

      20.12. Plan
Unfunded.  The Plan shall be unfunded.  The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the issuance of Shares or the payment of
cash upon exercise or payment of any Award.  Proceeds from the sale of
Shares pursuant to Options or other Awards granted under the Plan shall
constitute general funds of the Company.

       

      20.13. Administration
Costs.  The Company shall bear all costs and expenses incurred
in administering the Plan, including expenses of issuing Shares pursuant to any
Options or other Awards granted hereunder.

       

      20.14. Uncertificated
Shares.  To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may
nevertheless be effected on a noncertificated basis, to the extent not
prohibited by applicable law or the rules of any stock exchange.

       

      20.15. No Fractional
Shares.  An Option or other Award shall not be exercisable with
respect to a fractional Share or the lesser of fifty (50) shares or the full
number of Shares then subject to the Option or other Award.  No
fractional Shares shall be issued upon the exercise or payment of an Option or
other Award.

       

      20.16. Subsidiary or Affiliate
Eligible Individuals.  In the case of a grant of an Award to
any Eligible Individual of a Subsidiary or Affiliate, the Company may, if the
Committee so directs, issue or transfer the Shares, if any, covered by the Award
to such Subsidiary or Affiliate, for such lawful consideration as the Committee
may specify, upon the condition or understanding that 

       

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      such
Subsidiary or Affiliate will transfer such Shares to such Eligible Individual in
accordance with the terms and conditions of such Award and those of the
Plan.  The Committee may also adopt procedures regarding treatment of
any Shares so transferred to a Subsidiary or Affiliate that are subsequently
forfeited or canceled.

       

      20.17. Data
Protection.  By participating in the Plan, each 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 any Subsidiary or Affiliate or any division
respectively thereof.

       

      20.18. Right of
Offset.  The Company and the Subsidiaries and Affiliates shall
have the right to offset against the obligations to make payment or issue any
Shares to any Participant under the Plan, any outstanding amounts (including
travel and entertainment advance balances, loans, tax withholding amounts paid
by the employer or amounts repayable to the Company or any Subsidiary or
Affiliate pursuant to tax equalization, housing, automobile or other employee
programs) such Participant then owes to the Company or any Subsidiary or
Affiliate and any amounts the Committee otherwise deems appropriate pursuant to
any tax equalization policy or agreement.

       

      20.19. Participants Based Outside
of the United States.  The Committee may grant awards to
Eligible Individuals who are non-United States nationals, or 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 or establish such modifications, amendments, procedures or
subplans as may be necessary or advisable to comply with such legal or
regulatory requirements (including triggering a public offering or to maximize
tax efficiency).

       

       

       

       

      28Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         This AGREEMENT ("Agreement") is made as of June 1, 2009, by and between
The Oneida Savings Bank (the "Bank"), a New York chartered savings bank, Michael
R. Kallet, an individual residing in Oneida, New York,  ("Executive") and Oneida
Financial  Corp.  (the  "Company"),  a  federally-chartered  corporation and the
holding company of the Bank, as guarantor. The Bank and Company are collectively
referred to as the "Employer".

         WHEREAS,  Executive  and the Board of  Directors  of the Bank desire to
enter into an agreement  setting forth the terms and  conditions of  Executive's
employment and provide for the continued service of the Executive; and

         WHEREAS,  the Bank recognizes the importance of Executive to the Bank's
operations,  and desires to assure the  continuity of its  management and enable
the Executive to devote his full attention to management  responsibilities  when
faced with a possible change in control of the Bank or the Company.

         NOW,  THEREFORE,  in consideration of the mutual promises and covenants
herein contained, it is hereby agreed as follows:

1.       Employment.

         (a) Term. The initial term of employment  under this Agreement shall be
             ----
for the period  commencing  on the date hereof and ending on May 31,  2012.  Not
later than six months prior to the  expiration  of this  Agreement,  the parties
agree to  commence  discussions  regarding a renewal of this  Agreement.  If the
parties cannot reach agreement regarding the terms for a renewal agreement, this
Agreement  shall  automatically  renew for a 12 month period unless either party
provides  written  notice of intent  not to renew at least 60 days  prior to the
expiration  of this  Agreement.  The  initial  term  and any  renewal  term  are
collectively referred to herein as the "Employment Term."

         (b) Duties.  The Executive shall serve as President and Chief Executive
             ------
Officer of the Bank and Company during the  Employment  Term and shall have such
responsibilities,  duties and authority as is customary  for persons  serving in
similar  chief  executive  officer  positions  and as may  from  time to time be
reasonably assigned by the respective Boards of the Employer. As Chief Executive
Officer of the Company and the Bank,  the  Executive  shall be  responsible  for
implementing the policies of the Board of Directors of the Company and the Board
of  Directors  of the Bank,  and  shall  report to such  respective  Boards,  as
applicable.  In such capacity,  Executive  agrees to discharge his duties to the
best of his  abilities and to devote  substantially  all of his working time and
attention  to the  performance  of his duties under this  Agreement.  During the
Employment  Term,  there  shall  be no  material  decrease  in  the  duties  and
responsibilities  of the  Executive  other than as provided  herein,  unless the
parties  otherwise agree in writing.  During the Employment  Term, the Executive
shall not be required to relocate,  without his

<PAGE>

consent,  his place of employment to a location more than 25 miles away from the
Employer's Oneida, New York location to perform his duties hereunder, except for
reasonably required travel by the Executive on the business of the Employer. The
Executive  may  affiliate  with  professional  associations,  business and civic
organizations  in support of his role as President and Chief Executive  Officer,
provided that  Executive's  involvement  in such  activities  does not adversely
affect the performance of his duties on behalf of the Company or the Bank or the
reputation of the Company or Bank.

2.       Compensation and Benefits.

         (a) Base Salary. The Executive shall initially be paid a base salary at
             -----------
an  annualized  rate of  $310,000.00  (as may be  adjusted  from time to time in
accordance with this Agreement,  "Base Salary"),  payable in accordance with the
Employer's regular payroll practices for its employees.  On an annual basis, the
Executive's  Base Salary  shall be reviewed by the Employer and may be increased
in the  discretion of the Board of Directors and  Compensation  Committee of the
Employer.  In reviewing the Executive's  Base Salary,  the Board of Directors of
the   Employer   shall   consider   the   Executive's   performance,   scope  of
responsibility,  and  such  other  matters  as the  Board  of  Directors  or the
Compensation  Committee of the Board deems  appropriate.  The Base Salary of the
Executive shall not be decreased at any time during the current  Employment Term
from the  amount  then in  effect,  unless  the  Executive  otherwise  agrees in
writing.  The Executive  shall also be entitled to receive fees for serving as a
director  of the  Bank,  except  that  Executive  shall  not be  paid  fees  for
attendance at committee meetings.

         (b) Bonuses and Incentive Compensation. The Executive shall be eligible
             ----------------------------------
to participate in an equitable  manner with all other  employees of the Employer
in any bonus or other incentive  programs  (including any stock option or equity
compensation  plans) as may be  authorized,  declared  and paid by the Boards of
Directors of the Employer.  This  provision  shall not preclude the grant of any
other bonus or  compensation  to the  Executive  as  determined  by the Board of
Directors of the Employer.

         (c) Benefit  Plans.  The Executive  shall be eligible to participate in
             --------------
any employee  pension  benefit plans (as that term is defined under Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended),  group life
insurance plans,  medical plans, dental plans,  long-term  disability plans, and
other  fringe  benefit  plans or programs  maintained  by the  employer  for the
benefit of its employees ("Benefit Plans"). The Executive's participation in any
such benefit plans and programs (before or after termination) shall be based on,
and  subject  to  satisfaction  of,  the  eligibility   requirements  and  other
conditions  of such plans and programs  notwithstanding  any  provisions of this
Agreement.  The Executive shall be entitled to such supplemental benefits as set
forth on the  attached  Exhibit A to this  Agreement,  which may be amended from
time-to-time upon the mutual agreement of Executive and Employer.

         (d) Expenses.  The Executive is authorized to incur reasonable expenses
             --------
in the  performance  of his duties  hereunder,  including  the costs of business
entertainment,  travel, and attendance at meetings. The Employer shall reimburse
the Executive for all such expenses  promptly upon periodic  presentation by the
Executive of an itemized account of such expenses.

<PAGE>

         (e) Other  Benefits.  During the period of  employment,  the  Executive
             ---------------
shall also be entitled to receive the following benefits:

                  (i) Paid vacation in accordance  with the Employer's  Employee
Handbook;

                  (ii) Reasonable  sick leave  consistent with the Bank's policy
in that regard for other executive officers; and

                  (iii)   Reimbursement  of  fees  or  dues  (but  not  personal
expenses) for up to two club  memberships  of the Executive at dining or country
clubs as may be beneficial to the Executive's  role with the Bank. The choice of
clubs shall be subject to review and  disapproval  by the Board of  Directors of
the Bank at any time.

                  (iv)  Use  of  a  Bank   owned  or  leased   vehicle  of  type
commensurate with the Executive's  duties and role with the Bank as reviewed and
approved by the Board of Directors.

         (f) Exclusivity of Salary and Benefits. Executive shall not be entitled
             ----------------------------------
to any payments or benefits  other than those  provided  under this Agreement or
referred to in Exhibit A.

3.       Termination.

         Prior  to a  Change  of  Control,  the  Executive's  employment  by the
Employer shall be subject to termination as follows:

         (a) Voluntary  Termination.  The Executive may terminate this Agreement
             ----------------------
upon not less than 60 days prior written  notice  delivered to the Employer,  in
which  event  the  Executive  shall be  entitled  only to the  compensation  and
benefits the  Executive has earned or accrued  through the date of  termination.
Employer  may  appropriately  adjust  Executive's  duties  upon  notice  of such
termination.

         (b)  Termination  Upon Death.  This Agreement  shall terminate upon the
              -----------------------
Executive's  death. In the event this Agreement is terminated as a result of the
Executive's  death, the Employer shall continue payments of the Executive's Base
Salary and payments  related to Executive's  participation  in the Benefit Plans
which  would  have  otherwise  been due for a period  of 90 days  following  the
Executive's death to the Executive's estate or designated beneficiaries.

         (c) Termination Upon Disability.  Termination of Executive's employment
             ---------------------------
based on  "Disability"  shall be  construed  to comply with  Section 409A of the
Internal  Revenue Code and shall be deemed to have occurred if: (i) Executive is
unable to engage in any substantial  gainful activity by reason of any medically
determinable  physical  or mental  impairment  that can be expected to result in
death,  or last for a  continuous  period  of not less than 12  months;  (ii) by
reason of any medically  determinable  physical or mental impairment that can be
expected to result in death, or last for a continuous period of not less than 12
months,  Executive is receiving income replacement  benefits for a period of not
less than three months under an accident and health plan  covering  employees of
the Bank or the Company; or (iii) Executive is determined to be totally disabled
by the Social Security Administration.

<PAGE>

         The  Employer  may  terminate  this  Agreement  upon  the   Executive's
Disability. Once the Executive is determined to be Disabled, the Executive shall
be entitled to 100% of the Executive's Base Salary and continued  benefits under
the Benefit Plans  otherwise  payable  during that period,  reduced by any other
Employer-provided  benefits to which the  Executive may be entitled with respect
to such Disability  (including,  but not limited to, benefits provided under any
disability insurance policy or program,  worker's compensation law, or any other
benefit program or arrangement).

         (d) Termination  for Cause.  The Employer may terminate the Executive's
             ----------------------
employment for Cause by written  notice to the  Executive.  For purposes of this
Agreement,   "Cause"  shall  mean  the  Executive's  (1)  personal   dishonesty,
incompetence,  or willful  misconduct;  (2) breach of fiduciary  duty  involving
personal profit or intentional  failure to perform  material stated duties;  (3)
willful violation of any law, rule, or regulation (other than traffic violations
or similar  offenses);  (4) being a specific subject of a final cease and desist
order from,  written  agreement  with, or other order or  supervisory  direction
from, any federal or state regulatory authority; or (5) conviction or indictment
of Executive for a felony or any misdemeanor involving moral turpitude,  deceit,
dishonesty or fraud. In determining incompetence, the acts or omissions shall be
measured against standards  generally  prevailing in the financial  institutions
industry;  provided,  it shall be the burden of the  Employer to  establish  the
alleged  acts and  omissions  and the  prevailing  nature of the  standards  the
Employer shall have alleged are violated by such acts and/or omissions.

         Notwithstanding  any other term or provision  of this  Agreement to the
contrary,  if the Executive's  employment is terminated for Cause, the Executive
shall forfeit all rights to payments and benefits otherwise provided pursuant to
this Agreement;  provided,  however,  that Base Salary shall be paid through the
date of termination.

         (e)  Termination   Without  Cause.   The  Employer  may  terminate  the
              ----------------------------
Executive's  employment  for reasons other than Cause upon not less than 60 days
prior written  notice  delivered to the  Executive,  in which event the Employer
shall (i) pay to the  Executive  within 30 days of the date of  termination  the
following  a lump sum  payment  equal to the unpaid  Base Salary that would have
been paid to or earned  by the  Executive  pursuant  to this  Agreement,  if the
Executive had remained  employed under the terms of this  Agreement  through the
end of the  Employment  Term, or for a period of 6 months  following the date of
termination,  whichever  period is longer and (ii) continue  payments related to
Executive's  participation  in any medical,  dental and life  insurance  benefit
plans at the same levels that existed prior to the  termination  for a period of
18 months  following  the  termination  date. If the  Executive  terminates  his
employment  with the  Employer  during  the  Employment  Term for "Good  Reason"
(defined in Section 4(d) below), other than following a Change of Control,  such
termination  shall be deemed to have been a  termination  by the Employer of the
Executive's employment without Cause.

         Notwithstanding the foregoing,  if Executive's employment ends prior to
December  31, 2007 for  reasons  other than Cause and under  circumstances  that
entitled the  Executive to payments and benefits  under  paragraph  4(a) of this
Agreement  (regarding a "Change of

<PAGE>

Control"),  then amounts that may be payable under this  paragraph 3(e) shall be
reduced by payments made to Employee under paragraph 4(a).

         (f) Change of Control.  If the  Executive's  employment by the Employer
             -----------------
shall cease for any reason other than Cause,  death or  disability of Executive,
or  termination  for Good Reason by Executive  within six months prior to, or 12
months  following,  a Change of Control that occurs during the Employment  Term,
the  provisions  of  paragraph 4 below shall apply even if the  Employment  Term
under this Agreement has expired.

         (g)  Resignation.   Effective  upon  the  Executive's   termination  of
              -----------
employment for any reason, the Executive hereby resigns from any and all offices
and positions  (including  any director  positions)  related to the  Executive's
employment  with the Employer and any  subsidiaries or affiliates  thereof,  and
held by the Executive at the time of termination.

         (h)  Regulatory  Limits.  Notwithstanding  any other  provision in this
              ------------------
Agreement,  (i) the Employer may  terminate  or suspend this  Agreement  and the
employment of the Executive  hereunder,  as if such  termination  were for Cause
under Section 3(d) hereof, to the extent required by applicable Federal or state
law related to banking, deposit insurance or bank or savings institution holding
companies or by  regulations or orders issued by the Federal  Deposit  Insurance
Corporation  or any other  state or federal  banking  regulatory  agency  having
jurisdiction  over the Company or the Bank and (ii) no payment shall be required
to be made to or for the benefit of the  Executive  under this  Agreement to the
extent such payment is prohibited by applicable law,  regulation or order issued
by a banking agency or a court of competent jurisdiction; provided that it shall
be the Employer's burden to establish that any such action was so required.

         (i)  Excess  Payments.  Notwithstanding  the  foregoing,  in the  event
              ----------------
Executive is a "Specified Employee" (as defined herein) no payment shall be made
to Executive  under  sections  3(e) prior to the first day of the seventh  month
following the Event of  Termination  in excess of the  "permitted  amount" under
Section 409A of the Internal  Revenue Code.  For these  purposes the  "permitted
amount" shall be an amount that does not exceed two times the lesser of: (A) the
sum of Executive's annualized compensation based upon the annual rate of pay for
services  provided to the Bank for the calendar year preceding the year in which
Executive  has an Event of  Termination,  or (B) the maximum  amount that may be
taken into account under a tax-qualified  plan pursuant to Section 401(a)(17) of
the Internal  Revenue  Code for the  calendar  year in which occurs the Event of
Termination.  The payment of the "permitted amount" must occur no later than the
last day of the second  calendar  year  following the calendar year in which the
Event of Termination occurs. Any payment in excess of the permitted amount shall
be made to Executive on the first day of the seventh  month  following the Event
of Termination. "Specified Employee" shall be interpreted to comply with Section
409A of the  Internal  Revenue  Code and shall  mean a key  employee  within the
meaning  of Section  416(i) of the  Internal  Revenue  Code  (without  regard to
paragraph 5 thereof),  but an individual shall be a "Specified Employee" only if
the Bank is a publicly traded institution or the subsidiary of a publicly traded
holding company.

<PAGE>

4.       Termination Following a Change of Control.

         (a) Subject to the limits set forth in Section  4(b),  in the event the
Employer  terminates  the  Executive's  employment for reasons other than Cause,
death or disability of Executive,  or the Executive  terminates  employment with
Good Reason,  in either case within six months prior to, or 12 months  after,  a
Change of Control, the Employer shall, within 60 days of termination, (i) pay to
the  Executive a lump sum cash  payment  equal to 2.99 times the average  annual
compensation  paid to the Executive by Employer and included in the  Executive's
gross income for income tax purposes  during the five full  calendar  years,  or
shorter period of employment, that immediately precede the year during which the
Change  of  Control  occurs,   and  (ii)  provide  for   Executive's   continued
participation  in any  medical,  dental  and  life  insurance  benefit  plans on
substantially  the same  terms in  existence  at the time of  termination  for a
period of 18 months following the termination date.

         (b)  Limitation.  Notwithstanding  anything  in this  Agreement  to the
              ----------
contrary,  in the event that the amount  payable to the  Executive  pursuant  to
Section 4(a) above,  when added to all other  amounts paid or to be paid to, and
the  value of all  property  received  or to be  received  by the  Executive  in
anticipation  of or  following  a Change of  Control,  whether  paid or received
pursuant to this  Agreement or otherwise  (such other amounts and property being
referred to herein as "Other Change in Control  Payments"),  would constitute an
excess  parachute  payment  within the meaning of Section  280G of the  Internal
Revenue Code of 1986, as amended (or any successor or renumbered section),  then
the amount payable  pursuant to Section 4(a) of this Agreement  shall be reduced
to the  maximum  amount  which,  when  added to such  Other  Change  in  Control
Payments,  would not constitute an excess parachute  payment.  The allocation of
any reduction required by this subparagraph among various payments shall be made
based on the directions of the Executive.

         (c) For purposes of this Agreement, a "Change of Control" shall mean:

                  (1)   Acquisition  of   Significant   Share   Ownership:   The
                        -------------------------------------------------
acquisition  by any  individual,  entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the  Securities  Exchange  Act of 1934,  as amended (the
"Exchange  Act")) (a "Person") of  beneficial  ownership  (within the meaning of
Rule 13d-3  promulgated  under the Exchange  Act) of 25% or more of 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 subsection (1), the
following  acquisitions  shall  not  constitute  a Change  of  Control:  (i) any
acquisition  directly  from the  Company  or  Oneida  Financial,  MHC,  (ii) any
acquisition by the Company or Oneida  Financial,  MHC, (iii) any  acquisition by
any employee  benefit plan (or related  trust)  sponsored or  maintained  by the
Company or Oneida Financial,  MHC, the Bank or any other corporation  controlled
by the  Company or Oneida  Financial,  MHC,  (iv) the  reorganization  of Oneida
Financial  MHC to a  converted  stock  entity,  or (v)  any  acquisition  by any
corporation  pursuant to a transaction that complies with clauses (i), (ii), and
(iii) of subsection (3) of this Section 4(c); or

                  (2) Change in Board  Composition:  Individuals  who, as of the
                      ----------------------------
date hereof,  constitute  the Board of Directors of the Company (the  "Incumbent
Board")  cease for any reason

<PAGE>

to  constitute  at least a majority  of such Board of  Directors  (the  "Company
Board");  provided,  however, that any individual becoming a director subsequent
to the date  hereof  whose  election,  or  nomination  for  election  by Company
shareholders,  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 Company Board; or

                  (3) Merger with Third Party:  Consummation of  reorganization,
                      -----------------------
merger  or  consolidation  of the  Company  with  another  entity  (a  "Business
Combination"),   unless,  following  such  Business  Combination,   (i)  all  or
substantially all of the individuals and entities who were the beneficial owners
of 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 and the  combined  voting power of the then
outstanding  voting  securities  entitled to vote  generally  in the election of
directors  of  the   corporation   resulting  from  such  Business   Combination
(including,  without  limitation,  a  corporation  which  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,
(ii)  no  Person  (excluding  any  corporation   resulting  from  such  Business
Combination or any employee benefit plan (or related trust) of the Company,  the
Bank, such corporation resulting from such Business Combination or a corporation
controlled by any of them)  beneficially  owns,  directly or indirectly,  25% or
more of 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  (iii)  at least a
majority of the members of the board of directors of the  corporation  resulting
from such Business  Combination  were members of the Incumbent Board at the time
of  the  execution  of  the  initial  agreement,  providing  for  such  Business
Combination; or

                  (4) Sale of  Assets:  The  Company  sells or deposes of all or
                      ---------------
substantially all of its assets to a third party.

         (d) "Good  Reason"  shall  mean the  Executive's  resignation  from the
              ------------
Bank's employ upon any of the following, unless consented to by Executive:

                  (1) failure to appoint  Executive to the position set forth in
Section  1,  or  a  material  change  in  Executive's   function,   duties,   or
responsibilities, which change would cause Executive's position to become one of
lesser   responsibility,   importance,   or   scope   from  the   position   and
responsibilities  described in Section 1, to which  Executive  has not agreed in
writing (and any such  material  change  shall be deemed a continuing  breach of
this Agreement by the Bank);

                  (2) a relocation of Executive's  principal place of employment
to a  location  that is more  than 25 miles  from  the  location  of the  Bank's
principal executive offices as of the date of this Agreement;

<PAGE>

                  (3) a material  reduction  in the  benefits  and  perquisites,
including  Base  Salary,  to  Executive  from  those  being  provided  as of the
Effective  Date (except for any reduction  that is part of a reduction in pay or
benefits that is generally applicable to officers or employees of the Bank);

                  (4) a liquidation or dissolution of the Bank;

                  (5) a material breach of this Agreement by the Bank.

         Upon the occurrence of any event  described in clause above,  Executive
shall have the right to elect to terminate his  employment  under this Agreement
by  resignation  upon not less than thirty (30) days prior written  notice given
within a  reasonable  period of time (not to exceed  ninety (90) days) after the
event giving rise to the right to elect, which termination by Executive shall be
an Event of  Termination.  The Bank  shall  have at least 30 days to remedy  any
condition set forth in clause (ii) (A)-(E),  provided, however the Bank shall be
entitled to waive such period and make an immediate payment hereunder.

         (e)  Excess  Payments.  Notwithstanding  the  foregoing,  in the  event
Executive is a "Specified Employee" (as defined herein) no payment shall be made
to  Executive  under  section  4 prior to the  first  day of the  seventh  month
following the Event of  Termination  in excess of the  "permitted  amount" under
Section 409A of the Internal  Revenue Code.  For these  purposes the  "permitted
amount" shall be an amount that does not exceed two times the lesser of: (A) the
sum of Executive's annualized compensation based upon the annual rate of pay for
services  provided to the Bank for the calendar year preceding the year in which
Executive  has an Event of  Termination,  or (B) the maximum  amount that may be
taken into account under a tax-qualified  plan pursuant to Section 401(a)(17) of
the Internal  Revenue  Code for the  calendar  year in which occurs the Event of
Termination.  The payment of the "permitted amount" must occur no later than the
last day of the second  calendar  year  following the calendar year in which the
Event of Termination occurs. Any payment in excess of the permitted amount shall
be made to Executive on the first day of the seventh  month  following the Event
of Termination. "Specified Employee" shall be interpreted to comply with Section
409A of the  Internal  Revenue  Code and shall  mean a key  employee  within the
meaning  of Section  416(i) of the  Internal  Revenue  Code  (without  regard to
paragraph 5 thereof),  but an individual shall be a "Specified Employee" only if
the Bank is a publicly traded institution or the subsidiary of a publicly traded
holding company.

5.       Covenants.

         (a) Confidentiality. The Executive shall not, without the prior written
             ---------------
consent  of  the  Employer,  disclose  or  use in any  way,  either  during  the
Employment  Term  or  thereafter,  except  as  required  in  the  course  of his
employment by Employer,  any confidential  business or technical  information or
trade  secret  acquired  in the  course  of the  Executive's  employment  by the
Employer.  The Executive  acknowledges  and agrees that it would be difficult to
fully  compensate  the  Employer  for  damages  resulting  from  the  breach  or
threatened breach of the foregoing provision and, accordingly, that the Employer
shall be entitled to temporary preliminary injunctions and permanent injunctions
to enforce such  provision.  This  provision  with respect to injunctive  relief
shall not, however,  diminish the Employer's right to claim

<PAGE>

 and recover damages.
The Executive  covenants to use his best efforts to prevent the  publication  or
disclosure of any trade secret or any  confidential  information  concerning the
business  or finances of  Employer  or  Employer's  affiliates,  or any of their
dealings, transactions or affairs which may come to the Executive's knowledge in
the pursuance of his duties or employment.

         (b) No  Competition.  The  Executive's  employment  is  subject  to the
             ---------------
condition that during the term of his  employment  hereunder and for a period of
24 months following the date his employment ceases for any reason, the Executive
(i) shall  not,  directly  or  indirectly,  own,  manage,  operate,  control  or
participate  in the  ownership,  management,  operation  or  control  of,  or be
connected as an officer,  employee,  partner,  director,  individual proprietor,
lender,  consultant or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of, any entity or business (a  "Competitive
Operation")  which  competes in the banking  industry or with any other business
conducted by the Employer or by any group, affiliate,  division or subsidiary of
the  Employer,  in Madison,  Oneida or Onondaga  County,  (ii) will refrain from
directly or indirectly employing,  attempting to employ, recruiting or otherwise
soliciting,  inducing or  influencing  any person to leave  employment  with the
Employer;  and (iii) will refrain from soliciting or encouraging any customer to
terminate or otherwise  modify  adversely  its  business  relationship  with the
Employer.  The  Executive  shall fully advise the  Employer as to any  activity,
interest,  or investment the Executive may be involved in that might violate the
terms of this paragraph upon the request of Employer.

         (c)  Termination  of Payments.  Upon the breach by the Executive of any
              ------------------------
covenant under this Section 5, the Employer may terminate, offset and/or recover
from  the  Executive  immediately  any and all  benefits  paid to the  Executive
pursuant to this Agreement,  in addition to any and all other remedies available
to the Employer under the law or in equity.

         (d)  Modification.  Although  the  parties  consider  the  restrictions
              ------------
contained in this Section 5 reasonable as to protected business,  duration,  and
geographic  area,  in the event that any court of competent  jurisdiction  deems
them to be  unreasonable,  then such  restrictions  shall apply to the  broadest
business,  longest period, and largest geographic territory as may be considered
reasonable by such court, and this Section 5, as so amended, shall be enforced.

         (e) Other  Agreements.  The  Executive  represents  and  warrants  that
             -----------------
neither  the  Executive's  employment  with  the  Employer  nor the  Executive's
performance  of his  obligations  hereunder  will  conflict  with or violate the
Executive's  obligations  under  the  terms  of any  agreement  with a  previous
employer or other party including agreements to refrain from competing, directly
or indirectly, with the business of such previous employer or any other party.

6.       Miscellaneous.

         (a)   Withholding.   The  Employer   shall  deduct  and  withhold  from
               -----------
compensation and benefits provided under this Agreement all necessary income and
employment taxes and any other similar sums required by law to be withheld.

         (b) Rules,  Regulations and Policies.  The Executive shall use his best
             --------------------------------
efforts to abide by and comply with all of the rules, regulations,  and policies
of the Employer,  including  without

<PAGE>

limitation the Employer's  policy of strict  adherence to, and compliance  with,
any and all  requirements  of the banking,  securities,  and antitrust  laws and
regulations.

         (c) Return of  Employer's  Property.  After the  Executive has received
             -------------------------------
notice of termination  or at the end of his period of employment  with Employer,
whichever first occurs,  the Executive shall immediately  return to Employer all
documents and other property in his possession belonging to Employer.

         (d)  Construction  and  Severability.  The invalidity of anyone or more
              -------------------------------
provisions  of this  Agreement  or any part  thereof,  all of which are inserted
conditionally  upon their being valid in law,  shall not affect the  validity of
any  other  provisions  to this  Agreement;  and in the  event  that one or more
provisions  contained  herein  shall be  invalid,  as  determined  by a court of
competent  jurisdiction,  this  Agreement  shall be construed as if such invalid
provisions had not been inserted.

         (e) Governing Law. This Agreement  shall be governed by the laws of the
             -------------
United States,  where applicable,  and otherwise by the laws of the State of New
York other than the choice of law rules thereof.

         (f) Assignability and Successors. This Agreement may not be assigned by
             ----------------------------
the Executive or the Employer,  except that this Agreement shall be binding upon
and shall inure to the benefit of the successor of the Employer  through  merger
or corporate  reorganization  including the  successor to the Company  resulting
from any reorganization of Oneida Financial, MHC to a stock entity.

         (g) Jurisdiction and Venue. The jurisdiction of any proceeding  between
             ----------------------
the parties  arising out of, or with  respect to, this  Agreement  shall be in a
court of competent jurisdiction in New York State, and venue shall be in Madison
or Onondaga County. Each party shall be subject to the personal  jurisdiction of
the courts of New York State.

         (h) Arbitration of Disputes. Any controversy or claim arising out of or
             -----------------------
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation,  any claims of unlawful employment  discrimination  whether based on
age or otherwise)  shall, to the fullest extent  permitted by law, be settled by
arbitration  in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA")  in  Syracuse,  New  York in  accordance  with  the  rules  of the  AAA,
including,  but not  limited  to,  the rules and  procedures  applicable  to the
selection of arbitrators. Judgment upon the award rendered by the arbitrator may
be  entered  in any  court  having  jurisdiction  thereof.  Notwithstanding  the
foregoing,  this Section  shall not preclude  either party from pursuing a court
action for the sole  purpose of  obtaining  a temporary  restraining  order or a
preliminary  injunction in  circumstances  in which such relief is  appropriate;
provided  that  any  other  relief  shall  be  pursued  through  an  arbitration
proceeding pursuant to this Section.

         (i) Entire Agreement;  Amendment. This Agreement constitutes the entire
             ----------------------------
understanding  and  Agreement  between the parties  with  respect to the subject
matter hereof and

<PAGE>

shall supersede all prior  understandings and agreements.  This Agreement cannot
be amended,  modified,  or supplemented  in any respect,  except by a subsequent
written agreement entered into by the parties hereto.

<PAGE>

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

                                       THE ONEIDA SAVINGS BANK

                                       By: /s/ Rodney D. Kent
                                           ----------------------------------
                                           Rodney D. Kent
                                           Chairman of the Executive Committee

                                       By: /s/ Patricia D. Caprio
                                           ----------------------------------
                                           Patricia D. Caprio
                                           Chairman of Compensation Committee

                                       ONEIDA FINANCIAL CORP.

                                       By: /s/ Richard B. Myers
                                           ----------------------------------
                                           Richard B. Myers
                                           Chairman

                                       By: /s/ Patricia D. Caprio
                                           ----------------------------------
                                           Patricia D. Caprio
                                           Chairperson of Compensation Committee

                                       EXECUTIVE:

                                           /s/ Michael R. Kallet
                                       --------------------------------------
                                           Michael R. Kallet

<PAGE>

                                                                       Exhibit A
                                                                       ---------

                              SUPPLEMENTAL BENEFITS

In accordance with Section 2(c) of the Employment Agreement,  dated June 1, 2009
between  Michael R. Kallet,  The Oneida Savings Bank and Oneida  Financial Corp.
(the "Employment  Agreement"),  this Exhibit  contains the exclusive  listing of
supplemental  benefits  which the  Executive  is  entitled to in addition to the
compensation and benefits expressly referenced in the Employment Agreement. This
Exhibit  may be  amended  from  time-to-time  upon the mutual  agreement  of the
Executive and the Compensation Committee and board of directors of Employer.

1.       Supplemental  Life  Insurance - The Company will provide the  Executive
         with  additional  term life  insurance to supplement the group coverage
         provided to all employees of the Company,  , the cost of this policy to
         be paid by the Company with the Executive  responsible for the personal
         income tax consequences of the additional benefit. The Company provides
         a group plan with a death  benefit  equal to three and  one-half  times
         Base Salary with a maximum benefit of $300,000.00.  The additional term
         life  insurance  provided  under this  agreement is a supplement to the
         group  term life  insurance  provided  to all  employees  to provide an
         overall benefit to the Executive equal to three and one-half times Base
         Salary without a benefit cap

2.       Supplemental  Long-Term Disability Insurance - The Company will provide
         the Executive  with a long-term  disability  policy to  supplement  the
         group  coverage  provided to all  employees of the  Company.  The group
         coverage  provides a benefit  equal to two-thirds of Base Salary with a
         maximum  benefit of $6,000.00  per month.  The  supplemental  long-term
         disability  insurance  will wrap the current group policy to provide an
         overall  benefit to the  Executive  equal to  two-thirds of Base Salary
         without  a  benefit  cap.  The cost of this  benefit  to be paid by the
         Company.

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