Document:

Exhibit 4.1

 

SPECIMEN

 

	
  Number

  	
   

  	
  INCORPORATED UNDER THE LAWS OF THE

  	
   

  	
  Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  **1**

  	
   

  	
  State of Delaware

  	
   

  	
  **1**

  

 

KBW, INC.

 

COMMON STOCK

 

	
  This Certifies That

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  is the owner of

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

fully paid and non-assessable Shares, Par
Value $.01 each
of Common Stock of KBW, INC.

transferable only on the books of the
Corporation by the holder hereof in person or by duly

authorized Attorney upon surrender of this Certificate properly endorsed,

but subject to the restrictions as to transfer referred to above.

Witness the seal of the Corporation and the
signatures of its duly authorized officers.

 

	
  Dated

  	
   

  

 

[KBW, Inc. Corporate Seal]

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chairman & Chief Executive Officer

  	
   

  	
  Secretary

  

 

 

KBW, INC.

 

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

 

TEN COM — as tenants in common

TEN ENT — as tenants by the entireties

JIT TEN — as joint tenants with right of survivorship and not as
tenants in common

 

	
  UNIF GIFT MIN ACT— 

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  	
   

  
	
  under Uniform Gifts to Minors Act

  	
   

  	
   

  
	
   

  	
  (State)

  	
   

  
	
   

  
	
  UNIF TRF MIN ACT— 

  	
  Custodian (until age           )

  	
   

  
	
   

  	
   

  	
   

  
	
  (Minor)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  under Uniform Transfers to Minors Act

  	
   

  	
   

  
	
   

  	
  (State)

  	
   

  
							

 

Additional abbreviations may also be used though not in the above list.

 

For value received,                                            hereby
sell(s), assign(s) and transfer(s) unto:

 

(PLEASE INSERT SOCIAL

SECURITY

NUMBER OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE)

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF
ASSIGNEE)

 

                             Shares
of the capital stock represented by the within Certificate, and do(es) hereby
irrevocably constitute and appoint                                       Attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.

 

	
  Dated:

  	
   

  	
   

  

 

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY

 

 

PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

 

Signature(s) Guaranteed

 

	
  By:

  	
   

  

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM)
PURSUANT TO S.E.C. RULE 17Ad–15.

 

The within named Corporation will furnish without charge to each
stockholder who so requests a statement of the powers, designations, preferences
and relative, participating, optional, or other special rights of each class of
stock or series thereof of the Corporation and the qualifications, limitations
or restrictions of such preferences and/or rights. Such requests may be made to
the Secretary of the Corporation at the principal office of the Corporation.Exhibit
4.2

 

 

 

KBW, INC.

 

FORM OF

SECOND AMENDED AND RESTATED

STOCKHOLDERS’ AGREEMENT

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  LIMITATIONS ON TRANSFER OF SHARES

  	
  3

  
	
  Section 2.1.

  	
  General

  	
  3

  
	
  Section 2.2.

  	
  Disposition of Common Shares

  	
  3

  
	
  Section 2.3.

  	
  Disposition of Common Shares Upon Retirement

  	
  3

  
	
  Section 2.4.

  	
  Disposition of Common Shares Upon Death or Disability

  	
  3

  
	
  Section 2.5.

  	
  Disposition of Common Shares by Gift or Charitable Donation

  	
  4

  
	
  Section 2.6.

  	
  Pledge Transactions

  	
  4

  
	
  Section 2.7.

  	
  Disposition of Common Shares with the Consent of Board of Directors

  	
  4

  
	
  Section 2.8.

  	
  Compliance with Law and Regulations

  	
  4

  
	
  Section 2.9.

  	
  Legend on Certificates; Entry of Stop Transfer Orders

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  STOCKHOLDER COVENANTS

  	
  5

  
	
  Section 3.1.

  	
  Noncompetition

  	
  5

  
	
  Section 3.2.

  	
  Nonsolicitation of Clients

  	
  6

  
	
  Section 3.3.

  	
  Nonsolicitation of Employees

  	
  7

  
	
  Section 3.4.

  	
  Transfer of Client Relationships

  	
  7

  
	
  Section 3.5.

  	
  Prior Notice Required

  	
  7

  
	
  Section 3.6.

  	
  Stockholder Covenants Generally

  	
  7

  
	
  Section 3.7.

  	
  Damages

  	
  7

  
	
  Section 3.8.

  	
  Retirement-Eligible Stockholders; Employment Agreements

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  MISCELLANEOUS

  	
  9

  
	
  Section 5.1.

  	
  Term of the Agreement; Termination of Current Stockholders Agreement

  	
  9

  
	
  Section 5.2.

  	
  Severability

  	
  9

  
	
  Section 5.3.

  	
  Governing Law

  	
  10

  
	
  Section 5.4.

  	
  Representatives, Successors and Assigns

  	
  10

  
	
  Section 5.5.

  	
  Further Assurances

  	
  10

  
	
  Section 5.6.

  	
  Execution in Counterparts

  	
  10

  
	
  Section 5.7.

  	
  Amendments; Waivers

  	
  10

  
	
  Section 5.8.

  	
  Submission to Jurisdiction; Waiver of Immunity

  	
  10

  
	
  Section 5.9.

  	
  Specific Performance

  	
  11

  
	
  Section 5.10.

  	
  Notices

  	
  11

  
	
  Section 5.11.

  	
  Gender

  	
  11

  

 

EXHIBIT A           STOCKHOLDERS

 

EXHIBIT B            NON-COMPETITION/NON-SOLICITATION AGREEMENT

 

 

STOCKHOLDERS’ AGREEMENT

 

This Stockholders’ Agreement, dated as of                       
   , 2006, among KBW, Inc., a Delaware corporation (the “Company”),
and the persons listed on Exhibit A hereto, each of whom holds a title as
an employee at or above the level of “Principal” as of the date hereof
(individually, a “Stockholder” and collectively, the “Stockholders”).

 

WITNESSETH:

 

WHEREAS, the Company expects to effect, promptly
after the date hereof, the initial public offering of the shares of the Common
Stock, par value $0.01 per share, of the Company (the “Common Stock”)
pursuant to a registration statement filed with the Securities and Exchange
Commission (the “IPO”, and the date on which the IPO is consummated, the
“Effective Time”);

 

WHEREAS, in order to ensure harmonious relationships
among themselves with respect to the conduct of the business and affairs of the
Company, the Stockholders desire to enter into certain agreements with respect
to the disposition of their Common Stock and various other matters;

 

NOW THEREFORE, in consideration of the premises and
of the mutual agreements, covenants and provisions herein contained, the
parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

The following words and phrases as used herein shall
have the following meanings:

 

(a)           The term “Board of Directors”
shall mean the Board of Directors of the Company, or any committee of such
Board of Directors to the extent expressly authorized by the Board of Directors
to exercise the powers of the Board of Directors under this Agreement.

 

(b)           The term “Cause” shall have the meaning
accorded such term in the KBW, Inc. 2006 Equity Incentive Plan, filed by
the Company with the Securities and Exchange Commission on
September [  ], 2006 as Exhibit 10.2
to the Company’s Registration Statement on Form S-1, as such plan may be
amended from time to time.

 

(c)           The term “Change of Control” shall
have the meaning accorded such term in the KBW, Inc. 2006 Equity Incentive
Plan, filed by the Company with the Securities and Exchange Commission on
September [  ], 2006 as
Exhibit 10.2 to the Company’s Registration Statement on Form S-1, as
such plan may be amended from time to time.

 

(d)           The term “Charitable Organization”
shall mean a private foundation or a charitable, civic, educational or other
similar not-for-profit corporation or organization which (in each case)
qualifies under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended.

 

 

(e)           The term “Common Shares” shall
mean any shares of Common Stock held by a Stockholder on or prior to the Effective
Time and any shares of stock into which such Common Shares may be converted or
exchanged pursuant to a merger, reorganization or consolidation, or any shares
of stock paid out as a dividend in respect of such common shares (such as
pursuant to a spinoff, stock split or otherwise).

 

(f)            The term “Current Stockholders
Agreement” shall mean the Amended and Restated Stockholders’ Agreement,
dated as of August 1, 2005, among the Company and the Stockholders.

 

(g)           The term “Disability” shall mean
disability as that term is defined under the Company’s long-term disability
plan in effect at the date of such determination, or any other plan or
definition designated by the Board of Directors for the purpose of this
provision.

 

(h)           The term “Disposition,” when used
in reference to shares of stock, shall mean any sale, assignment, transfer,
pledge, mortgage, encumbrance, or other disposition, directly or indirectly,
whether or not for value, and whether or not voluntarily, of any Common Shares,
other than by will or intestacy.

 

(i)            The term “employee” shall mean any
person employed by the Company and/or any Subsidiary who receives regular and
stated compensation other than a pension, retainer or compensation in the
nature of a consulting fee.

 

(j)            The term “Fair Market Value” shall mean,
as of any date, the average of the daily closing prices for a Common Share on
the New York Stock Exchange for the 20 consecutive business days (or, if such
trading has commenced less than 20 business days prior to the date in question,
the actual number of business days elapsed since the commencement of such
trading) before the date in question.

 

(k)           The term “own,” when used in
reference to shares of stock, shall mean any shares owned of record or
beneficially.

 

(l)            The term “Retirement” shall mean
the termination of employment with the Company or any Subsidiary of any
Stockholder who has both (a)(i) reached the age of 60 or older, or
(ii) served as an employee for a sufficient number of years that the sum
of such Stockholder’s age and the number of years served by such Stockholder as
an employee is equal to or greater than 65, and (b) entered into the
two-year Non-competition/Non-solicitation agreement with the Company in the
form set forth on Exhibit B hereto (the “Non-competition/Non-solicitation
Agreement”).

 

(m)          The term “Subsidiary” or “Subsidiaries”
shall mean any corporation(s) or other entity of which the Company, directly or
indirectly, has the power, whether through the ownership of voting securities,
other ownership interests, contract or otherwise, to elect at least a majority
of the members of such entity’s board of directors or other persons performing
similar functions.

 

2

 

ARTICLE II

LIMITATIONS ON TRANSFER OF SHARES

 

Section 2.1.            General.  Each
Stockholder agrees that, in addition to any restrictions imposed by law, no
Stockholder shall make a Disposition of any Common Shares owned by such
Stockholder, except as expressly permitted by and in accordance with the terms
of this Agreement and the terms of the lock-up agreement entered into between
such Stockholder and the underwriters in connection with the IPO.

 

Section 2.2.            Disposition of Common Shares. 
Except as otherwise specifically provided in this Agreement:

 

(a)           No Stockholder may make any Disposition
of his Common Shares prior to the second anniversary of the Effective Time;

 

(b)           On or after the second anniversary of the
Effective Time and prior to the third anniversary of the Effective Time, such
Stockholder may make one or more Dispositions of his Common Shares
representing, in the aggregate, up to 25% (measured as of the Effective Time)
of such Stockholder’s Common Shares.

 

(c)           On or after the third anniversary of the
Effective Time and prior to the fourth anniversary of the Effective Time, in
addition to any Dispositions permitted by subparagraph (b) of this
Section 2.2, such Stockholder may make one or more Dispositions of his
Common Shares representing, in the aggregate, up to an additional 25% (measured
as of the Effective Time) of such Stockholder’s Common Shares.

 

(d)           On or after the fourth anniversary of the
Effective Time and prior to the fifth anniversary of the Effective Time, in
addition to any Dispositions permitted by subparagraphs (b) and
(c) of this Section 2.2, such Stockholder may make one or more
Dispositions of his Common Shares representing, in the aggregate, up to an
additional 25% (measured as of the Effective Time) of such Stockholder’s Common
Shares.

 

On or after the fifth anniversary of the Effective
Time, such Stockholder may make Dispositions of his Common Shares free from any
restrictions set forth in this Agreement.

 

Section 2.3.            Disposition of Common Shares Upon
Retirement.  Notwithstanding any other provisions of this
Agreement, any Stockholder who terminates his employment and such termination
constitutes a Retirement, may, from and after the later of the date of such
Retirement and the second anniversary of the Effective Date, make Dispositions
of Common Shares free from the restrictions set forth in Section 2.2 of
this Agreement.

 

Section 2.4.            Disposition of Common Shares Upon Death
or Disability.  Notwithstanding any other provisions of this
Agreement, any Stockholder who ceases to be an employee by reason of
Disability, or, in the event of the death of a Stockholder, the estate of such
deceased Stockholder, shall have the right from and after the date such
Stockholder ceases to be an employee or the date of death, as the case may be,
to make Dispositions of Common Shares free from the restrictions set forth in
Section 2.2 of this Agreement.

 

3

 

Section 2.5.            Disposition of Shares Upon Termination of
Employment without Cause.  Notwithstanding any other
provisions of this Agreement, any Stockholder whose employment is terminated by
the Company without Cause shall have the right [from and after the date of such
termination] to make Dispositions of Common Shares free from the restrictions
set forth in Section 2.2 of this Agreement

 

Section 2.6.            Disposition of Common Shares by Gift or
Charitable Donation.  Notwithstanding any other provisions of this
Agreement, a Stockholder may make a Disposition of Common Shares at any time
(i) to a Family Member or a Family Affiliate who agrees in writing to be
bound by all the terms of this Agreement as though such person or entity were a
Stockholder; or (ii) to any Charitable Organization; provided, that
any such Dispositions to Charitable Organizations exempt from restrictions on
transfer by virtue of this Section 2.6 shall be limited to an aggregate of
$[           ] (as measured by the
closing market price on the New York Stock Exchange of the Common Shares on the
date of such Disposition(s)) by any Stockholder during each of the first two
annual periods following the date hereof.

 

For purposes of this Section 2.5, the following
words shall have the following meanings:

 

(a)           The term “Family Member” shall
mean, with respect to a Stockholder, the spouse and each parent, child
(including an adopted child), grandchild, sibling, niece and nephew of such
Stockholder.

 

(b)           The term “Family Affiliate” shall
mean, with respect to a Stockholder, each trust, corporation, limited liability
company, partnership or other entity for the benefit of or controlled solely
by, either directly or indirectly, such Stockholder or his spouse and one or
more Family Members, provided that if any trust, corporation, limited liability
company or partnership shall cease to be so controlled, it shall cease to be a
Family Affiliate for all purposes of this Agreement.

 

Section 2.7.            Change of Control. 
Notwithstanding any other provisions of this Agreement, the restrictions
set forth in Section 2.2 shall terminate automatically upon a Change of
Control.

 

Section 2.8.            Disposition of Common Shares with the
Consent of Board of Directors. 
Notwithstanding any other provisions of this Agreement, a Stockholder
may make a Disposition of Common Shares of any amount at any time with the
prior written consent of the Board of Directors.

 

Section 2.9.            Compliance with Law and Regulations. 
Each Stockholder agrees that any Disposition of Common Shares by such
Stockholder shall be in compliance with any applicable constitution,
rule or regulation of, or any applicable policy of, the National Association
of Securities Dealers, Inc., any of the exchanges or associations or other
institutions with which the Company or any of its Subsidiaries has membership
privileges or other privileges, and any applicable law, rule or regulation
of the Commission or any other governmental agency having jurisdiction.

 

4

 

Section 2.10.          Legend on Certificates; Entry of Stop
Transfer Orders.

 

(a)           Each Stockholder agrees that each
outstanding certificate representing any Common Shares which are subject to
this Agreement shall bear an endorsement noted conspicuously on each such
certificate reading substantially as follows:

 

“The securities
represented by this certificate were issued without registration under the
Securities Act of 1933.  No transfer of
such securities may be made without an opinion of counsel, satisfactory to the
Company, that such transfer may properly be made without registration under the
Securities Act of 1933 or that such securities have been so registered under a
registration statement which is in effect at the date of such transfer.

 

The securities represented by this
certificate are subject to the provisions of an agreement dated as of                  ,
2006 among the Company and certain persons named in Exhibit A to such
agreement, a copy of which is on file at the principal executive office of the
Company, and such securities may be sold, assigned, pledged or otherwise
transferred only in accordance with such agreement.”

 

(b)           Each Stockholder agrees to the entry of stop
transfer orders against the transfer of legended certificates representing
Common Shares except in compliance with this Agreement.

 

ARTICLE III

STOCKHOLDER COVENANTS

 

Section 3.1.            Noncompetition.

 

(a)           In view of each Stockholder’s importance
to the Company, each Stockholder hereby agrees that the Company would likely
suffer significant harm from such Stockholder’s competing with the Company
during such Stockholder’s Employment Period and for some period of time
thereafter.  Accordingly, each Stockholder
hereby agrees that such Stockholder will not, without the written consent of
the Company, during the Employment Period and the Coverage Period:

 

(i)            form, or acquire a 5% or greater equity
ownership, voting or profit participation interest in, any Competitive
Enterprise; or

 

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

 

(1)           which is similar or substantially related
to any activity in which such Stockholder was engaged, in whole or in part, at
the Company,

 

(2)           for which such Stockholder had direct or
indirect managerial or supervisory responsibility at the Company, or

 

5

 

(3)           which calls for the application of the
same or similar specialized knowledge or skills as those utilized by such
Stockholder in such Stockholder’s activities at the Company, and, in any such
case, irrespective of the purpose of the activity or whether the activity is or
was in furtherance of advisory, agency, proprietary or fiduciary business of
either the Company or the Competitive Enterprise.

 

(b)           For purposes of the Stockholder
Covenants, a “Competitive Enterprise” is a business enterprise that
engages in, or owns or controls a significant interest in any entity that
engages in financial services such as investment banking, public or private
finance, financial advisory services, private investing (for anyone other than
such Stockholder and members of such Stockholder’s family), merchant banking,
asset or hedge fund management, securities brokerage, sales, lending, custody,
clearance, settlement or trading.

 

(c)           For purposes of the Stockholder
Covenants, the term “Coverage Period” means the period beginning on, and
including, the Date of Termination, and ending on the earlier of
(i) ninety (90) days following the Date of Termination, and (ii) the
fifth anniversary of the Effective Time.

 

(d)           For purposes of the Stockholder
Covenants, the term “Date of Termination” means (i) in the case of
a termination of employment by a Stockholder, the date that is [ten (10)] days
after the delivery of written notice of such Stockholder’s termination, or such
earlier date as may be determined by the Company in its sole discretion, and
(ii) in the case of a termination of employment by the Company, the date
on which written notice is delivered by the Company to such Stockholder (unless
the Company in its sole discretion specifies another date of termination in
such notice).

 

(e)           For purposes of the Stockholder
Covenants, with respect to any particular Stockholder, the term “Employment
Period” means the period beginning on the date hereof and ending on the
Date of Termination.

 

Section 3.2.            Nonsolicitation of Clients.

 

(a)           Each Stockholder hereby agrees that
during the Employment Period and the Coverage Period, such Stockholder will
not, in any manner, directly or indirectly, (1) Solicit a Client to
transact business with a Competitive Enterprise or to reduce or refrain from
doing any business with the Company or (2) interfere with or damage (or
attempt to interfere with or damage) any relationship between the Company and a
Client.

 

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

 

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

 

6

 

Section 3.3.            Nonsolicitation of Employees. 
Each Stockholder hereby agrees that during the Employment Period and the
Coverage Period, such Stockholder will not, in any manner, directly or
indirectly, Solicit any person who is an Employee to resign from the Company or
to apply for or accept employment with any Competitive Enterprise.

 

Section 3.4.            Transfer of Client Relationships. 
During the Coverage Period, each Stockholder hereby agrees to take all
actions and do all such things as may be reasonably requested by the Company
from time to time to maintain for the Company the business, goodwill, and
business relationships with any of the Company’s Clients with whom such
Stockholder worked during the term of such Stockholder’s employment.

 

Section 3.5.            Prior Notice Required. 
Each Stockholder hereby agrees that prior to accepting employment with
any other person or entity during the Employment Period or the Coverage Period,
such Stockholder will provide such prospective employer with written notice of
the provisions of this Agreement, with a copy of such notice delivered
simultaneously to the General Counsel of the Company.

 

Section 3.6.            Stockholder Covenants Generally.

 

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

 

(b)           Each Stockholder understands that the
Stockholder Covenants may limit such Stockholder’s ability to earn a livelihood
in a business similar to the business of the Company.

 

(c)           Each Stockholder acknowledges that a
violation on such Stockholder’s part of any of the Stockholder Covenants would
cause irreparable damage to the Company. 
Accordingly, each Stockholder agrees that the Company will be entitled
to injunctive relief for any actual or threatened violation of any of the
Stockholder Covenants in addition to any other remedies it may have.

 

Section 3.7.            Damages.

 

(a)           Each Stockholder acknowledges that such
Stockholder’s compliance with the Stockholder Covenants is an important factor
to the continued success of the Company’s operations and its future
prospects.  Each Stockholder and the
Company agree that if at any time such Stockholder were to breach any of the
Stockholder Covenants, the damages to the Company would be material, but that
the amount of such damages would be uncertain and not readily
ascertainable.  Accordingly, each
Stockholder and the Company agree that if such Stockholder breaches any of the

 

7

 

Stockholder
Covenants at any time, such Stockholder shall forfeit to the Company that
number of his or her Common Shares that remain subject to the restrictions on
Disposition under Section 2.2 of this Agreement at such time (it being
understood that, for purposes of this Section 3.7, any Dispositions
otherwise permitted under Section 2.2 at such time shall be prohibited
with respect to the Stockholder) with a Fair Market Value at such time equal to
the dollar amount (the “Liquidated Damages”) by which the Fair Market
Value of all of the Common Shares held by the Stockholder at the time of such
breach exceeds the original purchase price for such shares by the Stockholder.

 

(b)           Each Stockholder and the Company agree
that the Liquidated Damages are reasonable in proportion to the probable
damages likely to be sustained by the Company if such Stockholder breaches at
any time any of the Stockholder Covenants, that the amount of actual damages to
be sustained by the Company in the event of such breach is incapable of precise
estimation and that such forfeiture is not intended to constitute a penalty or
punitive damages for any purposes.  The
forfeiture by such Stockholder of his or her Common Shares will not be
construed as a release or waiver by the Company of the right to prevent the
continuation of any such violation of such Stockholder Covenants in equity
(including injunctive relief) or otherwise.

 

(c)           Each Stockholder acknowledges and agrees
that the Liquidated Damages pursuant to this Section 3.7 shall be in
addition to, and not in lieu of, any required forfeitures of awards that may be
granted to such Stockholder in the future under one or more of the Company’s
compensation and benefit plans.

 

Section 3.8.            Retirement-Eligible Stockholders;
Employment Agreements.  In the case of any Stockholder
whose termination of employment constitutes a Retirement, or any Stockholder
who is party to an employment agreement with the Company or any of its
Subsidiaries, to the extent any provisions of such Stockholder’s
Non-competition/Non-Solicitation Agreement or employment agreement (as
applicable, an “Other Agreement”) relate to the subject matter of this
Article III and conflict with the provisions of this Article III in
any respect (including without limitation as to time periods or restricted
activities), the relevant provisions of the Other Agreement shall control.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

 

Section 4.1.            Each Stockholder severally represents and
warrants for himself to the Company and to each other Stockholder that:

 

(a)           At the Effective Time, such Stockholder
has good and marketable title to the Common Shares, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind, other than pursuant to this Agreement or pursuant to the Current
Stockholders Agreement;

 

(b)           This Agreement has been duly authorized,
executed and delivered by such Stockholder or by his attorney-in-fact on behalf
of such Stockholder and constitutes a valid and binding obligation of such
Stockholder;

 

8

 

(c)           The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein do not
and will not conflict with or result in a breach by such Stockholder of, or
constitute a default by such Stockholder under, any agreement or instrument to
which such Stockholder is a party or by which such Stockholder or his property
may be bound, or any existing applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over such Stockholder or his property; and

 

(d)           Such Stockholder has acquired his Common
Shares for his own account and not with a view to the sale or distribution
thereof.

 

ARTICLE V

MISCELLANEOUS

 

Section 5.1.            Term of the Agreement; Termination of
Current Stockholders Agreement.

 

(a)           Except as provided in Section 5.4
and this Section, the term of this Agreement shall continue with respect to any
Stockholder party hereto, until such time as such party no longer has any
rights or obligations hereunder, and, with respect to the Company, until such
time as there is no longer any Stockholder who continues to be a party hereto.

 

(b)           Unless this Agreement is earlier
terminated pursuant to this Section 5.1 hereof, a signatory to this
Agreement shall be bound by its terms until the later of (i) such time as
such signatory is no longer subject to the provisions of Article III of
this Agreement and (ii) such time as all Common Shares owned by such
signatory are free of the provisions of Article II of this Agreement.  This Agreement may be terminated prior to the
time specified in Section 5.1(a) by written agreement of the Company
and the holders of a majority of the Common Shares then subject to this
Agreement.

 

(c)           This Agreement shall be effective as of
the Effective Time, and as of such time the Current Stockholders Agreement
shall be terminated and be of no further force and effect.  For the avoidance of doubt, upon the
Effective Time this Agreement shall embody the entire understanding of the
parties hereto, and shall supersede in all respects (including, without
limitation, any provisions relating to redemption or repurchase by the Company
of its Common Shares) all prior agreements entered into by the Company or its
Subsidiaries relating to the subject matter of this Agreement.

 

Section 5.2.            Severability. 
If the final determination of a court of competent jurisdiction
declares, after the expiration of the time within which judicial review (if
permitted) of such determination may be perfected that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms and provisions
hereof shall be unimpaired and (b) the invalid or unenforceable term or
provision shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.

 

9

 

Section 5.3.            Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of laws thereof.

 

Section 5.4.            Representatives, Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their respective legatees, legal representatives,
successors and assigns; provided, however, that a Stockholder may
not assign this Agreement or any of his rights hereunder without the consent of
the Company and any assignment without such consent by a Stockholder shall be
void.  Each Stockholder shall use his
best efforts to cause each Family Affiliate and Family Member of such
Stockholder to comply with the terms and provisions of this Agreement, which
obligations shall be in addition to the conditions of any permitted Disposition
to such entities provided in Section 2.5 hereof.

 

Section 5.5.            Further Assurances. 
Each Stockholder agrees to execute such additional documents and take
such further action as may be reasonably necessary to effect the provisions of
this Agreement.

 

Section 5.6.            Execution in Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.

 

Section 5.7.            Amendments; Waivers.

 

(a)           This Agreement may not be amended,
modified, revoked or changed unless such modification is approved by the
Company and the Board of Directors.

 

(b)           The failure of any party at any time or
times to require performance of any provision of this Agreement shall in no
manner affect the rights at a later time to enforce the same.  No waiver by any party of the breach of any
term contained in this Agreement, whether by conduct or otherwise, in any one
or more instances, shall be deemed to be or construed as a further or continuing
waiver of any such breach or the breach of any other term of this Agreement.

 

Section 5.8.            Submission to Jurisdiction; Waiver of
Immunity.  Each Stockholder for itself and its
successors and assigns, hereby irrevocably (a) agrees that any legal or
equitable action, suit or proceeding against such Stockholder arising out of or
relating to this Agreement or any transaction contemplated hereby or the
subject matter of any of the foregoing may be instituted in any state or
federal court in the State of Delaware, (b) submits itself to the
exclusive jurisdiction of any state or federal court of competent jurisdiction
in the State of Delaware for purposes of any such action, suit or proceeding,
(c) waives any objection, and agrees not to assert as a defense in any
such action, suit or proceeding, that (i) it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts, (ii) the venue thereof may not be appropriate and
(ii) the internal laws of the State of Delaware do not govern the
validity, interpretation or effect of this Agreement, (d) waives any
immunity from jurisdiction to which it might otherwise be entitled in any such
action, suit or

 

10

 

proceeding
which may be instituted in any state or federal court in the State of Delaware,
and (e) waives any immunity from the maintaining of an action against it
to enforce any judgment for money obtained in any such action, suit or
proceeding and, to the extent permitted by applicable law, any immunity from
execution.

 

Section 5.9.            Specific Performance. 
Each of the parties hereto acknowledges that it will be impossible to
measure in money the damage to the Company or the Stockholders if any party
hereto fails to comply with the provisions of this Agreement and each party
hereto agrees that in the event of any such failure, neither the Company nor
any Stockholder will have an adequate remedy at law.  Therefore, the Company and each Stockholder,
in addition to all of the other remedies which may be available at law or in
equity, shall have the right to equitable relief, including, without
limitation, the right to enforce specifically the provisions of this Agreement
and to obtain injunctive relief against any violation thereof or otherwise.

 

Section 5.10.          Notices.  All notices
to be given by any party hereunder shall be in writing and shall be deemed to
have been duly given if mailed, by first class or registered mail or overnight
courier, telexed or telecommunicated, sent by telegram, or delivered to a
Stockholder at such Stockholder’s address as reflected in the books and records
of the Company or otherwise to such Stockholder at his principal place of
employment with the Company, or in the case of the Company, to it at the
following address:

 

KBW, Inc.

787 Seventh Avenue

New York, NY 10019

Attention:  General Counsel

 

The
parties may change their respective addresses for purposes of notices hereunder
by giving notice of such change to all other parties in the manner provided in
this Section.

 

Section 5.11.          Gender.  For the
purposes of this Agreement, the words “he”, “his” or “himself” shall be
interpreted to include the masculine, feminine and corporate or trust form.

 

11

 

IN WITNESS
WHEREOF, the parties hereto have caused this instrument to be duly executed as
of the day and year first above written.

 

	
   

  	
  KBW, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  

 

12

 

EXHIBIT A

STOCKHOLDERS

 

	
  Name of Stockholder

  	
   

  	
  Signature

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