Document:

exv4w5

Exhibit
4.5

MANAGEMENT STOCKHOLDERS’ AGREEMENT

          MANAGEMENT
STOCKHOLDERS’ AGREEMENT dated as of November 23, 2010 among LPL Investment Holdings Inc., a
Delaware corporation (the “Company”) and Stephanie L. Brown, Mark S. Casady, William E.
Dwyer III, Robert J. Moore and Esther M. Stearns (each an “Executive” and collectively, the
“Executives”).

          WHEREAS, on June 5, 2008, the Company filed a Registration Statement on Form S-8 of the
Securities Act with the SEC to register Shares issued upon exercise of Options granted under
certain of the Company’s equity plans, including certain Shares Beneficially Owned by the
Executives, and these Shares are freely tradable in the public market, subject to certain
contractual and legal restrictions (capitalized terms as defined herein);

          WHEREAS, on June 4, 2010, the Company filed a Registration Statement on Form S-1 of the
Securities Act with the SEC to register certain Shares for sale in the public market (the proposed
“IPO”), including certain Shares Beneficially Owned by the Executives (capitalized terms as
defined herein);

          WHEREAS, in connection with the IPO, the Company and the Executives have agreed to enter into
this Agreement governing the Executives’ ownership of the Executive Shares (capitalized terms as
defined herein);

          NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, agree as follows:

ARTICLE I. DEFINITIONS

                    Section 1.01 Certain Defined Terms. As used herein, the following terms shall have the
following meanings:

          (a) “Agreement” means this Management Stockholders’ Agreement as it may be amended,
supplemented, restated or modified from time to time.

          (b) “Annual Carryover” means, for each Executive, for each Year, the percentage
calculated pursuant to Column 3 of the table in Section 2.02(a).

          (c) “Annual Percentage” means, for each Executive, for each Year, the percentage
set forth in column two of the table in Section 2.02(a).

          (d) “Beneficial Ownership” means beneficial ownership within the meaning of Rule
13d-3 under the Exchange Act, or any successor provision, provided that for purposes of this
Agreement, a Person shall only be deemed to be the “beneficial owner” of securities such Person
has the right to acquire on the date of determination and shall not be deemed to be the
“beneficial owner” of securities such Person does not have the right to acquire on the date of
determination but will have the right to acquire within 60 days thereof.

 

 

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

          (f) “Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in New York.

          (g) “Charitable Organization” means a charitable organization described by
Section 501(c)(3) of the Internal Revenue Code of 1986, as in effect from time to time.

          (h) “Change of Control” means the consummation of (i) any transaction or series of
related transactions, whether or not the Company is party thereto, after giving effect to which
in excess of fifty percent (50%) of the Company’s voting power is owned directly, or indirectly
through one or more entities, by any person and its “affiliates” or “associates” (as such terms
are defined in the Exchange Act Rules) or any “group” (as defined in the Exchange Act
Rules) other than, in each case, the Company or an Affiliate of the Company
immediately following the Closing, or (ii) a sale or other disposition of all or substantially
all of the consolidated assets of the Company (each of the foregoing, a “Business
Combination”), provided that, notwithstanding the foregoing, a Change in Control shall not
be deemed to occur as a result of a Business Combination following which the individuals or
entities who were beneficial owners of the outstanding securities entitled to vote generally in
the election of directors of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, 50% or more of the outstanding securities entitled to
vote generally in the election of directors of the resulting, surviving or acquiring
corporation in such transaction.

          (i) “Common Stock” means shares of common stock of the Company, par value $0.001.

          (j) “Company” has the meaning set forth in the preamble.

          (k) “Convertible Securities” means any evidence of indebtedness, shares of stock
(other than Common Stock), securities issuable under the 2008 Deferred Compensation Plan, or
other securities (other than Options) which are directly or indirectly convertible into or
exchangeable or exercisable for shares of Common Stock.

          (l) “Deferred Compensation Plan” means the Company’s 2008 Deferred Compensation
Plan.

          (m) “Deferred Compensation Plan Payment” has the meaning set forth in Section
2.01(b).

          (n) “Disability” shall, for each Executive, have the meaning set forth in such
Executive’s Employment Agreement.

          (o) “Employment Agreement” shall, for each Executive, mean the employment
agreement between such Executive and the Company, dated as of and effective upon the
consummation of the IPO, as such agreement may be amended from time to time.

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          (p) “Equivalent Shares” means that number of Shares issuable upon the exercise or
conversion of a vested Option or other vested Convertible Security.

          (q) “Estate Planning Vehicle” means an estate planning vehicle established and
maintained solely for the benefit of an Executive or such Executive’s immediate family
member(s).

          (r) “Executive” means each executive of the Company listed in the preamble hereto.

          (s) “Executive Shares” shall, for each Executive on each date of calculation, mean
all Shares Beneficially Owned by such Executive on the Measurement Date.

          (t) “Executive Stock Ownership Guidelines” means the Company’s stock ownership
guidelines adopted on November 17, 2010, as such ownership guidelines may be amended or supplemented by the
Board.

          (u) “Exchange Act” means the Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder.

          (v) “immediate family member” means with respect to any Executive, (a) any lineal
descendant or ancestor or sibling (by birth or adoption) of such Executive, (b) any spouse or
former spouse of any of the foregoing (other than a spouse or former spouse to whom a Transfer
is effected through a settlement agreement or domestic relations order), (c) any legal
representative or estate of any of the foregoing, or the ultimate beneficiaries of the estate
of any of the foregoing, if deceased or (d) any trust or other bona fide estate-planning
vehicle the only beneficiaries of which are any of the foregoing Persons described in clauses
(a) through (c) above.

          (w) “IPO” has the meaning set forth in the whereas clauses hereof.

          (x) “IPO Carryover Percentage” means, for each Executive, at the time of
calculation the percentage set forth in Schedule 1.01(x) minus the total percentage of Shares
sold by such Executive pursuant to Section 2.01(b) prior to such calculation.

          (y) “Litigation” has the meaning set forth in Section 5.07(a).

          (z) “Lock-Up Period” means, for each Executive, the period during which such
Executive’s Shares are subject to transfer and other restrictions pursuant to (i) a Selling
Stockholder Agreement among the Executive, the Company and the Custodian (as defined therein)
with respect to Shares sold in the IPO, (ii) a Non Participating Holder Agreement between the
Executive and the Company, (iii) a Lock-Up Agreement dated [•], 2010, (iv) Section 6.4 of the
Stockholders Agreement, or (v) Section 1(b)(iv) of the Underwriting Agreement, as applicable.

          (aa) “Maximum Annual Percentage” means, for each Executive and his or her
Permitted Transferees, for each Year, the percentage calculated in accordance with Column 5 of
the table set forth in Section 2.02(a).

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          (bb) “Measurement Date” means the day immediately prior to the consummation of
Company’s IPO.

          (cc) “Options” means any options to subscribe for, purchase or otherwise directly
acquire Common Stock, issued to an Executive pursuant to the Company’s (i) 2005 Stock Option
Plan (Incentive Stock Options), (ii) 2005 Stock Option Plan (Non-Qualified Stock Options),
(iii) 2008 Stock Option Plan or (iv) any Company plan entered into after the date hereof.

          (dd) “Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including any governmental
authority.

          (ee) “Payment Date” has the meaning set forth in the Company’s 2008 Nonqualified
Deferred Compensation Plan.

          (ff) “Permitted Transferees” of an Executive means collectively (i) any Charitable
Organization to whom Restricted Shares are transferred pursuant to Section 2.01(d)(ii) and (ii)
any Person to whom Executive Shares are transferred pursuant to Section 2.01(e).

          (gg) “Restricted Shares” has the meaning set forth in Section 2.01(d).

          (hh) “Securities Act” means the Securities Act of 1933, as amended, or any
successor federal statute thereto, and the rules and regulations of the SEC promulgated
thereunder.

          (ii) “Shares” means (i) all shares of Common Stock, including all shares of Common
Stock issued upon the exercise, conversion or exchange of any Options or Convertible Securities
and (ii) all Options and Convertible Securities (treating the Options and Convertible
Securities as a number of Shares equal to the number of Equivalent Shares represented by the
Options and Convertible Securities for all purposes of this Agreement, except as otherwise
specifically set forth herein).

          (jj) “Tax Payment” means, for each Executive, the taxes payable on such
Executive’s Deferred Compensation Payment, calculated based on the highest combined marginal
federal, state and local income tax rates then applicable to such Executive.

          (kk) “Transfer” mean any sale, pledge, assignment, encumbrance or other transfer
or disposition of any Shares to any Person, whether directly, indirectly, voluntarily,
involuntarily, by operation of law, pursuant to judicial process or otherwise.

          (ll)
“Underwriting Agreement” means the
underwriting agreement, dated as of November 17, 2010,
2010, by and among the Company and Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated,
as representatives of the several underwriters signatory thereto.

          (mm) “Unrestricted Shares” has the meaning set forth in Section 2.01(d).

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          (nn) “Year” means any of Year One through Year Four

          (oo) “Year Four” means the twelve (12) month period beginning on and including the
day immediately following the last day of Year Three and ending on the first anniversary of
such date.

          (pp) “Year One” means the twelve (12) month period beginning on the day
immediately following the Measurement Date and ending on the first anniversary of such date.

          (qq) “Year Three” means the twelve (12) month period beginning on and including
the day immediately following the last day of Year Two and ending on the first anniversary of
such date.

          (rr) “Year Two” means the twelve (12) month period beginning on and including the
day immediately following the last day of Year One and ending on the first anniversary of such
date.

          Section 1.02 Certain Matters of Construction. In addition to the definitions referred
to or set forth above in this Article I:

          (a)
The words “hereof,” “herein,” “hereunder” and words of similar import shall refer to
this Agreement as a whole and not to any particular Section or provision of this Agreement, and
reference to a particular Section of this Agreement shall include all subsections thereof;

          (b) The word “including” means including, without limitation;

          (c) Definitions shall be equally applicable to both nouns and verbs and the singular and
plural forms of the terms defined;

          (d) The masculine, feminine and neuter genders shall each include the other; and

          (e) Except where the context requires otherwise, “or” is inclusive.

ARTICLE
II. TRANSFER RESTRICTIONS.

          Section 2.01 Transfer Restrictions. No Executive and no Permitted Transferee of such
Executive may Transfer all or any portion of his or her Executive Shares except in compliance with
this Article II. Any purported Transfer of Executive Shares that is not in accordance with this
Article II, or subsequently violates, this Agreement shall be, to the fullest extent permitted by
law, null and void ab initio.

          (a) Subject to Section 2.02 and Section 2.03 hereof, in each Year:

(i) each Executive together with his or her Permitted Transferees may collectively
Transfer Executive Shares Beneficially Owned by such Executive

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and his or her Permitted Transferees in an aggregate amount up to the Adjusted
Annual Percentage of the Shares Beneficially Owned by such Executive on the
Measurement Date for such Executive for such Year;

(ii) except as provided in clauses (b), (c) or (d) below, no Executive and no
Permitted Transferee will Transfer Executive Shares Beneficially Owned by such
Executive or his or her Permitted Transferees in an amount exceeding the Adjusted
Annual Percentage for such Executive for such Year; and

(iii) the Adjusted Annual Percentage for each Executive together with his or her
Permitted Transferees for each Year shall be the percentage calculated in accordance
with the following table:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Column 4	 	Column 5
	 	 	Column 2	 	Column 3	 	Adjusted	 	Maximum
	Column 1	 	Annual	 	Annual	 	Annual	 	Annual
	Year	 	Percentage	 	Carryover1	 	Percentage2	 	Percentage3
	Year One
	 	8%
	 	0%
	 	8%
	 	8%
	Year Two
	 	8%
	 	0%-8%
	 	8%-16%
	 	16%
	Year Three
	 	8%
	 	0%-16%
	 	8%-24%
	 	24%
	Year Four
	 	8%
	 	0%-24%
	 	8%-32%
	 	32%

 

			
	1.	 	Calculated for each Executive and his or her Permitted Transferees for
each Year by subtracting the total percentage of Executive Shares Transferred by such
Executive and his or her Permitted Transferees in the previous Year from the Adjusted
Annual Percentage for the previous Year. For example, if an Executive together with his
or her Permitted Transferees Transfers 7% of his or her Executive Shares in Year One, the
Annual Carryover for Year One is 1%.
	 
	2.	 	Calculated for each Executive and his or her Permitted Transferees for each
Year by adding the Annual Percentage for a given Year to the Annual Carryover for the
previous Year.
	 
	3.	 	The Adjusted Annual Percentage in any Year cannot exceed the
Maximum Annual Percentage for such Year.

          (b) Subject to Section 2.02 and Section 2.03, in any Year, in addition to any
Executive Shares Transferred pursuant to Section 2.01(a) hereof, each Executive may transfer
Executive Shares Beneficially Owned by such Executive in an amount up to his or her IPO
Carryover Percentage.

          (c) Notwithstanding clause (a) or (b) above, but subject to Section 2.03 and Section 2.04,
for the thirty (30) days prior to or the ninety (90) days after the next scheduled Payment Date
pursuant to the Company’s 2008 Nonqualified Deferred Compensation Plan (such payment, a
“Deferred Compensation Plan Payment”), each Executive may Transfer that number of
Executive Shares (or a lesser number of Executive Shares) on the open market that must be
Transferred to return sales proceeds in an amount equal to the Tax Payment. The number of
Executive Shares Transferable by an Executive pursuant to this provision shall be rounded up to
the nearest whole number of Shares;

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          (d) Notwithstanding clause (a) above, but subject to Section 2.02 and Section 2.03, an
Executive may Transfer (through one or more gratuitous Transfers) to one or more Charitable
Organizations:

(i) up to twenty-five percent (25%) of his or her Executive Shares in the aggregate
through one or more Transfers (any Shares Transferred before the twenty-five percent
(25%) threshold is hit, the “Unrestricted Shares”), provided that any such
Transfer is not a transfer for value, and such Unrestricted Shares shall not be
subject to the transfer restrictions set forth in Section 2.02(a); and

(ii) Executive Shares exceeding twenty-five percent (25%) of his or her Executive
Shares (any Shares Transferred after the twenty-five percent (25%) threshold is hit,
the “Restricted Shares”) provided that any such Transfer is not a Transfer
for value, provided further that, in the case of this clause (ii), such Charitable
Organization shall acknowledge its obligations under this Agreement in a written
instrument acceptable in form and substance to the Company and delivered to the
Company, and provided, further, that such Restricted Shares (x) shall remain subject
to the transfer restrictions set forth in Section 2.02(a) to the same extent as if
such Executive Shares continued to be Beneficially Owned by the Executive and the
certificates representing such Shares shall bear the legend set forth in Section
3.01 as and for so long as Transfer of such Shares is limited by this Agreement, (y)
the Charitable Organization shall notify the Company prior to Transferring the
Restricted Shares and (z) such Transfer by such Executive and any further Transfers
of any such Shares by such Charitable Organization will be included for purposes of
the calculations with respect to such Executive and his or her Permitted Transferees
in Section 2.01(a)(iii) and provided further, that any Shares Transferred pursuant
to this Section 2.01(d) must be Shares of Common Stock.

          (e) Notwithstanding clause (a) above, but subject to Section 2.02 and Section 2.03, an
Executive may Transfer any or all of his or her Executive Shares to (i) any immediate family
member of such Executive or (ii)

a spouse or former spouse of such Executive to whom a Transfer is effected through a settlement agreement or
 domestic relations order or (iii) to any Estate Planning Vehicle for the benefit of such
Executive, provided in each case that such Permitted Transferee shall acknowledge its
obligations under this Agreement in a written instrument acceptable in form and substance to
the Company and delivered to the Company  stating that (x) any Executive Shares Transferred pursuant to this
Section 2.02(e) shall remain subject to the transfer restrictions set forth in Section 2.02(a)
to the same extent as if such Executive Shares continued to be Beneficially Owned by the
Executive and the certificates representing such Shares shall bear the legend set forth in
Section 3.01 as and for so long as Transfer of such Shares is limited by this Agreement, (y)
the holder of such Executive Shares shall notify the Company prior to Transferring the Shares
and (z) such Transfer by such Executive and any further Transfers of any such Shares by such
Permitted Transferee will be included for purposes of the calculations with respect to such
Executive and his or her Permitted Transferees in Section 2.01(a)(iii).

          (f) Except as specifically provided in Section 2.03, no Shares purchased or acquired by
the Executive after the Measurement Date (“Post-Measurement Date Shares”)

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shall increase the number of Executive Shares held by an Executive. An Executive may
Transfer Post-Measurement Date Shares without restriction under this Agreement. An Executive
may substitute Post-Measurement Date Shares for Executive Shares and, by doing so Transfer
Executive Shares in lieu of Post-Measurement Date Shares, so long as the certificate(s)
representing the Post-Measurement Date Shares so substituted are legended in accordance with
Section 3.01 (upon which such Post-Measurement Date Shares shall be considered “Executive
Shares” and the Executive Shares for which such Post-Measurement Date Shares are
substituted shall no longer be considered Executive Shares and replaced with certificates that
are not legended in accordance with Section 3.01) and the aggregate number of Executive Shares
is not reduced by such substitution.

                    Section 2.02 Compliance with Law and Company Policies. Notwithstanding any other
provision of this Agreement, no Executive shall Transfer any Executive Shares unless the Transfer
is effected (a) pursuant to an effective registration statement under the Securities Act and in
compliance with any other applicable federal securities laws and state securities or “blue sky”
laws or (b) pursuant to an exemption from registration under the Securities Act and in compliance
with any other applicable federal securities laws and state securities or “blue sky” laws and (c)
in compliance with Company policies, including the policy on insider trading.

                    Section 2.03 Minimum Retained Ownership Requirement. Notwithstanding any other
provision of this Agreement, each Executive shall comply with the Company’s Executive Stock
Ownership Guidelines and shall continue to hold (and may not Transfer) Executive Shares in an
amount equal to or sufficient to meet the amount required by such guidelines. For purposes of this
provision, the “Measurement Date” in the definition of Executive Shares shall be the date of
calculation.

                    Section 2.04 Period. The foregoing provisions of this Article II shall expire upon
the earlier of (a) the fourth anniversary of the Measurement Date, (b) a Change of Control, (c)
with respect to the Executive Shares of any Executive and his or her Permitted Transferees, the
death of such Executive, (d) with respect to any Executive and his or her Permitted Transferees,
the Disability of such Executive, (e) with respect to any Executive and his or her Permitted
Transferees, the termination of such Executive’s employment with LPL or (f) with respect to any
Executive, the time at which such Executive is no longer an Executive Officer. For purposes of
this Section 2.04, an “Executive Officer” shall mean any person who is an officer of the Company
under Rule 16a-1(f) under the Exchange Act.

ARTICLE III. LEGENDS.

                    Section 3.01 Restrictive Legend. Each certificate representing Shares shall have the
following legend endorsed conspicuously thereupon:

THE SALE, ENCUMBRANCE OR OTHER DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE, ARE SUBJECT TO THE PROVISIONS OF A MANAGEMENT STOCKHOLDERS’
AGREEMENT DATED AS OF NOVEMBER 23 2010 TO WHICH THE ISSUER AND CERTAIN OF ITS
STOCKHOLDERS ARE PARTY, A COPY OF WHICH MAY BE INSPECTED AT THE

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PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM THE ISSUER WITHOUT CHARGE.

ARTICLE IV. AMENDMENT, TERMINATION, ETC.

     Section 4.01 Oral Modifications. This Agreement may not be orally amended, modified,
extended or terminated, nor shall any oral waiver of any of its terms be effective.

     Section 4.02 Written Modifications. This Agreement may be amended, modified, extended
or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by
the Company and any Executive whose rights under this Agreement are materially modified by such
amendment, modification, extension or termination (it being understood that the waiver by the
Company of any obligation of one Person shall not be considered a modification of the rights of any
other Person). Each party hereto and, to the extent Executive Shares have been transferred
pursuant to Section 2.01(d) hereof, each non-Executive holder of Executive Shares subject hereto,
may waive any of its rights hereunder by an instrument in writing signed by such party or holder.

     Section 4.03 Effect of Termination. No termination under this Agreement shall relieve
any Person of liability for breach prior to termination.

ARTICLE V. MISCELLANEOUS

     Section 5.01 Severability. If any provision of this Agreement shall be declared by
any court of competent jurisdiction to be illegal, void or unenforceable, all other provisions of
this Agreement, to the extent permitted by law, shall not be affected and shall remain in full
force and effect. Upon any such determination, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable substitute provision to effect the original intent of
the parties.

     Section 5.02 Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement embodies the complete agreement and understanding among the parties hereto with respect
to the subject matter hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related to the subject
matter hereof in any way.

     Section 5.03 Successors and Assigns. Neither this Agreement nor any of the rights or
obligations of any party under this Agreement shall be assigned, in whole or in part (except by
operation of law pursuant to a merger), by any Executive without the prior written consent the
Company and, with respect to any assignment by the Company to a non-affiliated entity, each
Executive party hereto. This Agreement shall bind and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assigns.

     Section 5.04 Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall constitute one and the
same agreement.

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     Section 5.05 Remedies.

          (a) Each party hereto acknowledges that monetary damages would not be an adequate remedy in
the event that each and every one of the covenants or agreements in this Agreement are not
performed in accordance with their terms, and it is therefore agreed that, in addition to and
without limiting any other remedy or right it may have, the non-breaching party will have the right
to an injunction, temporary restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically each and every one of the terms
and provisions hereof. Each party hereto agrees not to oppose the granting of such relief in the
event a court determines that such a breach has occurred, and to waive any requirement for the
securing or posting of any bond in connection with such remedy.

          (b) All rights, powers and remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.

     Section 5.06 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (upon telephonic confirmation
of receipt), on the first Business Day following the date of dispatch if delivered by a recognized
next day courier service, or on the third Business Day following the date of mailing if delivered
by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered to the Company or Executive as designated on Schedule 5.06, or pursuant to such
other instructions as may be designated in writing by the party to receive such notice.

     Section 5.07 Governing Law; Consent to Jurisdiction.

          (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware. The parties hereto agree that any suit, action or proceeding (“Litigation”)
seeking to enforce any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be brought in any federal court
located in the State of Delaware or any Delaware state court. Each of the parties hereto hereby
irrevocably and unconditionally waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any such Litigation, the defense of sovereign immunity, any claim
that it is not personally subject to the jurisdiction of the aforesaid courts for any reason, other
than the failure to serve process in accordance with this Section 5.07, that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by
applicable law, that the Litigation in any such court is brought in an inconvenient forum, that the
venue of such Litigation is improper, or that this Agreement, or the subject matter hereof, may not
be enforced in or by such particular courts and further irrevocably waives, to the fullest extent
permitted by applicable law, the benefit of any defense that would hinder, fetter or delay the
levy, execution or collection of any amount to which the party is entitled pursuant to the final
judgment of any court having jurisdiction. Each of the parties irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in
connection with any Litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.

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          (b) Each of the parties hereto irrevocably consents to the service of process out of any of
the aforementioned courts in any such Litigation by the mailing of copies thereof by registered
mail, postage prepaid, to such party at its address set forth in this Agreement, such service of
process to be effective upon acknowledgment of receipt of such registered mail.

          (c) The parties hereto each expressly acknowledge that the foregoing waivers are intended to
be irrevocable under the laws of the State of Delaware and of the United States of America;
provided that consent by the parties hereto to jurisdiction and service contained in this Section
5.07 solely for the purpose referred to in this Section 5.07 and shall not be deemed to be a
general submission to said courts or in the State of Delaware other than for such purpose.

     Section 5.08 Interpretation. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

     Section 5.09 Further Assurances. Each Executive shall from time to time execute and
deliver all such further documents and do all acts and things as the Company or the other
Executives party hereto may reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.

     Section 5.10 Effectiveness. This Agreement shall become effective contemporaneously with
the consummation of the IPO. This Agreement shall not become effective and shall automatically be
of no force or effect if the IPO is not consummated on or before June 30, 2011.

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

	 	 	 	 	 
	 	LPL INVESTMENT HOLDINGS INC.

 	 
	 	By:  	/s/
STEPHANIE L. BROWN	 
	 	 	Name:  	Stephanie L. Brown	 
	 	 	Title:  	Secretary and Vice President	 
	 

 

 

	 	 	 	 	 	 	 

	 	 	THE EXECUTIVES:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ STEPHANIE L. BROWN	 	 
	 

	 	 	 	 

Stephanie L. Brown
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ MARK S. CASADY	 	 
	 

	 	 	 	 

Mark S. Casady
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ WILLIAM E. DWYER III	 	 
	 

	 	 	 	 

William E. Dwyer III
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ ROBERT J. MOORE	 	 
	 

	 	 	 	 

Robert J. Moore
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ ESTHER M. STEARNS	 	 
	 

	 	 	 	 

Esther M. Stearns
	 	 

 

 

Schedule 1.01(x) — IPO Carryover Percentage

	 	 	 	 
	Executive	 	IPO Carryover Percentage	 
	Stephanie L. Brown
	 	0%
	 
	 	 	
	Mark S. Casady
	 	1.06%
	 
	 	 	
	William E. Dwyer III
	 	7.76%
	 
	 	 	
	Robert J. Moore
	 	10%
	 
	 	 	
	Esther M. Stearns
	 	0%

 

 

Schedule 5.06 — Notice Addresses

If to the Company:

c/o LPL Investment Holdings Inc.

One Beacon Street

Boston, Massachusetts 02108

Attention: Stephanie Brown

Fax: 617-556-2811

with a copy (which shall not constitute notice) to:

Ropes & Gray LLP

One International Place

Boston, Massachusetts 02110

Attention: Julie H. Jones

Fax: (617) 951-7294

If to Stephanie L. Brown:

If to Mark S. Casady:

If to William E. Dwyer III:

If to Robert J. Moore:

If to Esther M. Stearns:exv10w23

Exhibit 10.23

LPL FINANCIAL CORPORATION

EXECUTIVE SEVERANCE PLAN

Introduction

     The purpose of Plan is to enable the Company and its subsidiaries to offer a form of
protection to members of the Executive Management Committee in the event their employment with the
Company or a subsidiary terminates.

     Accordingly, the Board has adopted the Plan effective on the Effective Date as herein defined,
for selected members of the Executive Management Committee in an effort to assist in replacing the
loss of income caused by a termination of employment under the circumstances described herein.

     The Plan supersedes any severance plans, policies and/or practices of the Company and any
subsidiary in effect for employees who participate in the Plan. The Severance Benefits payable
under this Plan apply to Qualifying Terminations on and after the Effective Date.

     The Plan is intended to alleviate some of the financial hardship that Eligible Employees may
experience when their employment is terminated for a reason covered by the Plan. In essence, the
Severance Benefits are intended to be supplemental unemployment benefits. The Severance Benefits
are not intended as deferred compensation and no individual shall have a vested right in such
benefits.

     The Company, as the Plan sponsor, has the sole discretion to determine whether an employee may
be considered eligible for Severance Benefits under the Plan. All actions taken by the Company
shall be in its role as the sponsor of the Plan, and not as a fiduciary. Nothing in the Plan will
be construed to give any employee the right to receive severance payments, except as set forth
herein, or to continue in the employment of the Company or any of its subsidiaries. The Plan is
unfunded, has no trustee, and is administered by the Compensation Committee of the Board (or such
other committee appointed by the Board for purposes of administering the Plan). The Plan is
intended to be an “employee welfare benefit plan” within the meaning of section 3(1) of ERISA and
it shall be administered as a top hat plan that is exempt from the substantive requirements of
ERISA.

     All capitalized terms in this Introduction shall have the meaning ascribed to them in Article
2 below.

Article 1. Establishment, Term and Purpose

     1.1 Establishment of the Plan. The Company hereby establishes an executive severance plan to
be known as the “LPL Financial Corporation Executive Severance Plan.”

     1.2 Term of the Plan. The Plan, as set forth herein, will commence on the Effective Date and
will continue until terminated or amended by action of the Board or the Committee in accordance
with Section 12.6.

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     1.3 Purpose of the Plan. The purpose of the Plan is to provide Eligible Employees Severance
Benefits in the event of a Qualifying Termination.

Article 2. Definitions

     Whenever used in the Plan, the following terms shall have the meanings set forth below and,
when the meaning is intended, the initial letter of the word is capitalized:

     2.1 “Accrued Compensation” means (i) the Participant’s Base Salary paid through the
Participant’s Separation Date; (ii) reimbursement for reasonable business expenses incurred in the
ordinary course of the Participant’s duties prior to the Participant’s Separation Date and in
accordance with Company policies; provided claims for such reimbursement are submitted to the
Company within 60 days following the Participant’s Separation Date; and (iii) such employee
benefits, if any, as to which the Participant may be entitled under the Company’s employee benefit
plans.

     2.2 “Base Salary” means the Participant’s annual base salary in effect on the Separation Date.

     2.3 “Beneficiary” means the Participant’s estate.

     2.4 “Board” means the Board of Directors of LPL Investment Holdings Inc.

     2.5 “Cause” means an Eligible Employee’s: (i) failure to substantially perform his usual
duties of employment with the Company (other than as a result of an illness or injury) for a period
of 10 days following notice by the Company to the Eligible Employee of such failure; (ii) fraud,
embezzlement, dishonesty or theft related to employment; (iii) an act or acts constituting a
felony, a violation of any federal or state securities or banking laws or a misdemeanor involving
moral turpitude; (iv) willful malfeasance, willful misconduct or gross negligence in connection
with the Eligible Employee’s employment duties or any act or omission that is injurious to the
financial condition or business reputation of the Company and its affiliates; or (v) breach of the
restrictive covenants in Sections 6.1, 6.2 or 6.3.

     2.6 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

     2.7 “Code” means the Internal Revenue Code of 1986, as amended.

     2.8 “Committee” means the Compensation Committee of the Board, or any other committee
appointed by the Board to perform the functions of the Compensation Committee.

     2.9 “Company” means LPL Financial Corporation or any successor thereto.

     2.10 “Effective Date” means the closing of the 2010 initial public offering of common stock of
LPL Investment Holdings Inc.

2

 

     2.11 “Eligible Employee” means each member of the Executive Management Committee who has not
entered into an employment or severance contract (other than the Plan) with the Company or an
affiliate.

     2.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     2.13 “Executive Management Committee” means executive employees of the Company or its
affiliates who are designated by the Board as members of such committee.

     2.14 “Good Reason” shall mean only the occurrence, without the Participant’s express written
consent (which may be withheld for any or no reason) of any of the events or conditions described
herein, provided that, the Participant gives written notice to the Company of the occurrence of
Good Reason within ninety (90) days following the date on which the Participant first knew or
reasonably should have known of such occurrence and the Company shall not have fully corrected the
situation within thirty (30) days following such notice. The following occurrences shall
constitute Good Reason for purposes of this Plan: (i) a material reduction in the Participant’s
Base Salary unless such reduction is consistent with reductions made in the applicable annual base
salaries of other similarly situated employees of the Company or (ii) a material adverse change in
the Participant’s title from managing director (but not changes in functional titles); provided
that “Good Reason” shall cease to exist for an event on the ninetieth (90th) day
following the date on which the Participant knew or reasonably should have known of such event and
failed to give notice as described above or the Participant fails to terminate employment within
fourteen (14) days following the expiration of the cure period.

     2.15 “Involuntary Termination” means the termination of a Participant’s employment by the
Company for any reason other than death, Permanent Disability or Cause.

     2.16 “Participant” means an Eligible Employee who has satisfied the conditions for
participation in Section 3 and thereby becomes eligible for Severance Benefits under the Plan.

     2.17 “Permanent Disability” means a physical or mental incapacity or disability of a
Participant which is determined by a qualified third party medical expert to render the Participant
unable to substantially perform all of the usual duties of employment with the Company (with
reasonable accommodations that do not cause an undue hardship) (i) for one-hundred twenty (120)
days in any twelve (12) month period or (ii) for a period of ninety (90) successive days.

     2.18 “Plan” means this LPL Financial Corporation Executive Severance Plan, as may be amended
from time to time.

     2.19 “Proprietary Information” means trade secrets or proprietary or confidential information
of any of the Company or its affiliates, or of any third party which any one of the Company or its
affiliates is under an obligation to keep confidential (including, but not limited to, intellectual
property rights and information related to the business of any of the Company or its affiliates and
any of their clients or representatives that (a) confers or tends to confer a competitive advantage
on any of the Company or its affiliates or (b) that has commercial value for any of the Company or
its affiliates). This includes but is not limited to: contracts; marketing materials and business
strategies; legal information; regulatory information; product information;

3

 

mark-up guidelines; client lists (including the names, addresses, telephone numbers and
account numbers of clients, the trade history with each client, and all other information on client
lists); lists of client prospects, financial advisors, business partners, brokers and/or
representatives; software programs; software source documents, financial information and
projections; and all concepts, plans, proposals or information about current, future and proposed
business or sales.

     2.20 “Qualifying Termination” means (i) an Involuntary Termination or (ii) a voluntary
termination of the Participant’s employment for Good Reason.

     2.21 “Release” means a general release agreement which contains, among other provisions, a
general release of all claims of any kind whatsoever against the Company and its affiliates, their
officers, directors and employees, known or unknown, as of the Separation Date.

     2.22 “Separation Date” means the Participant’s last active day of employment with the Company.

     2.23 “Severance Benefits” means the payment of severance compensation as provided in Section
4.2 herein.

     2.24 “Severance Period” and “Restricted Period” means one (1) year following the Separation
Date.

     2.25 “Voluntary Resignation” means any retirement or voluntary resignation from employment
other than for Good Reason.

Article 3. Participation

     3.1 Eligible Employees. Each Eligible Employee who incurs a Qualifying Termination and
satisfies the conditions of Section 3.2 shall be a Participant and shall receive the Severance
Benefits described in the Plan.

     3.2 Release. As a condition of receiving benefits hereunder, a Participant shall be required
to provide the Company with a Release. The Release shall be in the form provided by the Company
and must be executed within the time period specified by the Company, which shall not exceed sixty
(60) days following the Separation Date. Provided that the Participant has complied in all
material respects with the terms and conditions of the Release, the Company shall provide the
Participant with the payments set forth in Section 4.2.

Article 4. Severance Benefits

     4.1 Right to Severance Benefits. An Eligible Employee shall be entitled to receive from the
Company the Severance Benefits, as described in Section 4.2, if the Eligible Employee’s employment
with the Company ends on account of a Qualifying Termination, and the Eligible Employee executes,
and does not revoke, the Release. Eligible Employees shall not be entitled to receive Severance
Benefits if they are terminated for a reason that does not constitute a Qualifying Termination.

4

 

     4.2 Severance Benefits. In the event that a Participant becomes entitled to receive
Severance Benefits, the Company shall pay to the Participant the following:

	 	(a)	 	the Accrued Compensation, payable in a lump sum at the Company’s next regular
payday following the sixtieth (60th) day after the Separation Date or on such earlier
date as may be required or permitted under applicable law;
	 
	 	(b)	 	Base Salary during the Severance Period;
	 
	 	(c)	 	an amount equal to the bonus paid (or payable) to the Participant for the most
recently completed calendar year; and
	 
	 	(d)	 	an amount equal to 100% of the premium (including the additional amount, if
any, charged for administrative costs as permitted by COBRA) of continued health and
dental plan participation under COBRA for the Participant and for the Participant’s
qualified beneficiaries (as that term is defined under COBRA) for the one (1) year
period immediately following the Separation Date. Notwithstanding any provision herein
to the contrary, the premium payment shall be paid in a lump sum on the first business
day that is the earlier of (i) six (6) months following the Separation Date, or (ii) at
such time as otherwise permitted by law that would not result in additional taxation
and penalties under Code Section 409A.

Except as otherwise provided in Article 9 or elsewhere herein, any payments due under this Section
shall be payable in twelve (12) monthly installments during the Severance Period in accordance with
the Company’s normal payroll practices and shall begin at the Company’s next regular payday
following the sixtieth (60th) day after the Separation Date provided that the Participant has
executed and not revoked the Release and is compliant in all material respects with the Release
terms and conditions. For the avoidance of doubt, if the Participant does not execute a Release or
if the Participant revokes an executed Release within the time period permitted by law, the
Participant shall not be entitled to the Severance Benefits, other than the Accrued Compensation,
set forth in this Section 4.2. Except as described in this Section 4.2, neither the Company nor
any of its affiliates shall have any further obligations to the Participant under the Plan.

     4.3 Voluntary Resignation; Termination for Death or Permanent Disability. If an Eligible
Employee’s employment terminates on account of (a) Voluntary Resignation, (b) death, or (c)
Permanent Disability, then the Eligible Employee shall not be entitled to receive Severance
Benefits under this Plan and shall be entitled only to receive his or her Accrued Compensation.
Except as described in this Section 4.3, neither the Company nor any of its affiliates shall have
any further obligations to the Participant under the Plan.

     4.4 Termination for Cause. If an Eligible Employee’s employment terminates on account of
termination by the Company for Cause, the Eligible Employee shall not be entitled to receive
Severance Benefits and the Company shall pay the Eligible Employee his or her Accrued Compensation.
Notwithstanding any other provision of the Plan to the contrary, if the

5

 

Committee determines, at any time, that a Participant has engaged in conduct prior to the
Participant’s Separation Date that constitutes Cause, any Severance Benefits payable or provided to
the Participant under the Plan shall immediately cease, and the Participant shall be required to
return any Severance Benefits paid or provided to the Participant prior to such determination.
Except as described in this Section 4.4, neither the Company nor any affiliate shall have any
further obligations to such Eligible Employee or Participant, as applicable, under the Plan.

     4.5 Severance Benefits in the Event of Death. If a Participant dies while any amount would
still be payable to him or her hereunder had he or she continued to live, all such amounts, unless
otherwise provided herein, shall be paid to the Participant’s Beneficiary within sixty (60) days
from the date of the Participant’s death.

Article 5. Code Section 4999 Excise Tax.

     Anything in this Plan to the contrary notwithstanding, in the event that it shall be
determined that any payment or benefit (including any accelerated vesting of options or other
equity awards) made or provided, or to be made or provided, by the Company (or any successor
thereto or affiliate thereof) to or for the benefit of a Participant, whether pursuant to the terms
of this Plan, any other agreement, plan, program or arrangement of or with the Company (or any
successor thereto or affiliate thereof) or otherwise (a “Payment”), will be subject to the excise
tax imposed by Code Section 4999 or any comparable tax imposed by any replacement or successor
provision of United States tax law, then the aggregate present value of the Payments shall be
reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount
expressed in present value which maximizes the aggregate present value of the Payments without
causing any Payment to be subject to the deduction limitation under Code Section 280G or the
imposition of any excise tax under Code Section 4999. For this purpose, “present value” shall be
determined in accordance with Code Section 280G(d)(4). In the event that it is determined that the
amount of the Payments will be reduced in accordance with this Section, the Payments shall be
reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic
value deliverable to the Participant. In applying this principle, the reduction shall be made in a
manner consistent with the requirements of Code Section 409A, and where more than one payment has
the same value for this purpose and they are payable at different times, they will be reduced on a
pro-rata basis. All determinations to be made under this Section shall be made by the nationally
recognized independent public accounting firm used by the Company immediately prior to the change
in control (“Accounting Firm”), which Accounting Firm shall provide its determinations and any
supporting calculations to the Company and the Participant within ten
(10) days of the Separation Date.
Any such determination by the Accounting Firm shall be binding upon the Company and the
Participant. All of the fees and expenses of the Accounting Firm in performing the determinations
referred to in this Section shall be borne solely by the Company.

Article 6. Restrictive Covenants

     As consideration for the Company’s offer of coverage under this Plan to Eligible Employees and
for other good and valuable consideration, during his or her employment and upon termination of
employment for any reason, each Eligible Employee agrees to comply with the restrictive covenants
contained herein. In addition, receipt of Severance Benefits other than

6

 

Accrued Compensation is expressly conditioned upon such Participant’s continued compliance
with such restrictive covenants.

     6.1 Non-Competition. During the Restricted Period, regardless of the reason for the
separation and to the extent enforceable under applicable law, an Eligible Employee may not
provide, directly or indirectly, alone or as principal, agent, employee, employer, consultant,
investor or partner of, or assist in the management of, or provide advisory, sales, marketing,
recruiting or any other services to a business or entity that competes in any respect with a
business in which the Company and its affiliates were engaged (including, specifically, services
related to financial advisors), or any material products and/or services that the Company or its
affiliates were actively developing or designing as of the date such Eligible Employee’s employment
with the Company terminated, provided that, prior to such termination, such Eligible Employee knew
of such other business or such material product or such service under active development or design.

     6.2 Non-Solicitation.

     (a) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, persuade or induce: (i) any financial advisor licensed with the Company or its affiliates
or any clients of such financial advisor; (ii) any financial advisor licensed with the Company or
its affiliates during the twelve (12) month period prior to such Eligible Employee’s Separation
Date or any clients of such financial advisors; (iii) any financial advisors who such Eligible
Employee, by virtue of his or her position, knew or should have known to be in discussions with the
Company or its affiliates regarding licensure with the Company or its affiliates; (iv) any
institution with a contract with the Company or its affiliates; (v) any institution with a contract
with the Company or its affiliates during the twelve (12) month period prior to such Eligible
Employee’s Separation Date; or (vi) any institution who such Eligible Employee, by virtue of his or
her position, knew or should have known to be in discussions with the Company or its affiliates
regarding business relations with the Company or its affiliates.

     (b) During the Restricted Period, regardless of the reason for the separation and to the
extent enforceable under applicable law, each Eligible Employee may not, directly or indirectly,
solicit, seek to hire, or persuade or induce any employee or consultant of the Company or its
affiliates (or any person who was an employee or consultant of the Company or its affiliates during
the twelve (12) month period prior to such Eligible Employee’s Separation Date) to discontinue his
or her employment or other association with the Company or its affiliates.

     6.3 Confidentiality. Each Eligible Employee agrees and covenants not to disclose or use for
his or her own benefit, or the benefit of any other person or entity, any Proprietary Information,
unless or until the Proprietary Information is or becomes known or available to the public other
than because of a breach of this agreement by such Eligible Employee, or such disclosure is or
becomes required by law or valid legal process or is necessary to carry out the duties of his or
her employment, each Eligible Employee shall not disclose or reveal to any unauthorized person any
Proprietary Information relating to one or more of the Company or its affiliates, and each Eligible
Employee confirms that the Proprietary Information constitutes the exclusive property of one or
more of the Company or its affiliates.

7

 

     6.4 Specific Remedy. Each Eligible Employee acknowledges and agrees that if he or she commits
a material breach of the restrictive covenants in Sections 6.1, 6.2 or 6.3, the Company shall have
the right to have the covenant specifically enforced through an injunction or otherwise, without
any obligation that the Company post a bond or prove actual damages, by any court having
appropriate jurisdiction on the grounds that any such breach will cause irreparable injury to the
Company, without prejudice to any other rights and remedies that Company may have for a breach of
this Plan, and that money damages will not provide an adequate remedy to the Company. Each
Eligible Employee further acknowledges and agrees that the restrictive covenants contained in
Section 6.1, 6.2 or 6.3 are intended to protect the Company’s business interests and goodwill, are
fair, do not unreasonably restrict his or her future employment and business opportunities, and are
commensurate with the arrangements set out in this Plan and with the other terms and conditions of
the Eligible Employee’s employment.

Article 7. Withholding of Taxes; Funding

     7.1 Withholding of Taxes; Taxes. The Company shall be entitled to withhold from any amounts
payable under the Plan all taxes as legally shall be required (including, without limitation, any
United States federal taxes, and any other state, city, or local taxes). Each Participant shall be
solely responsible for the payment of all taxes that become due as a result of a payment to the
Participant under this Plan.

     7.2 Funding. The Plan shall be funded out of the general assets of the Company as and when
severance benefits are payable under the Plan. All Participants shall be solely general creditors
of the Company.

Article 8. Successors and Assignment

     8.1 Successors to the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the
business and/or assets of the Company or of any division or subsidiary thereof to expressly assume
and agree to perform the Company’s obligations under the Plan in the same manner and to the same
extent that the Company would be required to perform them if no such succession had taken place.

     8.2 Assignment by the Participant. Except in the event of death, a Participant does not have
the power to transfer, assign, anticipate, mortgage or otherwise encumber any rights or any amounts
payable under this Plan; nor will any such rights or amounts payable under this Plan be subject to
seizure, attachment, execution, garnishment or other legal or equitable process, or for the payment
of any debts, judgments, alimony, or separate maintenance, or be transferable by operation of law
in the event of bankruptcy, insolvency, or otherwise. In the event a Participant attempts to
assign, transfer or dispose of such right, or if an attempt is made to subject such right to such
process, such assignment, transfer or disposition will be null and void.

Article 9. Code Section 409A

     Notwithstanding the other provisions hereof, this Plan is intended to comply with the
requirements of Code Section 409A, to the extent applicable, and this Plan shall be interpreted to
avoid any penalty sanctions under Code Section 409A. Accordingly, all provisions herein, or

8

 

incorporated by reference, shall be construed and interpreted to comply with Code Section 409A
and, if necessary, any such provision shall be deemed amended to comply with Code Section 409A and
regulations thereunder. If any payment or benefit cannot be provided or made at the time specified
herein without incurring sanctions under Code Section 409A, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be imposed. All
payments to be made upon a termination of employment under this Agreement may only be made upon a
“separation from service” under Code Section 409A to the extent required under Code Section 409A.
For purposes of Code Section 409A, each payment made under this Plan shall be treated as a separate
payment. In no event may a Participant, directly or indirectly, designate the calendar year of
payment.

     Reimbursements provided under this Plan, if any, shall be made or provided in accordance with
the requirements of Code Section 409A including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during a limited period of time; (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense will be
made no later than the last day of the calendar year following the year in which the expense is
incurred; and (iv) the right to reimbursement is not subject to liquidation or exchange for another
benefit.

     To the maximum extent permitted under Code Section 409A, the severance benefits payable under
this Plan are intended to comply with the “short-term deferral exception” under Treas. Reg.
§1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception”
under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any portion of the severance benefits
that are payable under the Plan to a Participant during the six (6) month period following the
Participant’s Separation Date that does not qualify within either of the foregoing exceptions and
constitutes deferred compensation subject to the requirements of Code Section 409A, then such
amount shall hereinafter be referred to as the “Excess Amount.” If at the time of the
Participant’s separation from service, the Company’s (or any entity required to be aggregated with
the Company under Code Section 409A) stock is publicly-traded on an established securities market
or otherwise and the Participant is a “specified employee” (as defined in Code Section 409A and
determined in the sole discretion of the Company (or any successor thereto) in accordance with the
Company’s (or any successor thereto) “specified employee” determination policy), then the Company
shall postpone the commencement of the payment of the portion of the Excess Amount that is payable
within the six (6) month period following the Participant’s Separation Date with the Company (or
any successor thereto) for six (6) months following the Participant’s Separation Date with the
Company (or any successor thereto). The delayed Excess Amount shall be paid in a lump sum to the
Participant within ten (10) days following the date that is six (6) months following the
Participant’s Separation Date with the Company (or any successor thereto) and any remaining
installments shall continue to be paid to the Participant on their original schedule. If the
Participant dies during such six (6) month period and prior to the payment of the portion of the
Excess Amount that is required to be delayed on account of Code Section 409A, such Excess Amount
shall be paid to the personal representative of the Participant’s Beneficiary within sixty (60)
days after the Participant’s death.

9

 

Article 10. Claims Procedures

     Any request or claim for severance benefits under the Plan shall be deemed to be filed when a
written request is made by the claimant or the claimant’s authorized representative which is
reasonably calculated to bring the claim to the attention of the Committee.

     The Committee, or its designee, shall advise the claimant or such claimant’s representative,
in writing or in electronic form, of its decision within ninety (90) days of receipt of the claim
for severance benefits under the Plan, unless special circumstances require an extension of such
ninety (90) day period for not more than an additional ninety (90) days. Where such extension is
necessary, the claimant shall be given written notice of the delay before the expiration of the
initial ninety (90) day period, which notice shall set forth the reasons for the delay and the date
the Committee expects to render its decision. If the extension is necessary because the claimant
has failed to submit the information necessary to decide the claim, the Committee’s period for
responding to such claim shall be tolled until the date the claimant responds to the request for
additional information. The response shall (i) be in writing or in electronic form; (ii) be
written in a manner calculated to be understood by the claimant; and (iii) in the case of an
adverse benefit determination: (a) set forth the specific reason(s) for the denial of benefits; (b)
contain specific references to Plan provisions on which the denial is based; (c) describe any
additional material and information, if any, necessary for the claim for benefits to be perfected,
and an explanation of why such material or information is necessary; and (d) describe the Plan’s
review procedures and the time limits applicable to such procedures, and include a statement of the
claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit
determination on review.

     If the claimant fails to appeal the Committee’s adverse benefit determination, in writing,
within sixty (60) days after its receipt by the claimant, the Committee’s determination shall
become final and conclusive.

     If the claimant appeals the Committee’s adverse benefit determination in a timely fashion, the
Committee shall reexamine all issues relevant to the original denial of benefits. Any such
claimant or his or her duly authorized representative may review any relevant documents and
records, free of charge, including documents and records that were relied upon in making the
benefit determination, documents submitted, considered or generated in the course of making the
benefit determination (even if such documents were not relied upon in making the benefit
determination), and documents that demonstrate compliance, in making the benefit determination,
with the Plan’s required administrative processes and safeguards. In addition, the claimant or his
duly authorized representative may submit, in writing, any documents, records, comments or other
information relating to such claim for benefits. In the course of the review, the Committee shall
take into account all comments, documents, records and other information submitted by the claimant
or his duly authorized representative relating to such claim, regardless of whether it was
submitted or considered as part of the initial benefit determination.

     The Committee shall advise the claimant or such claimant’s representative, in writing or in
electronic form, of its decision within sixty (60) days of receipt of the written appeal, unless
special circumstances require an extension of such sixty (60) day period for not more than an
additional sixty (60) days. Where such extension is necessary, the claimant shall be given

10

 

written notice of the delay before the expiration of the initial sixty (60) day period, which
notice shall set forth the reasons for the delay and the date the Committee expects to render its
decision. In the event of an adverse benefit determination on appeal, the Committee shall advise
the claimant, in a manner calculated to be understood by the claimant of: (i) the specific
reason(s) for the adverse benefit determination; (ii) the specific Plan provisions on which the
decision was based; (iii) the claimant’s right to receive, upon request and free of charge, and
reasonable access to, copies of all documents, records and other information relevant to such
claim; and (iv) a statement describing any voluntary appeals procedures offered by the Plan, the
claimant’s right to obtain information about such procedures, and a statement of the claimant’s
right to bring an action under section 502(a) of ERISA.

     No person may bring an action for any alleged wrongful denial of Plan benefits in a court of
law unless the claims procedures set forth above are exhausted and a final determination is made by
the Committee. If a Participant or other interested person challenges a decision of the Committee,
a review by the court of law will be limited to the facts, evidence and issues presented to the
Committee during the claims procedure set forth above. Facts and evidence that become known to the
Participant or other interested person after having exhausted the claims procedure must be brought
to the attention of the Committee for reconsideration of the claims determination. Issues not
raised with the Committee will be deemed waived.

Article 11. Administration

     The Committee will be the plan administrator of the Plan and the named fiduciary of the Plan
for purposes of ERISA. The Committee may, however, delegate to any person, committee or entity any
of its power or duties under the Plan. The Committee will be the sole judge of the application and
interpretation of the Plan, and will have the discretionary authority to construe the provisions of
the Plan and to resolve disputed issues of fact. The Committee will have the sole authority to
make determinations regarding eligibility for benefits. The decisions of the Committee in all
matters relating to the Plan that are within the scope of its authority (including, but not limited
to, eligibility for benefits, Plan interpretations, and disputed issues of fact) will be final and
binding on all parties.

Article 12. Miscellaneous

     12.1 Notice of Termination. Any termination for Cause covered by this Plan shall be
communicated by a Notice of Termination. For purposes of the Plan, a “Notice of Termination” shall
mean a written notice which shall indicate the specific termination provision in the Plan relied
upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant’s employment under the provision so indicated.

     12.2 Employment Status. Except as may be provided under any other agreement between a
Participant and the Company, the employment of the Participant by the Company is “at will”, and may
be terminated by either the Participant or the Company at any time, subject to applicable law.
Nothing contained herein shall constitute an employment contract or guarantee of employment or
confer any other rights except as set forth herein.

11

 

     12.3 Other Payments. Except as otherwise provided in this Plan, no Participant shall be
entitled to any cash payments or other severance benefits under any of the Company’s or any
affiliate’s then current severance pay policies for a termination that is covered by this Plan for
the Participant.

     12.4 No Mitigation. Participants shall not be required to mitigate the amount of any Severance
Benefit provided for in this Plan by seeking other employment or otherwise, nor shall the amount of
any Severance Benefit provided for herein be reduced by any compensation earned by other employment
or otherwise, except if the Participant is re-employed by the Company or an affiliate, in which
case Severance Benefits shall cease.

     12.5 Gender and Number. 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.

     12.6 Amendment or Termination. The Board and the Committee may, in their sole discretion,
amend or terminate the Plan, in whole or in part, at any time and for any reason or no reason
without the consent of Participants. An amendment to the Plan may not discontinue or change any
payments to a Participant who commenced receiving severance benefits under the Plan prior to the
effective date of the amendment or termination of the Plan. If the Plan is terminated, no further
severance benefits will be payable under the Plan to any Participant who has not commenced
receiving severance benefits under the Plan prior to the effective date of such termination.

     12.7 Governing Law. To the extent not preempted by the laws of the United States, this Plan
shall be construed and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof.

     12.8 Liability. No member of the Committee and no officer, director or employee of the Company
or any affiliate shall be liable for any inaction with respect to his or her functions under the
Plan unless such action or inaction is adjudged to be due to gross negligence, willful misconduct
or fraud. Further, no member of the Committee shall be personally liable merely by virtue of any
instrument executed by him or her or on his or her behalf as a member of the Committee.

     12.9 Indemnification. The Company shall indemnify, to the fullest extent permitted by law and
its Certificate of Incorporation and By-laws (but only to the extent not covered by insurance) its
officers and directors (and any employee involved in carrying out the functions of the Company
under the Plan) and each member of the Committee against any expenses, including amounts paid in
settlement of a liability, which are reasonably incurred in connection with any legal action to
which such person is a party by reason of his or her duties or responsibilities with respect to the
Plan, except with regard to matters as to which he or she shall be adjudged in such action to be
liable for gross negligence, willful misconduct or fraud in the performance of his or her duties.

     12.10 Headings. The headings of the Plan are inserted for convenience of reference only and
shall have no effect upon the meaning of provisions hereof.

12

 

     12.11 Incompetency. In the event that the Committee finds that a Participant is unable to care
for his or her affairs because of illness or accident, then benefits payable hereunder, unless
claim has been made therefor by a duly appointed guardian, committee, or other legal
representative, may be paid in such manner as the Committee shall determine, and the application
thereof shall be a complete discharge of all liability for any payments or benefits to which such
Participant was or would have been otherwise entitled under the Plan.

     IN
WITNESS WHEREOF, the Company has caused this instrument to be
executed this 23rd day of November, 2010.

	 	 	 	 	 
	 
	 	LPL FINANCIAL CORPORATION

 	 
	 	By:  	/s/
Stephanie L. Brown 	 
	 	 	Its: Managing Director &
General Counsel	 

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