UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2011
INSTITUTIONAL FINANCIAL MARKETS, INC.
(Exact name of registrant as specified in its charter)
Maryland | 1-32026 | 16-1685692 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) | ||
Cira Centre 2929 Arch Street, 17th Floor Philadelphia, Pennsylvania |
19104 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (215) 701-9555
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On May 31, 2011, IFMI, LLC (IFMI), a Delaware limited liability company and a subsidiary of Institutional Financial Markets, Inc. (the Company), PrinceRidge Partners LLC, a Delaware limited liability company (PrinceRidge GP), and PrinceRidge Holdings LP, a Delaware limited partnership (PrinceRidge and, together with PrinceRidge GP, the PrinceRidge Entities), consummated the interim closing (the Interim Closing) of the transactions contemplated by the Contribution Agreement (the Contribution Agreement), dated April 19, 2011, by and among IFMI and the PrinceRidge Entities. At the Interim Closing, and pursuant to the terms and conditions of the Contribution Agreement, IFMI contributed, or caused a wholly owned subsidiary to contribute, approximately $1.1 million in cash and all of the equity ownership interests in Cohen & Company Capital Markets, LLC (CCCM), a broker-dealer comprising a substantial part of IFMIs capital markets segment, to PrinceRidge in exchange for an approximately 70% interest (consisting of equity and profits interests) in each of the PrinceRidge Entities. The members equity of CCCM at Interim Closing was approximately $43.9 million. A description of the Contribution Agreement was contained in the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2011.
The transactions contemplated by the Contribution Agreement and described in this report remain subject to the final approval of the Financial Industry Regulatory Authority (FINRA). Each of CCCM and The PrinceRidge Group LLC (the PrinceRidge Group), a broker-dealer wholly owned by PrinceRidge, have filed continuing membership applications (together, the CMAs) with FINRA in connection with the change in ownership that was effectuated at both broker-dealers as a result of the consummation of the Interim Closing and the transactions described in this report. To date, neither CCCM nor the PrinceRidge Group has received notice from FINRA objecting to the transactions contemplated by the Contribution Agreement. The final closing of the transactions contemplated by the Contribution Agreement will occur following receipt of the final FINRA approvals.
Fourth Amended and Rested Limited Liability Company Agreement of PrinceRidge GP
In connection with the Interim Closing, IFMI entered into the Fourth Amended and Restated Limited Liability Company Agreement of PrinceRidge GP (the LLC Agreement) and the Fourth Amended and Restated Limited Partnership Agreement of PrinceRidge (the Partnership Agreement). A description of the Partnership Agreement is set forth below under the heading titled Fourth Amended and Restated Limited Partnership Agreement of PrinceRidge. The management of PrinceRidge is vested exclusively in PrinceRidge GP.
Except as otherwise provided by the LLC Agreement or law, the business and affairs of PrinceRidge GP will be managed under the direction of the Board of Managers of PrinceRidge GP (the Board or Board of Managers). Subject to the provisions of the LLC Agreement, there will be three managers on the Board designated by IFMI (the IFMI Managers), and there will be two managers selected by the individuals that were members of PrinceRidge GP prior to the Interim Closing (the PrinceRidge Managers and, together with the IFMI Managers, the Managers).
The initial IFMI Managers are Walter T. Beach, Daniel G. Cohen, and Lance Ullom, and the initial PrinceRidge Managers are John Costas and Michael Hutchins. Messrs. Beach and Ullom are independent directors of the Company. IFMI has the right to replace the IFMI Managers at any time. The LLC Agreement sets forth the manner and circumstances in which the PrinceRidge Managers may be removed and replaced.
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Except as otherwise provided by the LLC Agreement or law, the act of a majority of the Managers will be the act of the Board. Subject to certain exceptions provided for in the LLC Agreement, the unanimous approval of the Managers is required to undertake, among other actions set forth in the LLC Agreement, the following actions:
(a) an extraordinary capital transaction, a merger or purchase of a material business in respect of PrinceRidge, PrinceRidge GP or any of the subsidiaries or control affiliates of PrinceRidge or PrinceRidge GP (collectively, the Management Group Entities);
(b) the issuance, or the modification of the terms, of any equity securities of any Management Group Entity other than issuances pursuant to equity compensation or benefit plans approved by the Board;
(c) an assumption by any Management Group Entity of indebtedness for borrowed money of any person; and
(d) so long as either John Costas or Michael Hutchins is an officer of PrinceRidge GP or PrinceRidge, any distribution or dividend with respect to any Management Group Entity.
Certain transactions of PrinceRidge GP with its members or its members affiliates also require unanimous and/or heightened approval of the Managers.
The Board has determined that the initial officers of PrinceRidge GP and PrinceRidge are: John Costas, Chairman; Daniel G. Cohen, Vice Chairman, Chief Investment Officer and Managing Director and Head of Structured Products; Michael Hutchins, Chief Executive Officer; Colette Dow, Chief Operating Officer and Douglas Listman, Chief Financial Officer. Mr. Listman continues to serve as Chief Accounting Officer of the Company.
Subject to the satisfaction of certain conditions, after the later of (a) September 30, 2011, or (b) the earlier of (1) the final closing under the Contribution Agreement, or (2) March 31, 2012, each member of PrinceRidge GP is entitled to borrow from PrinceRidge GP up to 30% of the balance of its capital account in PrinceRidge GP. The maximum term of any such loan is one year and such loan would accrue interest at a rate per annum equal to 10%. Each member of PrinceRidge GP has the ability to exercise this borrowing option once in any two year period. While the loan is outstanding, the amount of a members profit units will be reduced in proportion to the amount of such members capital account that was borrowed against.
Distributions will be made to each member of PrinceRidge GP at the times and in the amounts determined by the Board. Distributions of net income (other than net income attributable to an extraordinary capital transaction) will be made to the members pro rata in proportion to such members profit units. Proceeds attributable to extraordinary capital transactions will be distributed to the members in proportion to their respective equity units. If PrinceRidge GP generates net income, 50% of such net income is required to be distributed (a Mandatory Distribution) to the members in proportion to their respective profit units or equity units, as applicable (but without duplication). The amount of any Mandatory Distributions will be determined by the Board at the end of each fiscal quarter.
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An individual member may voluntarily withdraw as a member of PrinceRidge GP as of the end of any quarter upon fifteen days prior written notice to PrinceRidge GP and, in certain circumstances, prior to the end of a quarter. So long as IFMI owns a majority of the outstanding units of the PrinceRidge Entities, IFMI may voluntarily withdraw as a member of PrinceRidge GP only with the unanimous consent of the Board. In the event that IFMI no longer owns a majority of the outstanding units of the PrinceRidge Entities, IFMI may voluntarily withdraw as a member of PrinceRidge GP as of the end of any quarter upon fifteen days prior written notice to PrinceRidge GP, and, in certain circumstances, prior to the end of a quarter.
The Board may require that an individual member withdraw as a member of PrinceRidge GP at any time and for any reason. In the event that (a) any member owning a majority of the then outstanding units of PrinceRidge GP (or its parent or subsidiary) is indicted (and such indictment is not quashed within 90 days) for a criminal violation of any securities laws, and (b) the Board (other than the Managers designated by such member) reasonably determines that such indictment has had or would reasonably be expected to have a quantifiable material adverse effect on the business of the Management Group Entities, such member is required, within 150 days of receipt of such determination by the Board, to sell a number of units (if any) to a third-party such that the indicted member will own less than 50% of the outstanding units of PrinceRidge GP.
In connection with the withdrawal of a member from PrinceRidge GP, PrinceRidge GP is required to repurchase such members units for an amount equal to such members capital account. Generally, the repurchase obligation occurs over a three- to five- year period depending on the timing of the withdrawal. In the event that a member is required to withdraw and in certain other limited circumstances, such repurchase is required to occur within 45 days of such withdrawal.
Subject to certain exceptions provided for in the LLC Agreement, units in PrinceRidge GP are not transferable. Members of PrinceRidge GP have, or are subject to, rights of first refusal, drag-along rights, tag-along rights, and pre-emptive rights.
Fourth Amended and Restated Limited Partnership Agreement of PrinceRidge
As noted above, the management of PrinceRidge is vested exclusively in PrinceRidge GP.
Subject to the satisfaction of certain conditions, after the later of (a) September 30, 2011, or (b) the earlier of (1) the final closing under the Contribution Agreement, or (2) March 31, 2012, each partner of PrinceRidge is entitled to borrow from PrinceRidge up to 30% of the balance of its capital account in PrinceRidge. The maximum term of any such loan is one year and such loan would accrue interest at a rate per annum equal to 10%. Each partner of PrinceRidge has the ability to exercise this borrowing option once in any two year period. While the loan is outstanding, the amount of a partners profit units will be reduced in proportion to the amount of such partners capital account that was borrowed against.
Distributions will be made to each partner of PrinceRidge at the times and in the amounts determined by PrinceRidge GP. Distributions of net income (other than net income attributable to an extraordinary capital transaction) will be made to the partners pro rata in proportion to such partners profit units. Proceeds attributable to extraordinary capital transactions will be distributed to the partners in proportion to their respective equity units. If PrinceRidge generates net income, 50% of such net income is required to be distributed (a Mandatory Distribution) to the partners in proportion to their respective profit units or equity units, as applicable (but without duplication). The amount of any Mandatory Distributions will be determined by PrinceRidge GP at the end of each fiscal quarter.
An individual partner may voluntarily withdraw as a partner of PrinceRidge as of the end of any quarter upon fifteen days prior written notice to PrinceRidge GP and, in certain circumstances, prior to the end of a quarter. So long as IFMI owns a majority of the outstanding units of the PrinceRidge Entities, IFMI may voluntarily withdraw as a partner of PrinceRidge only with the unanimous consent of the Board. In the event that IFMI no longer owns a majority of the outstanding units of the PrinceRidge Entities, IFMI may voluntarily withdraw as a partner of PrinceRidge as of the end of any quarter upon fifteen days prior written notice to PrinceRidge GP, and, in certain circumstances, prior to the end of a quarter.
PrinceRidge GP may require that an individual partner withdraw as a partner of PrinceRidge at any time and for any reason. In the event that (a) any limited partner owning a majority of the then outstanding units of PrinceRidge (or its parent or subsidiary) is indicted (and such indictment is not quashed within 90 days) for a criminal violation of any securities laws, and (b) the Board (other than the Managers designated by such limited partner) reasonably determines that such indictment has had or would reasonably be expected to have a quantifiable material adverse effect on the business of the Management Group Entities, such limited partner is required, within 150 days of receipt of such determination by the Board, to sell a number of units (if any) to a third-party such that the indicted partner will own less than 50% of the outstanding units of PrinceRidge.
In connection with the withdrawal of a partner from PrinceRidge, PrinceRidge is required to repurchase such partners units for an amount equal to such partners capital account. Generally, the repurchase obligation occurs over a three- to five- year period depending on the timing of the withdrawal. In the event that a partner is required to withdraw and in certain other limited circumstances, such repurchase is required to occur within 45 days of such withdrawal.
Subject to certain exceptions provided for in the Partnership Agreement, units in PrinceRidge are not transferable. Partners of PrinceRidge have, or are subject to, rights of first refusal, drag-along rights, tag-along rights, and pre-emptive rights. The limited partners are also subject to certain restrictive covenants, including, but not limited to, confidentiality, non-solicitation, and non-disparagement.
Termination and Separation Agreement
In connection with the Interim Closing, IFMI and the PrinceRidge Entities have entered into the Termination and Separation Agreement, dated as of May 31, 2011, pursuant to which, in the event that FINRA denies its consent to either of the CMAs and/or the transactions described in this report, (a) IFMI will withdraw from the PrinceRidge Entities, the approximately 70% interest (consisting of equity and profits interests) in each of the PrinceRidge Entities (the PrinceRidge Entities Equity) will be returned to the PrinceRidge Entities, and the PrinceRidge Entities will return to IFMI the equity in CCCM (the CCCM Equity); (b) in the event that the value of the CCCM Equity and the value of the PrinceRidge Entities Equity are not equal, then
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the party receiving the equity interests of greater value will pay to the other party an amount of cash equal to the difference in the value of the equity interests; (c) CCCM, IFMI, and the PrinceRidge Entities will re-assume the employment arrangements of their former employees whose employment was transferred as a result of the transactions contemplated by the Contribution Agreement; and (d) each of the executive agreements entered into as a result of the consummation of the Interim Closing will be terminated.
The foregoing descriptions of the LLC Agreement, the Partnership Agreement and the Termination Agreement do not purport to be complete and are qualified in their entirety by reference to the LLC Agreement, the Partnership Agreement and the Termination Agreement, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated into this report by reference.
Forward-looking Statements
This report contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as may, might, will, should, expect, plan, anticipate, believe, estimate, predict, potential or continue or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this communication are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements including, but not limited to, the receipt of approval of FINRA and the final closing of the transactions contemplated in the Contribution Agreement or the unwinding of such transactions if final FINRA approval is not obtained, in addition to those discussed under the heading Risk Factors and Managements Discussion and Analysis of Financial Condition in our filings with the SEC, which are available at the SECs website at www.sec.gov and our website at www.ifmi.com/sec-filings. Such risk factors include the following: (a) a decline in general economic conditions or the global financial markets, (b) losses caused by financial or other problems experienced by third parties, (c) losses due to unidentified or unanticipated risks, (d) a lack of liquidity (i.e., ready access to funds for use in our businesses), (e) the ability to attract and retain personnel, (f) litigation and regulatory issues, (g) competitive pressure; and (h) a potential Ownership Change under Section 382 of the Internal Revenue Code. As a result, there can be no assurance that the forward-looking statements included in this communication will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this communication might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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Item 2.01 Completion of Acquisition or Disposition of Assets.
The information set forth under Item 1.01, Entry into a Material Definitive Agreement is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In connection with the Interim Closing, Daniel G. Cohen, the Companys Chairman, Chief Executive Officer and Chief Investment Officer, entered into an Executive Agreement with PrinceRidge (the Executive Agreement), pursuant to which he will serve as the Vice Chairman, the Chief Investment Officer, and Managing Director and Head of the Structured Products division of PrinceRidge. The initial term of the Executive Agreement ends on December 31, 2013, however, the term will be renewed automatically for additional one year periods, unless terminated by either of the parties in accordance with the terms of the Executive Agreement.
Pursuant to the Executive Agreement, Mr. Cohen will, through December 31, 2011, receive a guaranteed payment from PrinceRidge of $200,000 (the Guaranteed Payment), and be entitled to receive an additional annual allocation, not to exceed $800,000, equal to 20% of the Adjusted Profit (as defined in the Executive Agreement) of PrinceRidge (the Initial Annual Allocation). Mr. Cohens Guaranteed Payment for 2012 and 2013 will be equal to $200,000, plus the amount of the Initial Annual Allocation, if any, for the immediately preceding calendar year.
In addition to the Initial Annual Allocation, Mr. Cohen is entitled to an annual allocation from PrinceRidge equal to 8 1/3% of Post-Initial Allocation Profit (as defined in the Executive Agreement) of PrinceRidge (the Supplemental Annual Allocation). Subject to certain conditions, for a period of 60 days following the payment of the Initial Annual Allocation and the Supplemental Annual Allocation, Mr. Cohen has the opportunity to purchase additional units (the value of which cannot exceed the amount of the Initial Annual Allocation and the Supplemental Annual Allocation) of PrinceRidge at a price based on the then-current book value of PrinceRidge.
During the term of the Executive Agreement, the Board of Directors of the Company may, in its sole discretion, award Mr. Cohen an annual bonus in an amount and on such terms to be determined by the Board of Directors of the Company. Any such bonus to be awarded to Mr. Cohen is required to be approved by the Compensation Committee of the Board of Directors of the Company.
The Executive Agreement provides that Mr. Cohen may participate in any group life, hospitalization or disability insurance plans, health programs, retirement plans, fringe benefit programs and other benefits that may be available to other senior executives of PrinceRidge generally, in each case to the extent that Mr. Cohen is eligible under the terms of such plans or programs.
Pursuant to the Executive Agreement, in the event Mr. Cohen is terminated by PrinceRidge due to his death or disability, Mr. Cohen (or his estate or beneficiaries, as the case may be) shall be entitled to receive (a) any Guaranteed Payment and other benefits (including any allocations for a fiscal year completed before termination of the Executive Agreement but
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not yet paid (the Prior Year Allocations)) earned and accrued under the Executive Agreement prior to the date of termination, as well as any Initial Annual Allocation and Supplemental Annual Allocation (the Partial Year Allocations) for any portion of a fiscal year completed before termination and earned and accrued but not yet paid under the Executive Agreement prior to the termination of the Executive Agreement; (b) a single-sum payment equal to the Guaranteed Payment that would have been paid to him for the remainder of the year in which the termination occurs; (c) a single-sum payment equal to the sum of (1) the Initial Annual Allocation, and (2) the Supplemental Annual Allocation earned by Mr. Cohen, if any, in the fiscal year preceding the date of termination (which amount shall be annualized to the extent the termination occurs prior to the completion of a full fiscal year), multiplied by a fraction (x) the numerator of which is the number of days in the fiscal year preceding the termination, and (y) the denominator of which is 365.
If Mr. Cohen terminates his employment without Good Reason (as defined in the Executive Agreement) or PrinceRidge terminates his employment for Cause (as defined in the Executive Agreement), Mr. Cohen will only be entitled to any Guaranteed Payment and other benefits (including Prior Year Allocations and Partial Year Allocations) earned and accrued prior to the date of termination.
If Mr. Cohen terminates his employment with Good Reason, or PrinceRidge terminates his employment without Cause, Mr. Cohen will be entitled to receive (a) a single-sum payment equal to accrued but unpaid Guaranteed Payment and other benefits (including any Prior Year Allocations), as well as the Partial Year Allocations, (b) a single-sum payment of an amount equal to 3.0 times (1) the average of the Guaranteed Payment amounts paid to Mr. Cohen over the three calendar years prior to the date of termination, (2) if less than three years have elapsed between the date of the Executive Agreement and the date of termination, the highest Guaranteed Payment paid to Mr. Cohen in any calendar year prior to the date of termination, or (3) if less than 12 months have elapsed from the date of the Executive Agreement to the date of termination, the highest Guaranteed Payment received in any month times 12; and (c) a single-sum payment equal to the sum of (1) the Initial Annual Allocation and (2) the Supplemental Annual Allocation earned by the Mr. Cohen, if any, in the fiscal year preceding the date of termination (which amount shall be annualized to the extent the termination occurs prior to the completion of a full fiscal year), multiplied by a fraction (x) the numerator of which is the number of days in the fiscal year preceding the termination, and (y) the denominator of which is 365.
In the event of a Change of Control of the Company (as defined in the Executive Agreement) all of Mr. Cohens outstanding unvested equity-based awards become fully vested and immediately exercisable, as applicable. Only with respect to a Company Change of Control transaction that is first announced after the nine-month anniversary of the Interim Closing, if Mr. Cohen remains with PrinceRidge through the first anniversary of a Change of Control, but leaves PrinceRidge within six months thereafter, such termination will be treated as a termination for Good Reason, and Mr. Cohen will be entitled to the compensation set forth in the preceding paragraph.
Pursuant to the Executive Agreement, if any amount payable to or other benefit to which Mr. Cohen is entitled would be deemed to constitute a parachute payment (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the Code)), alone or when
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added to any other amount payable or paid to or other benefit receivable or received by Mr. Cohen, which is deemed to constitute a parachute payment and would result in the imposition of an excise tax under Section 4999 of the Code, then the parachute payments shall be reduced (but not below zero) so that the maximum amount is $1.00 less than the amount which would cause the parachute payments to be subject to the excise tax. However, if the reduction of the parachute payments is equal to or greater than $50,000, then there will not be any reduction and the full amount of the parachute payment will be payable to Mr. Cohen.
All termination payments, other than for death or disability, are subject to Mr. Cohen signing a general release. The Executive Agreement contains a non-competition provision restricting Mr. Cohens ability to engage in certain activities that are competitive with PrinceRidge for a period of three months after the end of the term of the Executive Agreement. The Executive Agreement also contains customary confidentiality provisions.
The foregoing description of the Executive Agreement does not purport to be complete and is qualified in its entirety by reference to the Executive Agreement, which is attached hereto as Exhibit 10.4, and is incorporated into this report by reference.
Item 8.01 Other Events.
On June 1, 2011, the Company issued a press release related to the transactions described under Item 1.01 above, which is furnished herewith as Exhibit 99.1.
The information in the preceding paragraph, as well as Exhibit 99.1 referenced therein, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in filings under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
The financial statements required by this item have not been filed on this initial Current Report on Form 8-K, but will be filed by amendment to this report in accordance with the requirements of Item 9.01(a)(4) of Form 8-K.
(b) Pro Forma Financial Information.
The pro forma financial information required by this item has not been filed on this initial Current Report on Form 8-K but will be filed by amendment to this report in accordance with the requirements of Item 9.01(b)(2) of Form 8-K.
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(d) Exhibits.
Exhibit |
Description | |
10.1* | Fourth Amended and Restated Limited Liability Company Agreement of PrinceRidge Partners LLC, dated as of May 31, 2011. | |
10.2* | Fourth Amended and Restated Limited Partnership Agreement of PrinceRidge Holdings LP., dated as of May 31, 2011. | |
10.3* | Termination and Separation Agreement, dated as of May 31, 2011, by and among IFMI, LLC, PrinceRidge Partners LLC, and PrinceRidge Holdings LP. | |
10.4* | Executive Agreement, dated as of May 31, 2011, by and among PrinceRidge Holdings LP, Institutional Financial Markets, Inc., Daniel G. Cohen and IFMI, LLC. | |
99.1** | Press Release Regarding the Interim Closing, June 1, 2011. |
* | Filed electronically herewith. |
** | Furnished electronically herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
INSTITUTIONAL FINANCIAL MARKETS, INC. | ||||
Date: June 6, 2011 | By: | /s/ Joseph W. Pooler, Jr. | ||
Joseph W. Pooler, Jr. Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit 10.1
EXECUTION VERSION
Fourth Amended and Restated
Limited Liability Company Agreement
of
PrinceRidge Partners LLC
Fourth Amended and Restated Limited Liability Company Agreement
of
PrinceRidge Partners LLC
TABLE OF CONTENTS
Page | ||||||
ARTICLE I INTERPRETATION |
2 | |||||
Section 1.01 |
Definitions | 2 | ||||
Section 1.02 |
Pronouns; Gender; Construction | 10 | ||||
Section 1.03 |
Headings; Cross-References | 10 | ||||
ARTICLE II GENERAL PROVISIONS |
11 | |||||
Section 2.01 |
Formation of the Company | 11 | ||||
Section 2.02 |
Company Name and Address | 11 | ||||
Section 2.03 |
Registered Agent and Registered Office | 11 | ||||
Section 2.04 |
Purposes of the Company | 11 | ||||
Section 2.05 |
Fiscal Year | 11 | ||||
Section 2.06 |
Maintenance of Separateness | 11 | ||||
ARTICLE III THE MEMBERS |
14 | |||||
Section 3.01 |
Current Members; Admission of Additional Members | 14 | ||||
Section 3.02 |
Supplementary Agreements | 14 | ||||
Section 3.03 |
Representations | 15 | ||||
Section 3.04 |
Liability of the Members | 16 | ||||
Section 3.05 |
Limited Rights of Members | 16 | ||||
Section 3.06 |
Power of Attorney | 16 | ||||
Section 3.07 |
Bankruptcy, Dissolution, Removal, Withdrawal, Admission or Resignation of a Member | 17 | ||||
Section 3.08 |
Associated Members | 17 | ||||
ARTICLE IV MANAGEMENT OF THE COMPANY |
17 | |||||
Section 4.01 |
Management of the Company | 17 | ||||
Section 4.02 |
Size of the Board | 17 | ||||
Section 4.03 |
Designation of Managers | 17 | ||||
Section 4.04 |
Term of Office; Vacancies and Removal | 18 | ||||
Section 4.05 |
Meetings of the Board | 18 | ||||
Section 4.06 |
Notice of Meetings | 18 | ||||
Section 4.07 |
Quorum and Voting | 18 | ||||
Section 4.08 |
Action Without a Meeting and Telephonic Meetings | 19 | ||||
Section 4.09 |
Actions Requiring Unanimous Consent | 19 | ||||
Section 4.10 |
Officers | 21 | ||||
Section 4.11 |
Chairman as Agent | 22 | ||||
Section 4.12 |
Ability to Bind the Company | 22 | ||||
Section 4.13 |
Compensation of Managers; Expense Reimbursement | 22 | ||||
Section 4.14 |
No Participation in Management by Members | 22 |
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Section 4.15 |
Reliance by Third Parties | 23 | ||||
Section 4.16 |
Reliance by the Members | 23 | ||||
Section 4.17 |
Expenses | 23 | ||||
Section 4.18 |
Standards for Actions by the Managers, Officers and the Members | 23 | ||||
Section 4.19 |
Management Availability | 24 | ||||
Section 4.20 |
Compliance with Securities and National Stock Exchange Laws, Rules and Regulations | 24 | ||||
ARTICLE V ISSUANCE OF UNITS; COMPENSATION; LOANS |
25 | |||||
Section 5.01 |
Issuance of Units | 25 | ||||
Section 5.02 |
Adjustment of Profit Units and Equity Units | 26 | ||||
Section 5.03 |
Issuance of Senior Securities | 26 | ||||
Section 5.04 |
Guaranteed Payments | 26 | ||||
Section 5.05 |
Loans | 26 | ||||
ARTICLE VI CAPITAL ACCOUNTS OF MEMBERS AND OPERATION THEREOF |
27 | |||||
Section 6.01 |
Capital Accounts | 27 | ||||
Section 6.02 |
General Allocations | 28 | ||||
Section 6.03 |
Special Allocations | 29 | ||||
Section 6.04 |
Liabilities | 30 | ||||
Section 6.05 |
Goodwill | 30 | ||||
Section 6.06 |
Allocation of Income and Loss for Tax Purposes | 30 | ||||
Section 6.07 |
Determination by the Board of Certain Matters | 30 | ||||
Section 6.08 |
Adjustments by the Board to Take Account of Certain Events | 31 | ||||
ARTICLE VII REPURCHASE OF UNITS; DISTRIBUTIONS ON UNITS |
31 | |||||
Section 7.01 |
Repurchase of Units | 31 | ||||
Section 7.02 |
Distributions | 31 | ||||
Section 7.03 |
Limitations on Distributions and Repurchases of Units | 33 | ||||
ARTICLE VIII WITHDRAWAL FROM THE COMPANY |
33 | |||||
Section 8.01 |
Withdrawal | 33 | ||||
Section 8.02 |
Repurchase of Units in Connection with Withdrawal of a Member | 34 | ||||
Section 8.03 |
Right to Offset | 36 | ||||
ARTICLE IX TRANSFERS OF UNITS |
36 | |||||
Section 9.01 |
Transfers of Units | 36 | ||||
Section 9.02 |
Involuntary Transfers; Right of First Refusal | 36 | ||||
ARTICLE X SALE OF UNITS; MONETIZATION EVENTS |
37 | |||||
Section 10.01 |
Payment of Unit Sale Proceeds | 37 | ||||
Section 10.02 |
Tag Along and Drag Along Rights | 37 | ||||
Section 10.03 |
Preemptive Rights | 38 | ||||
Section 10.04 |
Monetization Events | 39 | ||||
Section 10.05 |
Allocation of Sale Proceeds Between the Company and the Partnership | 40 |
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ARTICLE XI DURATION, WINDING-UP AND TERMINATION OF THE COMPANY |
40 | |||||
Section 11.01 |
Term | 40 | ||||
Section 11.02 |
Dissolution | 40 | ||||
Section 11.03 |
Winding Up | 40 | ||||
Section 11.04 |
Final Distribution | 40 | ||||
Section 11.05 |
Time for Liquidation, etc. | 41 | ||||
Section 11.06 |
Cancellation | 41 | ||||
Section 11.07 |
Final Allocations | 41 | ||||
ARTICLE XII TAX MATTERS; BOOKS AND RECORDS. |
42 | |||||
Section 12.01 |
Filing of Tax Returns | 42 | ||||
Section 12.02 |
Reports to Current and Former Members | 42 | ||||
Section 12.03 |
Tax Matters Partner | 42 | ||||
Section 12.04 |
Member Basis | 45 | ||||
Section 12.05 |
Tax Election | 45 | ||||
Section 12.06 |
Books and Records; Access; Auditors | 45 | ||||
ARTICLE XIII ADDITIONAL AGREEMENTS |
45 | |||||
Section 13.01 |
Restrictive Covenants | 45 | ||||
Section 13.02 |
Observer Rights | 45 | ||||
Section 13.03 |
Transactions with Affiliates | 46 | ||||
ARTICLE XIV MISCELLANEOUS |
46 | |||||
Section 14.01 |
Entire Agreement | 46 | ||||
Section 14.02 |
Amendments of Agreement | 46 | ||||
Section 14.03 |
Further Actions | 46 | ||||
Section 14.04 |
Applicable Law | 47 | ||||
Section 14.05 |
Counterparts | 47 | ||||
Section 14.06 |
Successors and Assigns | 47 | ||||
Section 14.07 |
No Waiver | 47 | ||||
Section 14.08 |
Survival | 47 | ||||
Section 14.09 |
Notices | 47 | ||||
Section 14.10 |
Dispute Resolution | 48 | ||||
Section 14.11 |
Injunctive Relief | 48 | ||||
Section 14.12 |
Choice of Venue | 48 | ||||
Section 14.13 |
Enforceability | 49 | ||||
Section 14.14 |
Judicial Modification | 49 | ||||
Section 14.15 |
Legal Proceedings | 49 |
Appendix A Form of Joinder Agreement for Managers
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DEFINED TERMS
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Fourth Amended and Restated Limited Liability Company Agreement
of
PrinceRidge Partners LLC
Dated as of May 31, 2011
This Fourth Amended and Restated Limited Liability Company Agreement is made and entered into as of the date set forth above by and among the undersigned Persons and shall hereafter govern the Company.
R E C I T A L S:
WHEREAS, the Company was formed under the Act as BlueHawk Management LLC, pursuant to a Certificate of Formation filed with the Secretary of State of the State of Delaware on January 28, 2008;
WHEREAS, the Company was initially governed by a Limited Liability Company Agreement, dated as of May 1, 2008 (the Original Agreement);
WHEREAS, the Companys name was changed to VinsonForbes Holdings LLC pursuant to a Certificate of Amendment of Certificate of Formation filed with the Secretary of State of the State of Delaware on December 5, 2008;
WHEREAS, the Original Agreement was amended and restated in its entirety pursuant to an Amended and Restated Limited Liability Company Agreement, dated as of December 12, 2008 (the Amended and Restated Limited Liability Company Agreement);
WHEREAS, the Amended and Restated Limited Liability Company Agreement was amended and restated in its entirety pursuant to a Second Amended and Restated Limited Liability Company Agreement, dated as of February 1, 2009 (the Second Amended and Restated Limited Liability Company Agreement);
WHEREAS, the Companys name was changed to PrinceRidge Partners LLC pursuant to a Certificate of Amendment of Certificate of Formation filed with the Secretary of State of the State of Delaware on June 29, 2009;
WHEREAS, the Second Amended and Restated Limited Liability Company Agreement was amended and restated in its entirety pursuant to a Third Amended and Restated Limited Liability Company Agreement, dated as of July 1, 2009 (the Third Amended and Restated Limited Liability Company Agreement);
WHEREAS, the Company, pursuant to a resolution and consent dated as of April 15, 2011, resolved, among other matters, to amend the Third Amended and Restated Limited Liability Company Agreement and admit each of Daniel G. Cohen and IFMI as a Member of the Company and a Class A Partner of the Partnership; and
WHEREAS, the current Members, Ahmed A. Alali, Daniel G. Cohen, John P. Costas, Colette C. Dow, Ronald J. Garner, Michael T. Hutchins, Matthew G. Johnson and IFMI, wish to amend and restate the Third Amended and Restated Limited Liability Company Agreement in its entirety and to enter into this Agreement (as defined below).
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NOW, THEREFORE, the parties hereto hereby agree to continue the Company and hereby amend and restate the Third Amended and Restated Limited Liability Company Agreement, which is replaced and superseded in its entirety by this Agreement, as follows:
ARTICLE I
Interpretation
Section 1.01 Definitions. Unless otherwise expressly provided in this Agreement, the following terms used in this Agreement shall have the meanings provided in this Section 1.01. In addition, capitalized terms used in this Agreement that are used in reference to the Partnership or Partnership Agreement, shall have the meaning given to such terms in the Partnership Agreement.
(a) Accounting Period means a period (i) the first day of which is (A) the first Business Day of each calendar quarter, (B) the date on which there are contributions to the capital of the Company or any material amount is credited to a Capital Account other than on a pro rata basis or (C) such other date deemed appropriate by the Company; and (ii) the last day of which is (A) the day prior to the commencement of any Accounting Period, (B) the date on which there are withdrawals or distributions from the capital of the Company or any material amount is debited or credited to any Capital Account other than on a pro rata basis or (C) such other date deemed appropriate by the Company.
(b) Act means the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended from time to time.
(c) Additional Member shall have the meaning set forth in Section 3.01(b).
(d) Adjusted Capital Account Deficit shall have the meaning set forth in Section 6.03(a)(iv)(A).
(e) Affiliate means, with respect to any specified Person, (i) a Person that directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with, the Person specified, and (ii) the successors, heirs, assigns, executors, personal representatives, advisors and agents of each of the foregoing Persons and/or entities described in (i) above. For purposes of this Agreement, each Associated Member shall be deemed to be an Affiliate of the Member with whom such Associated Member is associated.
(f) Agreement means this Fourth Amended and Restated Limited Liability Company Agreement, dated as of the date first above written, the Appendices to this Agreement and, with respect to each Member, any Supplementary Agreement to which such Member is a party, as any of the foregoing may be amended from time to time.
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(g) Amended and Restated Limited Liability Company Agreement shall have the meaning set forth in the recitals.
(h) Appendix A (or other Appendix or Appendices) means Appendix A (or other Appendix) to this Agreement.
(i) Asset Sale Proceeds means the gross proceeds minus expenses, if any, attributable to the sale of all or any portion of the Companys assets as part of an extraordinary capital transaction.
(j) Associated Member shall mean any trust, limited liability company, limited partnership or similar vehicle for the primary benefit of a Members descendants (whether natural or adopted) or other family members (including spouses and former spouses) and designated in the books and records of the Company as an Associated Member, each in its capacity as a member of the Company.
(k) Available Assets means, as of any date, the excess of (a) the cash, cash equivalent items and temporary investments held by the Company over (b) the sum of the amount of such items as the Company reasonably determines to be necessary for the payment of the Companys expenses, liabilities and other obligations (whether fixed or contingent including, to the extent determined by the Company, any outstanding loans made by a Member to the Company to fund any operating deficits, and taking into account adjustments with respect to any advances to a Member which are subject to recoupment), and for the establishment of appropriate reserves for such expenses, liabilities and obligations as may arise, including the maintenance of adequate working capital for the continued conduct of the Business.
(l) Business means the business activities of the Management Group Entities and their Affiliates.
(m) Business Day shall mean any day other than (a) Saturday and Sunday and (b) any other day on which banks located in New York City are required or authorized by law to remain closed.
(n) Capital Account means the capital account(s) established for each Member on the books of the Company.
(o) Capital Net Income and Capital Net Loss mean any Net Income or Net Loss attributable to a Sale Transaction, reduced or increased by any expenses allocated thereto by the Company.
(p) Cause shall have the meaning given to such term in a Members Supplementary Agreement, a Members Executive Agreement or an IFMI Managers Joinder Agreement, as applicable.
(q) Class A Partners means such Persons admitted to the Partnership as Class A Limited Partners in accordance with the Partnership Agreement.
(r) Code means the Internal Revenue Code of 1986, as amended.
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(s) Company means PrinceRidge Partners LLC, a Delaware limited liability company organized on January 28, 2008 as BlueHawk Management LLC.
(t) Contribution Agreement means the Contribution Agreement, dated April 19, 2011 by and among the Company, the Partnership and IFMI.
(u) Corporate Conversion shall have the meaning set forth in Section 10.04(a).
(v) Day-to-Day Responsibilities means an Individual Members day-to-day role with respect to the Business.
(w) Drag Along Right shall have the meaning set forth in Section 10.02(c).
(x) Equity Units means for each Member, the Equity Units indicated on the books and records of the Company and/or in such Members Supplementary Agreement.
(y) Excess Allocation Amount shall have the meaning set forth in Section 11.04.
(z) Executive Agreement means any Executive Agreement, by and among the Partnership, IFMI and the executive named therein.
(aa) Exercising Member shall have the meaning set forth in Section 10.03(b).
(bb) Final Distribution shall have the meaning set forth in Section 11.04.
(cc) Fiscal Year shall have the meaning set forth in Section 2.05.
(dd) Former Member refers to such Persons as hereafter from time to time cease to be Members, whether voluntarily or otherwise, in accordance with this Agreement.
(ee) IFMI means IFMI, LLC, a Delaware limited liability company.
(ff) IFMI Parent means Institutional Financial Markets, Inc., a Maryland corporation.
(gg) IFMI Managers means Walter T. Beach, Daniel G. Cohen, and Lance Ullom, and any successors thereto designated by IFMI consistent with the following. In the event that any of Walter T. Beach, Daniel G. Cohen, or Lance Ullom ceases to be an IFMI Manager or is removed by IFMI or otherwise, each person designated to replace each such IFMI Manager shall be subject to approval by the PrinceRidge Managers (which approval shall include review of the results of the Companys customary background investigation of such designated person), such approval not to be unreasonably withheld or delayed; provided that, if the PrinceRidge Managers do not approve the first person selected by IFMI to fill each such
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vacancy, the next person designated by IFMI to fill such vacancy shall be selected by the PrinceRidge Managers from a list of two candidates selected by IFMI in good faith (which candidates shall have satisfied the customary background review process employed by IFMI Parent with respect to the independent members of its board of directors), which candidates shall not include the candidate previously proposed to fill such vacancy.
(hh) Inactive Member means a Member whose Day-to-Day Responsibilities have ceased or been terminated by the Board.
(ii) Individual Member means a Member who is a natural person.
(jj) Involuntary Transfer means one (1) or more of the following events:
(i) the filing of a valid petition of voluntary or involuntary bankruptcy, or the insolvency of a Member;
(ii) receipt by a Member of notice of a public, private or judicial sale of all or any part of its Units to satisfy a judgment against or other indebtedness of such Member;
(iii) an assignment of all or any part of a Members Units for the benefit of one (1) or more creditors of a Member, other than a pledge as security by IFMI of its Units in connection with any financing arrangement or guarantee in connection therewith, provided that any foreclosure upon a pledge or other Transfer to or by a secured party in connection with such arrangement or guarantee shall be deemed an Involuntary Transfer; and
(iv) the entry of a decree of divorce, or the execution by a Member of a property settlement agreement, or any other action in connection with a pending divorce proceeding, the effect of which is to grant rights to all or any part of the Units owned by such Member to any Person other than such Member, in its individual capacity.
(kk) Joinder Agreement means any Joinder Agreement, by and among the Company and the Board member named therein. The Companys standard Joinder Agreement is attached hereto as Appendix A.
(ll) Limited Partner means each Person admitted as a limited partner of the Partnership in accordance with the Partnership Agreement, including any Persons hereafter admitted as Limited Partners in accordance with the Partnership Agreement and excluding any Persons who cease to be Limited Partners in accordance with the Partnership Agreement.
(mm) Management Group Entities means the Company and the Partnership and any subsidiary or controlled Affiliate thereof (whether existing on or after the date hereof).
(nn) Mandatory Distribution shall have the meaning set forth in Section 7.02(c).
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(oo) Meeting shall have the meaning set forth in Section 13.02.
(pp) Members means the members listed in the books and records of the Company, as such books and records may be amended from time to time. For the avoidance of doubt, each Class A Partner (as such term is defined in the Partnership Agreement) as of the date hereof is also a Member as of the date hereof.
(qq) Monetization Event shall mean any of the following: (a) the sale of all or any portion of the Management Group Entities Business or assets (as part of an extraordinary capital transaction); (b) a public offering of all or any portion of the equity securities of a Management Group Entity (or interests in a feeder, successor or subsidiary entity pursuant to a Corporate Conversion); (c) a sale or issuance of equity interests or other transaction of a Management Group Entity that results in all or a majority of the aggregate economic ownership of such entity being held by any third party investor; (d) any transaction or series of related transactions that results in the reduction of IFMIs Units below a majority of the then-outstanding Units thereof; or (e) any derivative or other transaction with similar effect to any of the foregoing as reasonably determined by the Board.
(rr) Net Income or Net Loss shall mean, with respect to any Accounting Period, the taxable income or tax loss of the Company for such period for Federal income tax purposes as determined by the Company, taking into account any separately stated items, increased by the amount of any tax-exempt income of the Company during such period and decreased by the amount of any Code Section 705(a)(2)(B) expenditures (within the meaning of Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) of the Company; provided, however, that Net Income or Net Loss of the Company shall be computed without regard to any items of gross income, gain, loss or deduction specially allocated pursuant to Section 6.03. In the event that the Capital Accounts are adjusted pursuant to Section 6.01(b), the Net Income or Net Loss of the Company (and the constituent items of income, gain, loss and deduction) realized thereafter shall be computed in accordance with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
(ss) New Units shall mean any Units, whether now authorized or not, any rights, options or warrants to purchase Units and any indebtedness or class of securities of the Company which is convertible into Units (or which is convertible into a security which is, in turn, convertible into Units); provided that the term New Units shall not include rights, options or warrants to purchase Units and any indebtedness or class of securities of the Company which is convertible into Units (or which is convertible into a security which is, in turn, convertible into Units) issued (A) upon conversion or exercise of any other equity securities of the Partnership or any of its controlled subsidiaries; provided that the issuance of such equity securities complied with the provisions of Section 10.03, (B) in the event of any subdivision of all of the issued and outstanding Units into a greater number of interests, or (C) to employees or consultants of the Company or the Partnership pursuant to any employee stock plan or other employee benefit plan arrangement or consultancy arrangement.
(tt) Notice Year shall have the meaning set forth in Section 8.02(a).
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(uu) Partners means the Limited Partners and the general partner, collectively, of the Partnership, including any Persons hereafter admitted as Partners in accordance with the Partnership Agreement and excluding any Persons who cease to be Partners in accordance with the Partnership Agreement.
(vv) Partnership means PrinceRidge Holdings LP, a Delaware limited partnership organized on January 28, 2008 as BlueHawk Capital Management LP.
(ww) Partnership Agreement means the limited partnership agreement of the Partnership, as amended and in effect from time to time among the Company and each Limited Partner of the Partnership.
(xx) Partnership Subsidiary means, individually, The PrinceRidge Group LLC, a Delaware limited liability company, PrinceRidge Capital LLC, a Delaware limited liability company, and each other corporation, limited liability company, partnership, trust or other entity of which a majority of the voting or equity interests are owned, directly or indirectly, by the Partnership or the Company.
(yy) Passive Members shall have the meaning set forth in Section 10.02(a).
(zz) Pass-Thru Member shall have the meaning set forth in Section 12.03(a).
(aaa) Permanent Disability shall have the meaning set forth in a Members Supplementary Agreement.
(bbb) Person means any natural person, domestic or foreign limited liability company, corporation, partnership, limited partnership, joint venture, association, business trust, estate, trust, enterprise, bank holding company and any other legal or commercial entity.
(ccc) Pre-Closing Company Tax Audit shall have the meaning set forth in Section 12.03(c).
(ddd) Preemptive Notice shall have the meaning set forth in Section 10.03(b).
(eee) Preemptive Notice Window shall have the meaning set forth in Section 10.03(b).
(fff) Preemptive Reply shall have the meaning set forth in Section 10.03(b).
(ggg) Preemptive Right shall have the meaning set forth in Section 10.03(a).
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(hhh) PrinceRidge Managers means John Costas, so long as he is a Qualifying PrinceRidge Member, and Michael Hutchins, so long as he is a Qualifying PrinceRidge Member. In the event that either John Costas or Michael Hutchins (but not both) cease to be a Qualifying PrinceRidge Member, such individual that remains a Qualifying PrinceRidge Member shall appoint one of the following individuals as a replacement: Ahmed Alali, Colette Dow, Ronald Garner or Matthew Johnson (such individuals, the Non-Manager Members), provided that the individual appointed as a replacement shall then be a Qualifying PrinceRidge Member. In the event that both John Costas and Michael Hutchins or any replacement for either of them cease to be Qualifying PrinceRidge Members (Former QPRMS), the PrinceRidge Manager(s), if any, shall be determined by a majority vote of the Non-Manager Members and the Former QPRMS (voting as a single class) (one vote each); provided, however, that any replacement PrinceRidge Managers shall then be a Qualifying PrinceRidge Member; provided, further, that each of the Non-Manager Members shall only have the ability to participate in the vote to determine the PrinceRidge Managers if such individuals shall then be Members of the Company or Partners of the Partnership.
(iii) PrinceRidge Member shall have the meaning set forth in Section 12.03(c)(i).
(jjj) Profit Units means for each Member, the Profit Units indicated in the books and records of the Company and/or in such Members Supplementary Agreement.
(kkk) Purchaser Notice shall have the meaning set forth in Section 10.02(b).
(lll) Qualifying PrinceRidge Member means each of the following persons: John Costas, Michael Hutchins, Ahmed Alali, Colette Dow, Ronald Garner and Matthew Johnson, so long as each such person continues to hold at least 51% of the number of Units of the Company and Units of the Partnership held by such person on the date hereof.
(mmm) Restrictive Covenants shall have the meaning set forth in the Partnership Agreement.
(nnn) Sale Proceeds means Asset Sale Proceeds and Unit Sale Proceeds.
(ooo) Sale Transaction means a transaction that generates Asset Sale Proceeds or Unit Sale Proceeds.
(ppp) Second Amended and Restated Limited Liability Company Agreement shall have the meaning set forth in the recitals.
(qqq) Section 704(c) Property means any Company property (a) that is contributed to the Company, if there is a difference between the basis of such property in the hands of the Company and the fair value of such property at the time of its contribution, or (b) that is revalued pursuant to Section 6.01(b) of this Agreement if the fair value of such property differs from its adjusted basis as of the date of such revaluation.
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(rrr) Securities Act means the U.S. Securities Act of 1933, as amended.
(sss) Selling Member(s) shall have the meaning set forth in Section 10.02(a).
(ttt) Source means each source of Net Income and Net Loss for the Company (excluding Capital Net Income) that is designated or changed from time to time by the Company.
(uuu) Sub-Capital Account shall have the meaning set forth in Section 6.01(a)(ii).
(vvv) Subscription Commitment means a Members or prospective Members agreement to purchase Units.
(www) Supplementary Agreement shall have the meaning set forth in Section 3.02.
(xxx) Tag Along Right shall have the meaning set forth in Section 10.02(b).
(yyy) Target Final Balance shall have the meaning set forth in Section 11.07.
(zzz) Target Minimum Repurchase Amount shall have the meaning set forth in Section 8.02(a).
(aaaa) Target Repurchase Date shall have the meaning set forth in Section 8.02(a).
(bbbb) Tax Matters Partner shall have the meaning set forth in Section 12.03(a).
(cccc) Termination and Separation Agreement means the Termination and Separation Agreement, dated May 31, 2011, by and among the Company, the Partnership, and IFMI.
(dddd) Third Amended and Restated Limited Liability Company Agreement shall have the meaning set forth in the recitals.
(eeee) Third Party Purchaser shall have the meaning set forth in Section 10.02(a).
(ffff) Threshold Value shall mean the threshold value set forth in a Members Supplementary Agreement.
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(gggg) Transaction Notice shall have the meaning set forth in Section 10.02(a).
(hhhh) Transfer means to sell, assign, pledge, transfer or otherwise dispose of, directly or indirectly, all or any part of a Unit.
(iiii) Underlying Transaction shall have the meaning set forth in Section 10.02(a).
(jjjj) Unit Price means the price at which a Unit is purchased by a Member or prospective Member or repurchased by the Company (other than in connection with an extraordinary capital transaction or Monetization Event), and in the case of a repurchase by the Company, shall equal the portion of the Capital Account (or Sub-Capital Account) represented by the Units repurchased on the effective date of the repurchase.
(kkkk) Unit Sale Proceeds means the net proceeds attributable to the simultaneous sale of all or any portion of the Units of all of the Members, after payment of expenses related thereto as determined by the Company; provided that a Transfer of Units by a Member for tax or estate planning purposes or a repurchase of Units at their Unit Price shall not be deemed to generate Unit Sale Proceeds.
(llll) Units means (i) the limited liability company membership interests, including Units of any type or class, whether existing as of the date hereof or newly issued at a future date, such as Profit Units and Equity Units, or representing any Source, issued by the Company to a Member in accordance with this Agreement, and (ii) in the case of (a) the definitions of Involuntary Transfer, Monetization Event, and Qualifying PrinceRidge Member in this Section 1.01, and (b) Sections 4.19, 8.01(a), 8.01(c), 12.03 and 13.02, the Partnership units of any type or class issued by the Partnership to a Limited Partner in accordance with the Partnership Agreement.
(mmmm) Voluntarily Withdraw means a Members decision to withdraw as a Member of the Company.
(nnnn) Withdrawal Date shall have the meaning set forth in Section 8.01(e).
Section 1.02 Pronouns; Gender; Construction. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Person(s) may require in the context thereof. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.
Section 1.03 Headings; Cross-References. The titles of the articles and the headings of the sections of this Agreement are for convenience of reference only, and are not to be considered in construing the terms and provisions of this Agreement. References to Article or Section in this Agreement shall be deemed to refer to the indicated Article or Section of this Agreement, unless the context clearly indicates otherwise.
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ARTICLE II
General Provisions
Section 2.01 Formation of the Company. The Company was formed as a limited liability company under the Act, by the filing of the Certificate of Formation of the Company with the Office of the Secretary of State of the State of Delaware on January 28, 2008. The Members shall make every reasonable effort to assure that all other certificates and documents are properly executed and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all of the requirements for the formation of the Company as a limited liability company under the Act. The Members hereby ratify the execution and filing of the Certificate of Formation and other filings made with the States of Delaware and New York prior to the date hereof.
Section 2.02 Company Name and Address. The name of the Company is PrinceRidge Partners LLC. The original name of the Company was BlueHawk Management LLC. Its principal office shall be located at 1633 Broadway, 28th Floor, New York, NY 10019, or at such other location as the Company in the future may designate.
Section 2.03 Registered Agent and Registered Office. The address of the registered office of the Company in the State of Delaware is c/o National Corporate Research, Ltd., 615 South DuPont Highway, Dover, Delaware 19901. The name and address of the registered agent of the Company in the State of Delaware for service of process on the Company is National Corporate Research, Ltd., 615 South DuPont Highway, Dover, Delaware 19901. Such office and such agent may be changed from time to time by the Company through appropriate filings with the Secretary of State of the State of Delaware.
Section 2.04 Purposes of the Company.
(a) The Company is organized for the purpose of engaging, directly or indirectly through Affiliates or joint ventures, in a full range of financial services activities. In connection with the foregoing, the Company shall serve as the general partner of the Partnership, pursuant to the Partnership Agreement. The Company may also engage in any other business or activity related or unrelated to any of the foregoing activities. In addition to the foregoing, the Company may engage in any activities that are lawful for a limited liability company under the Act.
(b) The Company shall have the power to take any action and engage in any proceeding, activity and transaction that the Board pursuant to Article IV of this Agreement, may deem necessary or advisable in connection with the foregoing purposes.
Section 2.05 Fiscal Year. The fiscal year of the Company (the Fiscal Year) shall end on December 31 of each year.
Section 2.06 Maintenance of Separateness. Each of the Company, the Partnership and the Partnership Subsidiaries shall at all times be obligated to:
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(a) maintain all of its business records, books of account and bank accounts separate from those of IFMI Parent, IFMI or any other Person;
(b) ensure that its assets are not commingled with the assets of IFMI Parent, IFMI or any other Person;
(c) conduct its business solely in its own name and, in the case of the Company, the name of the Partnership (when acting on behalf of the Partnership in its capacity as General Partner) so as not to mislead third parties as to the identity of the entity with which such third parties are dealing, and correct any known misunderstanding regarding its separate identity;
(d) in the case of the Company, obtain, whenever necessary, proper authorization from the Board or the Chairman, as appropriate, for any action taken or to be taken by the Company;
(e) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person; provided, however, that the Companys assets may be included in a consolidated financial statement of its Affiliate provided that (i) appropriate notation shall be made in a footnote to such consolidated financial statements to indicate the separateness of the Company from such Affiliate and to indicate that the Companys assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person (other than the Partnership and the Partnership Subsidiaries) and (ii) such assets shall also be listed on the Companys own separate balance sheet;
(f) except as provided by Section 4.5 of the Reimbursement Agreement, provide for its operating expenses and liabilities, including its organizational expenses and the salaries of its own employees, from its own funds and not from the funds of any other Person;
(g) observe all procedures and formalities required by this Agreement and the laws of the State of Delaware;
(h) subject to Section 13.03 and other than as contemplated hereby, by the Contribution Agreement and by the documents, instruments or agreements entered into in connection with the Contribution Agreement, ensure that all transactions between the Company, the Partnership or a Partnership Subsidiary and any Affiliate will be at arms length and on terms no less favorable than available to either party in a similar transaction with a non-Affiliate;
(i) ensure that its initial capitalization is sufficient in light of its purpose and business;
(j) without limiting Sections 4.09 and 13.03, ensure that it does not, other than as set forth in Section 5.05 of this Agreement or pursuant to the Contribution Agreement, make any advance to or guarantee or become obligated for the debts of IFMI, IFMI Parent or any other Person (other than the Company, the Partnership and the Partnership Subsidiaries, as applicable) or hold out its credit as being available to satisfy the obligations of any Person (other than the Company, the Partnership and the Partnership Subsidiaries, as applicable);
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(k) other than with respect to the Companys accounting function (which may be maintained in IFMIs Philadelphia office or such other place as determined by the Company), maintain and conduct its business separate from that of any Affiliate and, if applicable, sublease from any Affiliate office space at a rent representing its pro rata share based upon an existing lease, of sufficient space which is separately allocated and identifiable to conduct its business;
(l) have and use its own stationery, invoices, checks and telephone number in all business of the Company, the Partnership and the Partnership Subsidiaries, respectively;
(m) without limiting Sections 4.09 and 13.03, ensure that it does not pledge its assets for any other Person (other than the Company, the Partnership and the Partnership Subsidiaries, as applicable);
(n) other than as required by an insurance carrier, ensure that it does not enter into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy covering the property of any other Person;
(o) ensure that it will not conceal from creditors any of its assets or participate in concealing the assets of any other Person;
(p) ensure that it holds itself out as a separate entity; and
(q) ensure that it does not identify itself as being a division or a part of any other Person and that it does not identify IFMI Parent, IFMI or any other Person as being a division or part of itself.
(r) Notwithstanding the foregoing and anything herein to the contrary, the Members acknowledge that, as of the date hereof, the Company is a subsidiary of IFMI and IFMI Parent, that the Companys assets, liabilities and results of operations will be included in the consolidated financial statements of IFMI Parent, and that the Company is subject to the obligations set forth in Section 4.20 hereof. The Board shall use its reasonable best efforts to comply with the foregoing covenants of this Section 2.06. Failure of the Company, the Members, the Board or the officers of the Company on behalf of the Company or the Partnership, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company, the Partnership or any Partnership Subsidiary as a separate legal entity or the limited liability of the Members or the Managers. The unanimous consent of the Board shall be required to waive any of the foregoing covenants of this Section 2.06.
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ARTICLE III
The Members
Section 3.01 Current Members; Admission of Additional Members.
(a) The current Members are Ahmed A. Alali, Daniel G. Cohen, John P. Costas, Colette C. Dow, Ronald J. Garner, Michael T. Hutchins, Matthew G. Johnson and IFMI.
(b) Subject to Sections 4.09 and 10.03 of this Agreement, the Members may at any time admit one (1) or more new Members (each, an Additional Member) and issue Units to such Additional Members pursuant to this Agreement, subject to the condition that each such Additional Member shall execute a Supplementary Agreement, pursuant to which such Member agrees to be bound by the terms and provisions hereof (as may be modified by the terms of such Supplementary Agreement).
(c) The name of each Member and the type and number of Units issued to such Member shall be set forth in the books and records of the Company. The names, addresses and capital contributions (if any) of each of the Members shall also be set forth in the books and records of the Company.
(d) For so long as IFMI is a Member, any individual designated as an IFMI Manager shall execute a separate Joinder Agreement (as further described below) at the reasonable request of the Board.
Section 3.02 Supplementary Agreements.
(a) The Company may enter into one or more supplemental written agreements (including any Joinder Agreements or Executive Agreements) with any Member or Manager (each, a Supplementary Agreement) (i) specifying the type and number of Units initially issued to such Member, if any, and (ii) waiving, modifying or supplementing the rights or obligations of such Member or the Managers designated by such Member under this Agreement or otherwise with respect to the Company. Each of the Members acknowledges and agrees that such Supplementary Agreements may provide for other rights, benefits or obligations to the Members or the Managers designated by such Member that are parties thereto than otherwise set forth herein (including, without limitation, with respect to allocations and distributions, other compensation, indemnification and Restrictive Covenants). The Company may enter into more than one (1) Supplementary Agreement with a Member or Manager. For the avoidance of doubt, references herein to the Supplementary Agreement of a Member or a Manager shall include all Supplementary Agreements into which the Company enters into with such Member or Manager. In the event of any dispute between a Member or a Manager and the Company regarding a conflict between the terms of any such Members or Managers Supplementary Agreement and the terms of this Agreement, the terms of such Supplementary Agreement shall control. A Supplementary Agreement does not modify, amend, limit or supersede any provision of this Agreement, except as to matters expressly addressed in such Supplementary Agreement, and is to be construed narrowly with respect to such matters.
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Section 3.03 Representations. Each Member represents, warrants and covenants to the Company as follows:
(a) Capacity. Such Member has the full capacity, power and authority to execute, deliver and perform its obligations under this Agreement and to subscribe for and purchase Units as a member of the Company. Such Member has duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of such Member, enforceable against such Member in accordance with its terms, subject to bankruptcy, insolvency, moratorium, and similar laws of general applicability relating to or affecting creditors rights and to general equity principles.
(b) Compliance with Laws and Other Agreements. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the performance of such Members obligations hereunder (subject to the terms of Section 3.02 above) will not conflict with, or result in any violation of or default under, any provision of any agreement (including any restrictive covenant such as a non-compete agreement) or other instrument to which such Member is a party or by which such Member or any of such Members assets are bound, or any judgment, decree, statute, order, rule or regulation applicable to such Member or such Members assets.
(c) Access to Information. Such Member has carefully reviewed this Agreement. Such Member has been provided an opportunity to ask questions of, and such Member has received answers thereto satisfactory to such Member from, the Company and its representatives regarding such documents and the terms and conditions of the offering of Units, and such Member has obtained all additional information requested by such Member of the Company and its representatives.
(d) Evaluation of and Ability to Bear Risks. Such Member has such knowledge and experience in financial affairs that such Member is capable of evaluating the merits and risks of purchasing Units, and such Member has not relied in connection with this investment upon any representations, warranties or agreements other than those set forth in this Agreement and, in the case of IFMI, those set forth in the Contribution Agreement. Such Members financial situation is such that such Member can afford to bear the economic risk of holding Units for an indefinite period of time, and such Member can afford to suffer the complete loss of such Members investment in such Units.
(e) Investment Purpose. Such Member is acquiring Units pursuant to this Agreement for such Members own account for investment and not with a view to or for sale in connection with any distribution of all or any part of such Units. Such Member will not, directly or indirectly, Transfer all or any part of such Units (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of all or any part of such Units) except in accordance with the registration provisions of the Securities Act or an exemption from such registration provisions, with any applicable state or non-U.S. securities laws, and with the terms of this Agreement. Such Member understands that such Member must bear the economic risk of an investment in Units for an indefinite period of time because, among other reasons, the offering and sale of such Units have not been registered under the Securities Act and, therefore, such Units cannot be sold other than through a privately negotiated transaction unless it is
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subsequently registered under the Securities Act or an exemption from such registration is available. Such Member also understands that sales or transfers of such Units are further restricted by the provisions of this Agreement, and may be restricted by other applicable securities laws.
Section 3.04 Liability of the Members. Except as otherwise expressly provided in the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member.
Section 3.05 Limited Rights of Members. The following provisions shall apply with respect to each Member:
(a) The rights of the Members shall be limited solely to (i) such Members right to receive distributions and allocations in respect of such Members Units and Capital Account as set forth in this Agreement and (ii) such other rights as are otherwise expressly provided for in this Agreement (including, without limitation, voting and consent rights and the right related to inspect books and records), in a Members Supplementary Agreement and under the Act; and
(b) Subject to, and as limited by, the provisions of this Agreement, the Members shall owe to the Company duties of loyalty and due care with respect to the management and operation of the Company of the type owed under law by stockholders of a business corporation incorporated under the General Corporation Law of the State of Delaware.
Section 3.06 Power of Attorney. Provided that the applicable action or decision set forth below has been approved in accordance with Article IV, each of the Members hereby appoints the Chairman, or any officer of the Company acting at the express direction of the Chairman, with power of substitution as his or her true and lawful representative and attorney-in-fact, in such Members name, place and stead to make, execute, sign, acknowledge, swear to and file:
(a) any and all instruments, certificates and other documents which may be deemed necessary or desirable to effect the winding-up and termination of the Company; and
(b) any business certificate, fictitious name certificate, amendment thereto, or other instrument or document of any kind necessary or desirable to accomplish the business, purpose and objectives of the Company, or required by any applicable federal, state or local law.
The power of attorney hereby granted by each of the Members is coupled with an interest, is irrevocable, and shall survive, and shall not be affected by, the subsequent death, disability, incapacity, adjudication of incompetency, termination, bankruptcy or insolvency of such Member; provided, however, that such power of attorney shall terminate upon the substitution of another Member for all such Members Units or upon the complete withdrawal of such Member as a Member of the Company.
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Section 3.07 Bankruptcy, Dissolution, Removal, Withdrawal, Admission or Resignation of a Member. The bankruptcy, dissolution, removal, admission or withdrawal or resignation of a Member shall not in and of itself cause a dissolution or termination of the Company.
Section 3.08 Associated Members. Except as otherwise agreed to in writing by the Company: (i) an Associated Member shall be deemed to take the same actions and make the same consents and elections with respect to its Units as its related Member, including, without limitation, any election to withdraw from the Company; and (ii) each Associated Member shall have the same obligations, including without limitation the Restrictive Covenants, and be subject to the same terms as its related Member as set forth in this Agreement as well as in the related Members Supplementary Agreement.
ARTICLE IV
Management of the Company
Section 4.01 Management of the Company. There is hereby established a board of managers (the Board of Managers or Board) to be comprised of natural persons who shall be designated as set forth in this Article IV (each, a Manager and, collectively, the Managers). Except for matters expressly reserved by this Agreement or the Act for action by the Members, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under, the Board. In addition to the powers and authorities expressly conferred by this Agreement upon the Board, except with respect to certain responsibilities assigned to the Tax Matters Partner, and unless otherwise provided by the Board, all day-to-day Company management and operation decisions and determinations relating to the operations of the Company in the ordinary course of business shall be made by the Board or the Chairman or other officers appointed pursuant to Section 4.10.
Section 4.02 Size of the Board. The number of Managers which constitutes the Board shall be determined in accordance with Section 4.03.
Section 4.03 Designation of Managers. The Managers shall be designated to the Board as follows:
(a) there shall be three (3) IFMI Managers, provided that (i) in the event IFMI withdraws as a Member for any reason, the number of IFMI Managers shall be one (1), and until the Withdrawal Date, at which time the number of IFMI Managers shall be zero, and (ii) in the event IFMI makes an Involuntary Transfer, the number of IFMI Managers shall be zero; and
(b) there shall be two (2) PrinceRidge Managers; provided, however, that in the event that there are less than two (2) Qualifying PrinceRidge Members, the number of PrinceRidge Managers shall equal the number of Qualifying PrinceRidge Members unless the requirement to hold at least 51% of the number of Units of the Company and Units of the Partnership is waived by IFMI, which waiver may be revoked by IFMI at any time upon thirty (30) days written notice to the PrinceRidge Manager.
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Section 4.04 Term of Office; Vacancies and Removal.
(a) Each Manager serving on the Board shall hold office until his or her successor is designated or, if earlier, until his or her resignation from the Board, removal, death, disability or incapacitation.
(b) Notwithstanding anything to the contrary herein, the Managers shall have the right to remove or replace any other Manager only for (i) Cause or (ii) if any PrinceRidge Manager is no longer a Qualifying PrinceRidge Member; provided, that in the case of (ii) such removal shall not be effective unless and until (x) such removed former Qualifying PrinceRidge Member shall have had the repurchase of all of such Members Units consummated in full in accordance with Section 8.02(a) and (y) a new PrinceRidge Manager shall have been appointed and such appointment shall be effective or, if no Member is then deemed to be a Qualifying PrinceRidge Member, unless and until the repurchase of all former Qualifying PrinceRidge Members shall have been consummated in full in accordance with Section 8.02(a).
(c) Any vacancies on the Board (whether by removal for Cause, resignation or otherwise) shall, in the case of any IFMI Manager, be filled in accordance with Section 1.01(gg) hereof and, in the case of any PrinceRidge Manager, be filled in accordance with Section 1.01(iii) hereof.
Section 4.05 Meetings of the Board. Meetings of the Board may be held at such time and place either within or without the State of Delaware as will from time to time be determined by the Board, the Chairman or any Vice Chairman, including by conducting meetings via telephonic conference calls; provided that, unless otherwise determined by the Board, such meetings shall be held no less than once a month.
Section 4.06 Notice of Meetings. The Secretary shall notify, or cause notification of, each Manager of any meeting of the Board, stating the time, date and place of and, if necessary, the business to be transacted at or the purpose of any such meeting. Notice shall be given not less than two (2) nor more than thirty (30) days prior to such meeting and shall be given to each Manager personally, by telegram, cablegram, electronic transmission or by any similar transmission. Notice of any Board meeting may be waived by any Manager before or after any meeting. Attendance of a Manager at any meeting will constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not called or convened in accordance with the Act or this Agreement.
Section 4.07 Quorum and Voting. Subject to Section 4.09 hereof, at all meetings of the Board, the presence of a majority of the Managers shall be necessary and sufficient to constitute a quorum for the transaction of business unless a greater number is required by law. The act of a majority of the Managers will be the act of the Board, except as otherwise provided by the Act or this Agreement (including, without limitation, Section 4.09 hereof). If a quorum shall not be present at any meeting of the Board, the Manager present at the meeting may adjourn the meeting from time to time, without notice other than announcement of such adjournment at the meeting, until a quorum will be present. A Manager may vote or be present at a meeting either in person or by proxy.
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Section 4.08 Action Without a Meeting and Telephonic Meetings. Notwithstanding any provision contained in this Agreement to the contrary, any action of the Board may be taken by unanimous written consent without a meeting, or any meeting of the Board may be held by means of a telephonic conference connection so long as all parties can hear one another. Any such action taken by the Board by written consent without a meeting will be effective only if the written consent or consents are in writing, set forth the action so taken, and are signed by all of the Managers.
Section 4.09 Actions Requiring Unanimous Consent. Notwithstanding anything to the contrary herein, if a PrinceRidge Manager is then serving on the Board or the number of IFMI Managers has been reduced to one (1) in accordance with Section 4.03(a), the following actions shall require the unanimous approval of the Managers:
(a) any Sale Transaction, corporate conversion, merger or purchase of a material business in respect of any Management Group Entity or any Monetization Event;
(b) the filing of a voluntary petition for reorganization relief, or consent to the entry of an order for relief or the effecting of any liquidation, dissolution or winding up of any Management Group Entity;
(c) any reclassification, recapitalization, reorganization, stock split, restructuring, consolidation, merger, exchange or other similar change in respect of the equity securities of any Management Group Entity or authorize, approve, agree to effect or engage in any reorganization or restructuring or any similar transaction or change the status of any Management Group Entity as a limited partnership or limited liability company, as applicable, under the laws of the State of Delaware;
(d) any amendment or modification of the certificate of formation of the Company or the certificate of limited partnership of the Partnership or the Partnership Agreement or this Agreement or any other organizational or governing documentation of any Management Group Entity or the Contribution Agreement;
(e) the authorization or issuance, or the modification of the terms, of any Units or limited partnership interests in the Partnership or any equity securities of any Management Group Entity other than issuances pursuant to equity compensation or benefit plans approved by the Board;
(f) any guarantee or assumption by any Management Group Entity of indebtedness for borrowed money of any Person;
(g) the taking of any action that would subject any Management Group Entity to additional or further material regulation other than as applicable to the business lines of the Management Group Entities on the date of such action after giving effect to the Interim Closing (as defined in the Contribution Agreement), and other than such laws, rules and regulations that apply to public and/or exchange listed companies generally;
(h) so long as either John Costas or Michael Hutchins is an officer of the Company or the Partnership, and except as provided in Article VIII, the repurchase,
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redemption or buyback of Units, limited partnership interests in the Partnership or any other equity securities of any Management Group Entity; provided, that thereafter, any repurchase, redemption or buyback of Units, limited partnership interests in the Partnership or any other equity securities of any Management Group Entity shall be on a pro rata basis among all Members (in the case of the Company), Limited Partners (in the case of the Partnership) or other holders equity securities (in the case of any other Management Group Entity);
(i) so long as either John Costas or Michael Hutchins is an officer of the Company or the Partnership, the making or authorization of any distributions or dividends with respect to any Management Group Entity or any act or omission causing the Company or the Partnership to fail to satisfy the pro rata Mandatory Distribution requirements in Section 7.02 hereof or Section 7.02 of the Partnership Agreement; provided, that thereafter, the making or authorization of any distributions or dividends shall be paid on a pro rata basis to all of the Members (in the case of the Company), Limited Partners (in the case of the Partnership) or other holders of equity securities (in the case of any other Management Group Entity);
(j) the entering into, or amendment of, a Supplementary Agreement, an Executive Agreement or a Joinder Agreement, other than a Joinder Agreement (or amendment thereto) with terms substantially the same as those contained in the Joinder Agreement set forth on Appendix A;
(k) so long as either John Costas or Michael Hutchins is an officer of the Company or the Partnership, the admission of a new Member or Limited Partner;
(l) so long as either John Costas or Michael Hutchins is an officer of the Company or the Partnership, the creation or approval of any equity compensation or benefit or of any consultancy compensation arrangement;
(m) the modification of any terms of any existing loan or the forgiveness of any loan to any Member;
(n) the creation of any subsidiaries or the acquisition of interests in any Partnership Subsidiary where the interests of IFMI, on the one hand, and the Individual Members, on the other, are not in the same proportion as their respective ownership interests in the Company;
(o) taking a position on a tax return for which there is not authority supporting a more likely than not position (other than as specifically set forth in this Agreement, the Partnership Agreement or the Contribution Agreement);
(p) the becoming bound (or permitting any Member, parent of Member or each of their respective subsidiaries and the officers thereof to become directly or indirectly bound) by (i) any restrictive agreements regarding a Management Group Entity, including, without limitation, any non-competition, standstill, non-solicitation or similar arrangement, or (ii) any contractual restriction regarding the ability of a Management Group Entity to make an investment in any other Person; and
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(q) termination other than for cause pursuant to Daniel G. Cohens Executive Agreement;
(r) (i) each of the matters set forth in Section 6.03(b), Section 6.08, Section 7.02(f), Section 7.02(g)(ii), Section 8.01(a) and Section 10.02(c), (ii) for so long as either John Costas or Michael Hutchins is an officer of the Company or the Partnership, each of the matters set forth in Section 7.02(e) and Section 9.01(a), and (iii) the waiver of any of the matters set forth in Section 2.06.
Section 4.10 Officers.
(a) The officers of the Company shall consist of a Chairman, a Chief Executive Officer, a Chief Financial Officer and such other officers as may be appointed by the Board from time to time, including, but not limited to, any Vice Chairman. One person may hold, and perform the duties of any two or more offices. No officer need be a Member, a Delaware resident or a United States citizen. Designation and approval of a person as an officer of the Company shall not of itself create any contractual rights.
(b) Chairman. The Chairman, which shall be an executive officer position, shall be appointed by the Board. Except as otherwise determined by the Board, and subject to the oversight of the Board, the Chairman of the Company shall have the authority to perform (i) the duties customarily attendant to the position of said office, (ii) such other duties that are reasonably specified and reasonably designated from time to time by the Board, and (iii) such other duties and have responsibilities as may be set forth in any applicable employment agreement and/or Supplementary Agreement. The Chairman shall see that all resolutions and orders of the Board are carried into effect and, in connection with the foregoing, shall be authorized to delegate to any other officer of the Company such of his or her powers and such of his or her duties as the Chairman shall deem necessary or appropriate.
(c) Vice Chairman. A Vice Chairman, which shall be an executive officer position, may be appointed by the Board. Except, with respect to clauses (i) and (ii) only, as otherwise determined by the Chairman and/or the Board, and subject, with respect to clauses (i) and (ii) only, to the oversight of the Chairman and/or the Board, the Vice Chairman of the Company shall have the authority to perform (i) the duties customarily attendant to the position of said office, (ii) such other duties that are reasonably specified and reasonably designated from time to time by the Board, and (iii) such other duties and have responsibilities as may be set forth in any applicable employment agreement and/or Supplementary Agreement.
(d) Chief Executive Officer. The Chief Executive Officer shall be responsible for the day-to-day activities and operations of the Company and the Partnership as determined by the Chairman and/or the Board and shall have the authority to perform such other duties and have responsibilities as may be set forth in any applicable employment agreement and/or Supplementary Agreement.
(e) Chief Financial Officer. The Chief Financial Officer shall be responsible for overseeing the financial activities and operations of the Company and the Partnership as determined by the Chairman and/or the Board.
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(f) Each officer will hold office until his or her successor is duly elected or appointed and qualifies or until his or her death or resignation or removal from office. Subject to the terms of any Supplementary Agreement or employment agreement then in effect, any officer of the Company may be removed or replaced as such, with or without cause, for any reason or for no reason, by the Board. Any officer of the Company may resign as such at any time upon written notice to the Board. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.
Section 4.11 Chairman as Agent. Except as otherwise determined by the Board, the Chairman, to the extent of his powers set forth in this Agreement, is an agent of the Company for the purpose of the Companys business, and the actions of the Chairman taken in accordance with this Agreement shall bind the Company. The Chairman or the Board may authorize any officer, employee or other agent to act for and on behalf of the Company.
Section 4.12 Ability to Bind the Company. Except as otherwise determined by the Board, and subject to compliance with this Agreement, the Chairman (and any officers or agents appointed by the Chairman) shall have the authority (a) to execute and deliver, in the name and on behalf of the Company, without limitation, checks, drafts, orders, instructions, trade orders, contracts, commitments, conveyances of real estate, leases, notes, documents evidencing lending or borrowing, or any other agreements, documents and instruments; and (b) to take any and all actions on behalf of the Partnership pursuant to the Partnership Agreement.
Section 4.13 Compensation of Managers; Expense Reimbursement. Managers that are also officers or employees of the Company or the Partnership or employees of any of the Members or their Affiliates shall not receive any stated fee for services in their capacity as Managers; provided, however, that nothing contained herein shall be construed to preclude any Manager from serving the Company or the Partnership in any other capacity and receiving compensation therefor; provided further that such Managers compensation in such Managers capacity as an employee or officer of the Company or the Partnership shall require the unanimous approval of the Managers not Affiliated with such Manager or his or her Affiliates; provided further that notwithstanding the foregoing, to the extent any Manager that is also an officer has an Executive Agreement or Supplementary Agreement, such agreement shall control such compensation and no such approval of Managers not Affiliated with such Manager or his or her Affiliates shall be required with respect to compensation specifically provided for in such agreement. Managers that are not also officers of the Company or employees of any of the Members or their Affiliates may receive compensation for their services as Managers, in each case as determined from time to time by the Board of Managers; provided that such Managers compensation shall require the unanimous approval of the Managers not Affiliated with such Manager or his or her Affiliates.
Section 4.14 No Participation in Management by Members. Except as otherwise expressly provided in this Agreement, the Members in their capacities as such shall not take part in the management or control of the Company or its management of other activities, transact any business in the Companys name or have the power to sign documents for or otherwise bind the Company.
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Section 4.15 Reliance by Third Parties. Persons dealing with the Company or the Partnership are entitled to rely conclusively upon the certificate of the Board or of a duly authorized Member, officer, employee or other agent of the Company, to the effect that such Person is, as applicable, a Manager or acting as and upon the power and authority of the Board or upon the power and authority of any other Member or any officer, as delegated to such Member or officer by the Board or the Chairman as set forth in this Agreement.
Section 4.16 Reliance by the Members. The Members and any duly authorized Member, officer, employee or other agent of the Company may rely, and shall be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
Section 4.17 Expenses. Subject to Section 6.3 of the Contribution Agreement, the Company shall be responsible for paying, and the Board shall pay directly out of Company funds, all reasonable costs and expenses incurred in connection with the business of the Company, including, without limitation, any out-of-pocket expenses of the Members and Managers incurred in connection with the business of the Company in accordance with the Companys expense reimbursement policy, liability and other insurance premiums, expenses incurred in the preparation of financial reports and any legal, accounting and other professional fees and expenses.
Section 4.18 Standards for Actions by the Managers, Officers and the Members.
(a) Subject to Section 4.09, any determination, decision, consent, vote or judgment of, or exercise of discretion by, or action taken or omitted to be taken by, the Board under this Agreement, shall be made, given, exercised, taken or omitted as the Board shall determine in its sole and absolute discretion, whose determination shall be final, conclusive and binding as to all Members.
(b) Any Member, Manager or officer, in the performance of such Members, Managers or officers duties, shall be entitled to rely in good faith on the provisions of this Agreement and on opinions, reports or statements (including financial statements, books of account any other financial information, opinions, reports or statements as to the value or amount of the assets, liabilities, profits or losses of the Company and the Partnership) of the following other Persons or groups: (i) one or more officers or employees of such Member or the Company or the Partnership, (ii) any legal counsel, certified public accountants or other Person employed or engaged by such Member, the Board or the Company or the Partnership, or (iii) any other Person who has been selected with reasonable care by or on behalf of such Member, Manager, officer, the Board, the Company or the Partnership, in each case as to matters which such relying Person reasonably believes to be within such other Persons professional or expert competence. The preceding sentence shall in no way limit any Persons right to rely on information to the extent provided in Section 18-406 of the Act.
(c) On any matter involving a conflict of interest with respect to the Company or the Partnership not provided for in this Agreement, each Manager and officer shall be guided by its reasonable judgment as to the best interests of the Company.
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(d) Subject to, and as limited by, the provisions of this Agreement, the Managers and the officers, in the performance of their duties as such, shall owe to the Company and the Partnership duties of loyalty and due care with respect to the management and operation of the Company and the Partnership, respectively, of the type owed under law by directors and officers of a business corporation incorporated under the General Corporation Law of the State of Delaware; provided, however, that the doctrine of corporate opportunity or any analogous doctrine shall not apply to the IFMI Managers in their roles as Managers or officers, or the PrinceRidge Managers in their roles as Managers (but not in their roles as officers) with respect to opportunities that arise in businesses that are not Competing Businesses (as defined in the Contribution Agreement).
(e) Except as required by the Act, no individual who is a Manager or an officer, or any combination of the foregoing, shall be personally liable under any judgment of a court, or in any other manner, for any debt, obligation or liability of the Company or the Partnership, whether that liability or obligation arises in contract, tort or otherwise, solely by reason of being a Manager or an officer or any combination of the foregoing.
(f) No Manager or officer shall be liable to the Company, the Partnership, any Member or any Limited Partner for any act or omission (including any breach of duty (fiduciary or otherwise)), including any mistake of fact or error in judgment taken, suffered or made by such Person if such Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Company and the Partnership and which act or omission was within the scope of authority granted to such Person; provided that such act or omission did not constitute fraud, willful misconduct, bad faith or gross negligence in the conduct of such Persons office.
(g) No Manager shall be liable to the Company, the Partnership, any Member or any Limited Partner for monetary damages for breach of fiduciary duty as a Manager; provided that the foregoing shall not eliminate or limit the liability of a Manager: (i) for any breach of such Managers duty of loyalty to the Company or its Members or the Partnership or its Limited Partners (as such duty is modified pursuant to the terms of this Agreement); (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of Law (as defined in the Contribution Agreement); or (iii) for any transaction from which such Manager derived an improper personal benefit.
Section 4.19 Management Availability. For so long as IFMI owns a majority of the outstanding Units of the Partnership, upon the written request of the Chairman of IFMI Parent, the Managers shall be available, and the Company shall make available the executive officers of the Company (including by teleconference), to meet with officers of IFMI Parent during normal business hours and upon reasonable advance notice, and the board of directors of IFMI Parent, including, without limitation, attendance (in person or by teleconference), from time to time, at regularly scheduled board and senior management meetings.
Section 4.20 Compliance with Securities and National Stock Exchange Laws, Rules and Regulations. Notwithstanding anything in this Agreement to the contrary, so long as IFMI Parent is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and is required by applicable laws, rules, regulations or stock exchange requirements
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to disclose, or include in its periodic reports, information regarding the Company, the Partnership and/or the Partnership Subsidiaries, the Company shall, and shall cause the Partnership and the Partnership Subsidiaries to: (a) comply with all applicable federal securities laws and national securities exchange rules and regulations; (b) except to the extent compliance with this clause (b) conflicts with policies and procedures adopted by an entity in which the financial statements of the Company or the Partnership are consolidated, be bound by all policies and procedures adopted, from time to time, by IFMI Parent to ensure compliance with such laws, rules and regulations; and (c) assist and provide IFMI with all information regarding the Company, the Partnership and the Partnership Subsidiaries that IFMI requests in connection with any disclosures deemed necessary or appropriate by IFMI regarding the Company, the Partnership and the Partnership Subsidiaries, including, but not limited to: (i) disclosure of the Companys and the Partnerships financial condition and results of operations (including, as deemed necessary by IFMI, as a separate reportable segment or as part of another reportable segment); (ii) disclosures in press releases, earnings releases and investor presentations; and (iii) disclosure of financial statements and pro forma financial information required by Form 8-K in connection with the admittance of IFMI as a Member of the Company and a Limited Partner of the Partnership.
ARTICLE V
Issuance of Units; Compensation; Loans
Section 5.01 Issuance of Units.
(a) Subject to Sections 4.09 and 10.03, the Company may issue Profit Units, Equity Units or other types or classes of Units to Members at such times and on such terms as it shall determine.
(b) With respect to Profit Units, Profit Units may be issued with respect to all Sources or different Sources. The Profit Units issued with respect to all Sources and each Source shall equal one hundred percent (100%) of the total number of Profit Units issued by the Company.
(c) An Equity Unit shall represent a portion of Capital Net Income and Asset Sale Proceeds allocated to a Member or Unit Sale Proceeds in which such Member participates, as the case may be. The Equity Units of all Members shall equal one hundred percent (100%) of the total number of Equity Units issued by the Company.
(d) The Subscription Commitment, if any, Unit Price (and resulting Capital Account balance) and issuance of Units to each Member shall be set forth in the books and records of the Company.
(e) A Member shall not be obligated to purchase additional Units, except as provided in such Members Subscription Commitment, if any, or Supplementary Agreement, except as provided in Section 7.02(g)(ii) (with respect to taxes withheld or paid on behalf of such Member) or as otherwise agreed to by such Member in writing.
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(f) Except as expressly agreed to by the Company and such Member, a Member shall not have any obligation to the Company or to any other Member to restore any negative balance in its Capital Account by making additional capital contributions with respect to such Members Units, or otherwise.
Section 5.02 Adjustment of Profit Units and Equity Units.
(a) Each Member shall initially hold the number of Profit Units and Equity Units indicated in the books and records of the Company and/or in its Supplementary Agreements.
(b) The Company may, at any time, as provided in this Agreement, increase or decrease the number of Profit Units and/or Equity Units held by a Member to reflect changes in the Members relevant Capital Account and Sub-Capital Account balances.
(c) After the repurchase of a Members Units, such Member shall not be entitled to any allocation of Net Income or Net Losses with respect to Profit Units, or to Sale Proceeds, with respect to Equity Units, as applicable.
Section 5.03 Issuance of Senior Securities. Subject to Sections 4.09 and 10.03, the Company may issue one or more classes of Units that have priority over any other Units then in issue, either as to the return of the amount of such Unit holders capital or as to any allocation of any item of income, gain, loss, deduction or credit of the Company.
Section 5.04 Guaranteed Payments. Subject to Section 13.03, the Company, including those provided for in a Supplementary Agreement or separate written agreement, may make a guaranteed payment to any Member who is also an employee of the Company or the Partnership.
Section 5.05 Loans.
(a) Other than in accordance with Article IV, the Company shall not make loans to any Member except in the case of the following clause 5.05(b).
(b) Notwithstanding anything in this Agreement to the contrary, after the later of (x) September 30, 2011 or (y) the earlier of (1) the Final Closing (as defined in the Contribution Agreement) or (2) March 31, 2012, each Member shall be entitled to borrow from the Company up to 30% of the balance of their Capital Account; provided, however, that (i) such borrowing Member shall provide at least 45 days prior notice of the intent to exercise this borrowing option, (ii) a determination by the Company shall be made that such loan would not cause material harm to the Company or the Partnership, (iii) any such loan would have a maximum term of 1 year and would accrue at an interest rate per annum equal to ten percent (10%), and (iv) any such loan would be subject to the receipt of all necessary regulatory approvals and compliance with applicable law. All loans made to Members pursuant to this Section 5.05 shall (i) be secured by a first priority security interest in such Members Capital Account and (ii) while the loan is outstanding, reduce the amount of such Members Profit Units (for purposes of Net Income allocations or distributions) in proportion to the amount of such Members Capital Account that was borrowed against. The Board (excluding any Member or any
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member of the Board appointed by a Member receiving such a loan) shall have the right to cause any Member receiving a loan to execute and deliver any documentation the Company reasonably deems necessary to evidence and secure such loan. Each Member shall have the ability to exercise the borrowing option provided in this Section 5.05(b) once in any two (2) year period.
(c) Without the consent of the Company, no Member shall make loans or advance money to the Company. Subject to Section 13.03, if any Member makes any loan to the Company or advances money on behalf of the Company, the amount of any such loan or advance shall not be treated as a capital contribution to the Company, but shall be a debt due from the Company. Subject to Section 13.03, the amount of any such loan or advance by a lending Member shall be repayable by the Company and shall bear interest on the terms and at the rate agreed between the Company and the lending Member.
(d) No Member shall be obligated to make any loan or advance to the Company absent an agreement between the Member and the Company to make a loan or advance to the Company.
ARTICLE VI
Capital Accounts of Members and Operation Thereof
Section 6.01 Capital Accounts.
(a)(i) There shall be established for each Member on the books of the Company a Capital Account, which shall be maintained and adjusted as provided in this Article VI. The Capital Account of a Member shall be credited with (x) the amount of all cash contributed by such Member for such Members Units, (y) the fair value of any property contributed by such Member to the Company (net of any liabilities secured by such property that the Company is considered to assume or take subject to under Section 752 of the Code) for such Members Units, and (z) the amount of repayment, when repaid, of any loan made to such Member pursuant to Section 5.05(b) hereof. The Capital Account of a Member shall be credited with any amount credited to such Capital Account pursuant to this Article VI, and debited by (i) the amounts debited to such Capital Account in accordance with this Article VI, (ii) the amount of any cash distributed to such Member from such Capital Account in accordance with Article VII or in connection with the repurchase of Units, (iii) the fair value of any asset distributed in kind to such Member from such Capital Account pursuant to Article VII (net of any liabilities secured by such asset that such Member is considered to assume or take subject to under Section 752 of the Code) or in connection with the repurchase of Units, and (iv) the amount of any loan made to such Member pursuant to Section 5.05(b) hereof. The Capital Account of each Member also shall be adjusted appropriately to reflect any other adjustment required pursuant to Treasury Regulations Section 1.704-1 or 1.704-2. Notwithstanding the foregoing, nothing herein shall affect the terms of Article II of the Contribution Agreement.
(ii) The Company may establish for any Member a sub-capital account of any Capital Account (each, a Sub-Capital Account) to account for Net Income and Net Loss from any Source, or for any other purpose. A Sub-Capital Account generally shall be maintained and adjusted in the same manner as a Capital Account, as provided in this Agreement.
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(b) Upon the occurrence of any event specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), the Company may cause the Capital Accounts of the Members to be adjusted to reflect the fair value of the Companys assets at such time (as reasonably determined by the Company) in accordance with such Regulation. In such event, income, gain, loss and deductions realized thereafter shall be computed in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
Section 6.02 General Allocations. As of the close of business on the last day of the relevant Accounting Period, subject to Section 6.03 hereof, allocations to the Members shall be made as follows:
(a) Net Income and Net Loss, other than Capital Net Income and Capital Net Loss, shall be credited or debited, as applicable, to the Capital Accounts of the Members pro rata in proportion to such Members Profit Units (taking into account the reduction of any Members outstanding Profit Units pursuant to a loan made by the Company to such Member pursuant Section 5.05(b) hereof) as of the last day of the applicable Accounting Period for which such Net Income was earned or such Net Loss was determined; provided, that, notwithstanding the foregoing, Net Income and Net Loss, other than Capital Net Income and Capital Net Loss, attributable to a specific Source for such Accounting Period shall be credited or debited, as applicable, to the Capital Accounts or Sub-Capital Accounts, as applicable, of the Members holding Profit Units issued with respect to such Source pro rata in proportion to such Profit Units.
(b)(i) Any Capital Net Income shall be credited to the Capital Accounts of the Members as follows:
(A) any Capital Net Income attributable to the sale of one hundred percent (100%) of the Companys assets shall be allocated with respect to each increment of Threshold Value pro rata among the Capital Accounts of the Members entitled to participate in such increment of Threshold Value in proportion to such Members Equity Units; and
(B) any Capital Net Income attributable to a sale of less than one hundred percent (100%) of the Companys assets shall be allocated to the Capital Accounts of the Members pursuant to Section 6.02(b)(i)(A); provided, however, that for the purpose of this Section 6.02(b)(i)(B), each Threshold Value that has been determined up to that time shall be multiplied by the percentage of the Companys assets being sold.
(ii) Any Capital Net Loss shall be allocated among the Capital Accounts of the Members pro rata in proportion to such Members Equity Units.
(c) Notwithstanding anything herein to the contrary, any taxes that are paid by the Company or any entity in which the Company owns any direct or indirect interest with respect to any item of Net Income (or, otherwise, any income or gain) allocable, or otherwise attributable to, one or more Members (including on account of a Members resident or
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non-resident status) shall be credited against and reduce (without duplication) the amounts otherwise distributable or payable to such Member. For the avoidance of doubt, any entity-level tax of the Company or any entity in which the Company owns any direct or indirect interest such as the New York City Unincorporated Business Tax or the employer portion of the Medicare tax shall be treated as a Company expense and allocated pro rata among the Members. If any Member receives a refund with respect to such entity-level taxes that should have been paid to the Company or any entity in which the Company owns any direct or indirect interest, such Member shall contribute such refund to the Company without the receipt of any Units or other interest in the Company or any entity in which the Company owns any direct or indirect interest.
Section 6.03 Special Allocations.
(a) Section 704(b) Allocation Limitations. Notwithstanding Section 6.02, special allocations of income and gain or specific items of income or gain may be specially allocated for any Fiscal Year (or other period) as follows:
(i) Minimum Gain Chargeback. The Company shall allocate items of income and gain among the Members at such times and in such amounts as necessary to satisfy the minimum gain chargeback requirements of Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).
(ii) Qualified Income Offset. The Company shall specially allocate items of income and gain when and to the extent required to satisfy the qualified income offset requirement within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(iii) Nonrecourse Deductions. The Company shall allocate any nonrecourse deductions, as defined in Treasury Regulations Section 1.704-2(b)(1), of the Company among the Members in a manner which complies with the requirements of Treasury Regulations Section 1.704-2(e).
(iv) Adjusted Capital Account Deficit.
(A) Notwithstanding any other provision of this Agreement, losses (or items of deduction as computed for book purposes) shall not be allocated to a Member to the extent that such Member has or would have, as a result of such allocation, an Adjusted Capital Account Deficit. As used herein, a Members Adjusted Capital Account Deficit shall mean and refer to such Members Capital Account, increased by any amounts which such Member is obligated to restore pursuant to the terms of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and reduced by any adjustments, allocations or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6). Any loss (or items of deduction as computed for book purposes) which otherwise would be allocated to a Member, but which cannot be allocated to such Member because of the application of the immediately preceding sentence, shall instead be allocated to the other Members in accordance with their respective Capital Account balances, subject to the limitation imposed by the immediately preceding sentence, until there are no remaining Members who do not have an Adjusted Capital Account Deficit.
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(B) Notwithstanding Section 6.02, Net Income or items thereof otherwise allocable to a Member who was not eligible to be allocated losses or deductions under clause (A) above, shall first be allocated 100% to the Members in the amount necessary to reverse, in reverse chronological order, on a cumulative basis and without duplication, any amounts allocated to such Members pursuant to the last sentence of clause (A), such allocations to be made pro rata based on the amounts previously allocated to such Members pursuant to the last sentence of clause (A).
(b) Adjustment of Allocations. In the event that the Board reasonably and unanimously determines that the allocations otherwise required pursuant to Section 6.02 or 6.03(a) would not properly reflect the economic arrangement of the Members or would otherwise cause any inequitable or onerous result for any Member, then, notwithstanding any provision in this Agreement to the contrary, the Company may adjust such allocations in such manner as the Board reasonably and unanimously determines to be required to prevent such result.
Section 6.04 Liabilities. Liabilities shall be determined in accordance with generally accepted accounting principles applied on a consistent basis; provided, however, that the Company may provide reserves or holdback amounts from distributions for estimated accrued expenses, liabilities or contingencies, whether or not in accordance with generally accepted accounting principles; provided that, the establishment of any reserves or holdback amounts that are not in accordance with generally accepted accounting principles shall require unanimous approval of the Board.
Section 6.05 Goodwil. Except as required by generally accepted accounting principles, no value shall be placed on the name or goodwill of the Company, except as determined pursuant to Sections 6.02(b), 7.02(b) and 10.01.
Section 6.06 Allocation of Income and Loss for Tax Purposes. The Companys ordinary income and losses, capital gains and losses and other items as determined for federal income tax purposes (and each item of income, gain, loss or deduction entering into the computation thereof) shall be allocated to the Members in the same proportions as the corresponding book items are allocated pursuant to Sections 6.02 and 6.03. Notwithstanding the foregoing sentence, federal income tax items relating to any Section 704(c) Property shall be allocated among the Members pursuant to the principles of Section 704(b) and 704(c) of the Code and Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e), to take into account the difference between the fair value and the tax basis of such Section 704(c) Property, as of the date of its revaluation pursuant to Section 6.01(b) of this Agreement or its contribution to the Company. Items described in this Section 6.06 shall neither be credited nor charged to the Members Capital Accounts.
Section 6.07 Determination by the Board of Certain Matters. All matters concerning: (i) valuations; (ii) the determination and calculation, and the allocation to and among the Members, of taxable income, deductions, credits, Net Income, Net Losses and other items of Company income, gain, losses, deductions and credits (and including taxes thereon); (iii) tax accounting procedures and methods; and (iv) the operation of Article VI hereof, shall be determined by the Board in accordance with Article IV.
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Section 6.08 Adjustments by the Board to Take Account of Certain Events. In the event that a Member is admitted to, or withdraws from, the Company other than at the end of the Companys Fiscal Year, allocations among the Members and accounting procedures shall be determined by the unanimous approval of the Board in accordance with Article IV.
ARTICLE VII
Repurchase of Units; Distributions on Units
Section 7.01 Repurchase of Units. Subject to Section 4.09, upon the consent of the Board and the consent of the affected Individual Member, the Company may repurchase the Units of any Individual Member at any time. No Member shall have the right to have the Company repurchase such Members Units or to withdraw capital from the Company, except in connection with such Members withdrawal from the Company in accordance with Article VIII. The price at which the Company shall repurchase Units from a Member shall be the Unit Price.
Section 7.02 Distributions. Subject to Section 4.09, distributions shall be made to each Member at the times and in the amounts determined by the Board, and if and when declared by the Board, shall be made as follows:
(a) Net Income. Distributions of Net Income (other than Capital Net Income) shall be made to the Members pro rata in proportion to such Members Profit Units (taking into account the reduction of any Members outstanding Profit Units pursuant to a loan made by the Company to such Member pursuant Section 5.05(b) hereof); provided, that, notwithstanding the foregoing, Net Income (other than Capital Net Income) attributable to a specific Source shall be distributed to the Member holding Profit Units issued with respect to such Source pro rata in proportion to such Profit Units.
(b) Sale Proceeds.
(i) Proceeds of Sale of Assets (Capital EventFull). Asset Sale Proceeds distributed in connection with a sale or other disposition of one hundred percent (100%) of the Companys assets that does not lead to a liquidation of the Company, shall be distributed to the Members in accordance with, and in proportion to, their respective Equity Units. Such distribution shall be made, with respect to each increment of Threshold Value, pro rata among the Members entitled to participate in such increment of Threshold Value in accordance with such Members Equity Units.
(ii) Proceeds of Sale of Assets (Capital EventPartial). Asset Sale Proceeds attributable to a sale of less than one hundred percent (100%) of the Companys assets shall be distributed to the Members pursuant to Section 7.02(b)(i); provided, however, that for the purpose of this Section 7.02(b)(ii), each of the Threshold Values that have been determined up to that time shall be multiplied by the percentage of the Companys assets being sold.
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(c) Mandatory Distributions. Notwithstanding the foregoing and other than as provided for by the Managers in accordance with Section 4.09(i), if there is Net Income, 50% of such Net Income shall be distributed (a Mandatory Distribution) to the Members in accordance with, and in proportion to, their respective Profit Units or Equity Units, as applicable (but without duplication). The amount of any Mandatory Distributions shall be determined by the Board at the end of each fiscal quarter; provided, however, that the net sum of the Mandatory Distributions, if any, for each fiscal quarter shall be distributed to the Members within 45 days after the end of each fiscal year. In determining a Members rights to distributions pursuant to Sections 7.02(a) and (b) (including by reason of the application of Section 11.04), distributions received by such Member pursuant to this Section 7.02(c) shall be taken into account as if received pursuant to Sections 7.02(a) and (b) (including by reason of the application of Section 11.04).
(d) Intentionally omitted.
(e) Other Distributions. Subject to Section 4.09 and Section 11.04, distributions of amounts not covered by Sections 7.02(a), 7.02(b), 7.02(c) or 7.02(f) shall be distributed to the Members as determined by the Board.
(f) Distributions In Kind.
(i) Upon the unanimous consent of the Board, the Company may distribute any assets in kind. If cash and property are to be distributed in kind simultaneously, the Company shall, upon the unanimous consent of the Board, distribute such cash and property in kind in proportion each Members Profit Units and Equity Units.
(ii) For purposes of determining amounts distributable to the respective Members under this Section 7.02, any property to be distributed in kind shall have the value assigned to such property by the unanimous consent of the Board, and the amount of Net Income or Net Loss that would have been realized had such assets been sold at their fair value shall be allocated to the Capital Accounts of the Members pursuant to Sections 6.02 and 6.03 of this Agreement immediately prior to such distribution.
(g) Tax Withholding.
(i) The Company may withhold and pay over to the Internal Revenue Service (or any other relevant taxing authority) such amounts as the Company is required to withhold or pay over, pursuant to the Code or any other applicable law, on account of a Members distributive share of the Companys items of gross income, income or gain.
(ii) For purposes of this Agreement, any taxes so withheld or paid over by the Company with respect to a Members distributive share of the Companys gross income, income or gain shall be deemed to be a distribution or payment to such Member, reducing the amount otherwise distributable to such Member in accordance with this Agreement (including pursuant to Section 11.04) and reducing the Capital Account of such Member. If the amount of such taxes is greater than any such distributable amounts, then, notwithstanding anything in this Agreement to the contrary, such Member and any successor to such Members Units shall, as required by the Board upon the unanimous approval of the Managers, pay the amount of such excess to the Company, as a contribution to the capital of the Company.
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(iii) The Company shall not be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Member that may be eligible for such reduction or exemption. To the extent that a Member claims to be entitled to a reduced rate of, or exemption from, a withholding tax pursuant to an applicable income tax treaty, or otherwise, such Member shall furnish the Company with such information and forms as such Member may be required to complete where necessary to comply with any and all laws and regulations governing the obligations of withholding tax agents. Each Member represents and warrants that any such information and forms furnished by such Member shall be true and accurate, and agrees to indemnify the Company and each of the Members from any and all damages, costs and expenses resulting from the filing of inaccurate or incomplete information or forms relating to such withholding taxes.
Section 7.03 Limitations on Distributions and Repurchases of Units. Notwithstanding Sections 7.01, 7.02 and 8.02:
(a) Distributions and repurchases of Units are subject to the provision by the Board for (i) all Company liabilities in accordance with the Act and (ii) reserves or amounts held back in accordance with this Agreement;
(b) The unused portion of any reserve or amount held back shall be distributed, with interest as determined by the Board, after the Board has determined that the need therefor shall have ceased;
(c) Distributions shall be made only to the extent of Available Assets; and
(d) Distributions to, and the repurchase of Units from, any Member are subject to the application of any provision of this Agreement that may result in a Member not actually receiving the full (or any) amount that the Member would have otherwise been, in the absence of such provision, entitled to receive pursuant to such distribution or repurchase (such as deductions to repay loans to the Company and the Companys right to offset liabilities or withhold distributions with respect to a Member).
ARTICLE VIII
Withdrawal from the Company
Section 8.01 Withdrawal.
(a) Voluntary Withdrawal. An Individual Member may Voluntarily Withdraw (i) as of the end of any quarter upon fifteen (15) days prior written notice to the Company, (ii) to the extent such Individual Member is a Qualifying PrinceRidge Member as of the date hereof, and is or becomes a PrinceRidge Manager after the date hereof, upon any event or series of events that results in such Person no longer being deemed a Qualifying PrinceRidge Member and subsequent to such event such Person ceases to be a Member of the Board, and (iii)
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at any other time with the consent of the Board. So long as IFMI owns a majority of the outstanding Units, IFMI may Voluntarily Withdraw only with the unanimous consent of the Board. In the event that IFMI no longer owns a majority of the outstanding Units, (a) IFMI may Voluntarily Withdraw as of the end of any quarter upon fifteen (15) days prior written notice to the Company, (b) at any other time with the unanimous consent of the Board, or (c) so long as there is no more than one (1) IFMI Manager, with the consent of the Board.
(b) Required Withdrawal. Notwithstanding any other provision of this Agreement, the Board, upon written notice to an Individual Member, may require such Individual Member to withdraw as a Member of the Company at any time and for any reason. Except as otherwise determined by the Board, an Individual Member shall be deemed to have requested to Voluntarily Withdraw upon such Individual Member becoming an Inactive Member.
(c) Required Sale. In the event that (i) any Member owning a majority of the then outstanding Units (or its parent or subsidiary) is indicted (and such indictment is not quashed within 90 days) for a criminal violation of any securities laws (including the Securities Act of 1933, the Securities Act of 1934 or the Investment Advisers Act of 1940), and (ii) the Board (other than the Managers designated by such Member) reasonably determines that such indictment has had or would reasonably be expected to have a quantifiable material adverse effect on the Business, such Member shall be required within 150 days of receipt of such determination by the Board to sell a number of Units (if any) to a third-party such that such Member will own less than 50% of the outstanding Units. Approval of any sale pursuant to this Section 8.01(c) shall not be unreasonably withheld or delayed.
(d) Withdrawal Pursuant to Termination and Separation Agreement. Reference is made to the Recitals and Section 3.01 of the Termination and Separation Agreement, and for purposes of this Section 8.01(d), capitalized terms without definition shall have the meanings ascribed to them in the Termination and Separation Agreement. Notwithstanding any other provisions of this agreement, in the event that FINRA denies its Consent to any one of the CMAs after the consummation of the Interim Closing, then beginning on the Termination Date, the Company, the Partnership and IFMI shall, and shall cause their respective Affiliates to, as promptly as practicable, effect the withdrawal of IFMI from each of the Company and the Partnership.
(e) Withdrawal Date. The Withdrawal Date of a Member shall be the date on which all of the Members Units have been repurchased by the Company or the Member otherwise no longer holds any Units of the Company (e.g., in the case of a Transfer permitted in accordance with this Agreement).
Section 8.02 Repurchase of Units in Connection with Withdrawal of a Member.
(a) Subject to Section 4.09, in connection with the withdrawal of a Member from the Company, the Company shall repurchase such Members Units for the aggregate Unit Price with respect to such Members Units; provided, that, except in the case of (x) a withdrawal pursuant to Sections 8.01(a)(ii) or 8.01(b) in connection with which the Company must effect within 45 days of such withdrawal such repurchase or (y) a withdrawal
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pursuant to Section 8.01(a)(ii) or 8.01(b) where, after giving effect to such withdrawal no PrinceRidge Member would constitute a Qualifying PrinceRidge Member, in connection with which the Company must effect within 45 days of the later of (1) such withdrawal and (2) the date on which IFMI does not exercise its right to waive or ceases to waive the requirement in Section 4.03(b) such repurchase from all then current PrinceRidge Members, the Company may effect such repurchase in one or more transactions at any time, but in no event before the repayment of any loan made by the Company to such Member pursuant to Section 5.05 of this Agreement, and shall use its commercially reasonable efforts to effect such repurchase no later than the applicable anniversary of the date, as designated below, the Member gave its notice or was required to withdraw (the Notice Year) and shall repurchase no less than the percentages, as designated below, of the Members Units outstanding at the applicable anniversary dates (each, a Target Minimum Repurchase Amount) for the aggregate Unit Price with respect to the Units being repurchased on or before the applicable anniversary dates (each a Target Repurchase Date):
(A) Subject to the terms of any Supplementary Agreement, in the event of any withdrawal by any Member prior to the one (1) year anniversary of the of execution of this Agreement and such Member has not contributed additional capital to the Company, the following Target Minimum Repurchase Amounts and Target Repurchase Dates shall be used:
(i) the last day of the month in which the first anniversary of the date of the notice of withdrawal occurs, 20%;
(ii) the last day of the month in which the second anniversary of the date of the notice of withdrawal occurs, 25%;
(iii) the last day of the month in which the third anniversary of the date of the notice of withdrawal occurs, 331/3%;
(iv) the last day of the month in which the fourth anniversary of the date of the notice of withdrawal occurs, 50%; and
(v) the last day of the month in which the fifth anniversary of the date of the notice of withdrawal occurs, 100%.
(B) Subject to the terms of any Supplementary Agreement, in the event of any withdrawal by any Member (i) subsequent to the one (1) year anniversary of the execution of this Agreement or (ii) at any time after such Member has contributed additional capital to the Company, the following Target Minimum Repurchase Amounts and Target Repurchase Dates shall be used:
(i) the last day of the month in which the first anniversary of the date of the notice of withdrawal occurs, 331/3%;
(ii) the last day of the month in which the second anniversary of the date of the notice of withdrawal occurs, 50%; and
(iii) the last day of the month in which the third anniversary of the date of the notice of withdrawal occurs, 100%.
The aggregate Unit Price with respect to the Units being repurchased shall be paid no later than thirty (30) days after the effective date of each such repurchase.
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(b) For the avoidance of doubt, a Member who has given its notice to withdraw or any Member who has been required to withdraw by the Company shall continue to participate in the Net Income, Net Losses and any Sale Proceeds during the time and to the extent its Units remain outstanding and have not been repurchased by the Company.
(c) Notwithstanding Section 8.02(a), in the event that IFMI permits a PrinceRidge Member that is no longer a Qualifying PrinceRidge Member to serve on the Board, then the Company shall not be required to effectuate the repurchase required by Section 8.02(a)(y) until 45 days after IFMI has revoked, in its sole discretion, its permission for a non-Qualifying PrinceRidge Member to serve on the Board, so long as such revocation was made in accordance with Section 4.03(b).
(d) Reference is made to Section 3.01 of the Termination and Separation Agreement, and for purposes of this Section 8.02(d), capitalized terms without definition shall have the meanings ascribed to them in the Contribution Agreement. Notwithstanding Section 8.02(a), in connection with a withdrawal of IFMI pursuant to Section 8.01(d), the Company, the Partnership and IFMI shall effect the transactions set forth in the Termination and Separation Agreement.
Section 8.03 Right to Offset. Subject to Section 13.03, the Company shall have the right to offset against any payments due to a Member any amounts owed to the Company by such Member, including, without limitation, principal and interest on any loans from the Company or the Partnership to each Member.
ARTICLE IX
Transfers of Units
Section 9.01 Transfers of Units.
(a) Except (i) as otherwise expressly provided in this Agreement, including with respect to Section 10.02 and Section 10.03, or as required pursuant to the Contribution Agreement, (ii) Transfers of Units by a Member for tax or estate planning purposes, and (iii) a pledge as security by IFMI of its Units in connection with any financing arrangement or guarantee in connection therewith (it being understood and agreed that any foreclosure or other Transfer in connection with such arrangements or guarantees shall not be permitted without the unanimous consent of the Board), no Member shall have the right, directly or indirectly, to Transfer all or any part of its Units without the consent of the Board. Any purported direct or indirect Transfer of any Units in contravention of this Section 9.01(a) shall be null and void and of no force and effect.
(b) Notwithstanding anything in this Agreement to the contrary, no Transfer of Units shall be permitted if such event would result in the Company having more than one hundred (100) Members. For purposes of this Section 9.01(b), the number of Members of the Company shall be determined in accordance with Treasury Regulations Section 1.7704-1(h).
Section 9.02 Involuntary Transfers; Right of First Refusal. In the event of an Involuntary Transfer of all or any part of a Members Units, such Member shall immediately
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give written notice, by registered mail or by hand delivery, to the Company, which notice shall (A) describe the event constituting the Involuntary Transfer, (B) list the names and addresses of all parties involved, (C) state the Units of the Member in the Company affected by the Involuntary Transfer, and (D) state the amount of any judgment or other indebtedness with respect to which such Involuntary Transfer was suffered. The occurrence of the event which constitutes an Involuntary Transfer shall constitute an offer to the other Members. Upon receipt of such notice by the Company, such offeree Members shall have the right to purchase all of the Units then owned by the offeror Member which shall be necessary to satisfy (as fully as possible) the judgment or other indebtedness for which the Involuntary Transfer was suffered, at the fair value as established by an independent appraiser selected by the Board.
ARTICLE X
Sale of Units; Monetization Events
Section 10.01 Payment of Unit Sale Proceeds.
(a) Unit Sale Proceeds attributable to a sale of one hundred percent (100%) of the Members Units shall be paid to the Members with respect to each increment of Threshold Value pro rata among the Members entitled to participate in such increment of Threshold Value pro rata in proportion to such Members Equity Units.
(b) Unit Sale Proceeds attributable to a sale of less than one hundred percent (100%) of the Members Units shall be paid to the Members pursuant to Section 10.01(a); provided, however, that for the purpose of this Section 10.01(b), each of the Threshold Values that have been determined up to that time shall be multiplied by the percentage of the Units being sold.
(c) Notwithstanding any other provision of this Agreement, any distribution of Unit Sale Proceeds to any Member shall first be used for the repayment of any loan made to such Member in accordance with Section 5.05 of this Agreement.
Section 10.02 Tag Along and Drag Along Rights. The Members shall have the following rights in connection with a sale of Units:
(a) Transaction Notice. If the Company or one or more Members receives a bona fide offer from a third party, relating to the purchase, directly or indirectly, by such third party (such third party, a Third Party Purchaser) of a certain Members (the Selling Member(s)) Units, and the Member determines to consummate the sale, and such sale to the Third Party Purchaser is approved by the Board (subject to Section 4.09), the Board shall deliver a notice (a Transaction Notice) to the Third Party Purchaser, the Selling Member(s) and the non-selling Members (the Passive Members) stating that the Selling Member(s) intends to sell its Units and setting forth the principal terms of such sale, including the portion of such Units to be sold, and the consideration for such sale, as well as the principal conditions to such sale (such subject transaction, the Underlying Transaction).
(b) Tag Along Right. Except with respect to a sale pursuant to Section 8.01(c), each Passive Member shall be entitled to sell to the Third Party Purchaser the same
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portion (expressed as a percentage) of its Units as is being sold by the Selling Member(s), on the same terms and conditions as the Selling Member(s) in the Underlying Transaction, if within thirty (30) days of its receipt of such notice the Passive Member delivers a notice (a Purchaser Notice) to the other Members stating that it intends to exercise its right to effect such sale (such right, the Tag Along Right). Such sale by the Passive Members, however, shall not occur earlier than ten (10) days after delivery of the Purchaser Notice and only simultaneously with and subject to the Underlying Transaction.
(c) Drag Along Right. The Company shall, upon the unanimous consent of the Board, be entitled to require each of the Passive Members to sell to the Third Party Purchaser the same portion (expressed as a percentage) of its Units as is being sold by the Selling Member(s) on the same terms and conditions as the Selling Member(s) in the Underlying Transaction, if the Company or the Selling Member(s) states in the Transaction Notice that it intends to exercise such right (such right, the Drag Along Right); provided that such Passive Member shall not be required to make any representations or warranties other than with respect to unencumbered title to its Units and the power, authority and legal right to transfer such Units and such Passive Member shall not be required to provide an indemnity. Such sale by the Passive Members, however, shall not occur earlier than ten (10) days after delivery of the Transaction Notice and only simultaneously with and subject to the Underlying Transaction.
(d)(i) When calculating the portion of the Unit Sale Proceeds to which a Member would be entitled for the purpose of a Sale Transaction under this Section 10.02, such sale proceeds shall be paid to each Member participating in such Sale Transaction based on the amounts each Member would have received pursuant to Section 10.01.
(ii) In the event that the consideration being paid in the Underlying Transaction consists of more than one form of consideration, then each Member participating in such Underlying Transaction shall receive its pro rata share of each such form of consideration.
Section 10.03 Preemptive Rights.
(a) In the event that, from time to time following the date hereof, the Company proposes to sell or issue New Units to any Person, each then-existing Member shall have the right (a Preemptive Right) to purchase a pro rata portion of the New Units proposed to be sold or issued equal to the percentage determined by dividing (x) the Units held by each such Member at the time of such proposed sale or issuance by (y) the aggregate Units in the Company at the time of such proposed sale or issuance. Each Member will be entitled to purchase all or part of such New Units at the same price and on the same terms as such New Units are proposed to be sold or issued by the Company pursuant to this Section 10.03.
(b) Prior to the sale or issuance of any New Units to any Person, the Company shall cause to be given to each Member written notice of the Companys intention to make such sale or issuance (the Preemptive Notice). The Preemptive Notice shall set forth the aggregate number of Units to be sold or issued, the proposed purchasers, the proposed date of sale or issuance (which date shall not be less than twenty (20) Business Days after the date of delivery of the Preemptive Notice), the consideration that the Company will receive therefore
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and all other material terms and conditions of such sale or issuance. Each Member shall have thirty (30) Business Days (the Preemptive Notice Window) from the date of receipt of the Preemptive Notice to agree to purchase up his or her pro rata portion of the New Units offered to such Member by the Company pursuant to this Section 10.03 for the price and upon the terms specified in the Preemptive Notice by giving written notice to the Company and stating therein the quantity of such New Units such Member elects to purchase (the Preemptive Reply). In the event that a Member delivers a Preemptive Reply (such Member, an Exercising Member), the Company shall sell to such Exercising Member, and such Exercising Member shall purchase from the Company, for the consideration and on the terms set forth in the Preemptive Notice the number of Units that such Exercising Member has elected to purchase on the same day the Company sells or issues (or would have sold or issued) the Units described in the Preemptive Notice.
(c) In the event that any Member fails to exercise in full the Preemptive Rights set forth in this Section 10.03 within the Preemptive Notice Window, the Company shall have thirty (30) Business Days thereafter to sell or issue the New Units not elected to be purchased under this Section 10.03 at the price and upon terms no more favorable to the purchasers than specified in the Preemptive Notice. In the event that the Company has not sold such New Units within such subsequent thirty (30) Business Day period, the Company shall not thereafter sell or issue any New Units without first offering such New Units in the manner provided in this Section 10.03.
Section 10.04 Monetization Events.
(a) General. In the event the Board determines to pursue a Monetization Event, the Members shall, at the request and under the direction of the Board, take all actions necessary or desirable to effect any conversion deemed necessary by the Company in connection with such Monetization Event (including, without limitation, whether by conversion to a subchapter C corporation, merger or consolidation into any entity, recapitalization or otherwise), giving effect to the same economic and corporate governance provisions contained herein (Corporate Conversion).
(b) In the event that a Monetization Event is approved by the Board, each Member shall be deemed hereby to consent to such Monetization Event (including any related Corporate Conversion) and agrees (i) to enter into such agreements, and to make such representations, warranties and indemnities therein, with respect to such Monetization Event, as may be necessary to effectuate such Monetization Event, provided that any such representations, warranties and indemnities shall not disproportionately adversely affect any Member or Members without such Members consent, and (ii) that it will, in connection with such Monetization Event, consent to, cooperate with, and raise no objections against the Monetization Event, and shall enter into such transfer, vesting, holdback, forfeiture and other restrictions with respect to equity interests received in connection with such conversion as shall be reasonably required pursuant to the determination of the Board. If a Member fails or refuses to vote as required by this Section 10.04(b), then such Member hereby grants to the Chairman an irrevocable proxy, coupled with an interest, to vote on behalf of such Member in accordance with this Section 10.04(b), and, if applicable, hereby appoints the Chairman as its attorney-in-fact, to Transfer its Units in accordance with the terms of this Section 10.04(b). In the event that
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any Member fails or refuses to comply with the provisions of this Section 10.04(b), the Company may elect to proceed with the Monetization Event notwithstanding such failure or refusal and, in such event and upon tender of the specified consideration to any such Member, such Member shall be deemed to have withdrawn at such time.
Section 10.05 Allocation of Sale Proceeds Between the Company and the Partnership. For the avoidance of doubt, for purposes of determining the amount of Sale Proceeds allocable to the Members, in connection with any Sale Transaction involving the Partnership, Sale Proceeds paid for assets or Units of the Partnership shall be aggregated and allocated one hundred percent (100%) to the Partnerships Limited Partners and zero percent (0%) to the Company.
ARTICLE XI
Duration, Winding-Up and Termination of the Company
Section 11.01 Term. The term of the Company began on the date the Certificate of Formation of the Company was filed, and shall continue until cancellation of the Certificate of Formation of the Company in accordance with this Agreement.
Section 11.02 Dissolution. Subject to Section 4.09, there shall be a dissolution of the Company and its affairs shall be wound up upon the first to occur of any of the following events:
(a) the decision of the Members to dissolve the Company;
(b) the entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the Act or any successor provision thereof; or
(c) at any time there are no Members, unless the business of the Company is continued in accordance with the Act.
Section 11.03 Winding Up. Upon the dissolution of the Company, the Company (or any duly designated representative) shall use all commercially reasonable efforts to liquidate all of the Company assets and wind up the affairs of the Company in an orderly manner; provided that if in the judgment of the Members (or such representative) an asset of the Company should not be liquidated, the Company (or such representative) shall allocate, on the basis of the value of any assets of the Company not sold or otherwise disposed of, any unrealized gain or loss based on such value to the Members Capital Accounts as though the assets in question had been sold on the date of such allocation and, after giving effect to any such adjustment, distribute said assets in accordance with Article VII, subject to the priorities set forth in Article VII; provided further, that the Company (or such other representative) will attempt to liquidate sufficient Company assets to satisfy in cash (or make reasonable provision in cash for) the debts and liabilities referred to in Article VII.
Section 11.04 Final Distribution. After the application or distribution of the proceeds of the liquidation of the Company assets in one or more installments to the satisfaction of the liabilities to creditors of the Company, including to the satisfaction of the expenses of the
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winding-up, liquidation and dissolution of the Company (whether by payment or the making of reasonable provision for payment thereof), the remaining proceeds, if any, plus any remaining assets of the Company shall be distributed to and among the Members as follows: (i) first, to any Member (whether an individual or entity) whose aggregate allocations of Net Income (other than Capital Net Income) pursuant to Section 6.02(a) only from and after the date hereof and not otherwise in connection with any Sale Transaction or the Companys dissolution and/or liquidation shall exceed the aggregate prior distributions of the Company to such Member pursuant to Section 7.02(a) and Section 7.02(c), to the extent such distribution under Section 7.02(c) relates to Section 7.02(a), (such Members Excess Allocation Amount), until the aggregate amount(s) so distributed to such Member shall equal such Members Excess Allocation Amount (and if there shall be more than one such Member having an Excess Allocation Amount, then the foregoing distributions of this clause (i) shall be made in proportion to each such Member in proportion to their respective Excess Allocation Amounts); and (ii) the balance shall be distributed to the Members as Asset Sale Proceeds in accordance with Section 7.02(b)(i) (the amount that each Member would be distributed, such Members Final Distribution).
Section 11.05 Time for Liquidation, etc. A reasonable time period shall be allowed for the orderly winding up and liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Company to seek to minimize potential losses upon such liquidation. The provisions of this Agreement shall remain in full force and effect during the period of winding-up and until the filing of a certificate of cancellation of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware.
Section 11.06 Cancellation. Upon completion of the foregoing, the Company (or any duly designated representative) or such other Person as required by the Act shall execute, acknowledge and cause to be filed a certificate of cancellation of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. The provisions of this Agreement shall remain in full force and effect during the period of winding-up and until the filing of such certificate of cancellation.
Section 11.07 Final Allocations. Notwithstanding anything herein to the contrary, the Companys income, gain, losses, deductions and credits for the Fiscal Year or other period in which the Company dissolves and liquidates shall be allocated to and among the Members in a manner such that the Capital Account balance of each Member, immediately after giving effect to such allocations, shall, as nearly as possible, equal such Members Final Distribution. For purposes of this Section 11.07, the allocation provisions contained in this Agreement are intended to produce a final Capital Account balance for each Member (such Members Target Final Balance) that is equal to such Members Final Distribution and that to the extent that the Board determines that the allocation provisions of this Agreement would not produce the Target Final Balance for any Member, then this Agreement shall be automatically amended, and allocations of items of Company income (including gross income), gain, deductions and/or losses shall be allocated in such manner as the Board determines to be necessary to produce such Target Final Balance for each Member (and, if and to the extent the Board determines it to be necessary, for any prior Fiscal Year or other period if the United States federal income tax return of the Company for such prior Fiscal Year or other period has not yet been filed or is still open and can be amended, shall be specially allocated as the Board determines to be necessary to cause the
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respective positive Capital Account balance of each Member to be equal to such Members Target Final Balance. This Section 11.07 shall apply without regard to any allocation or re-allocation that may be required and/or imposed by the Internal Revenue Service or any other tax authority in any audit, proceeding or otherwise.
ARTICLE XII
Tax Matters; Books and Records.
Section 12.01 Filing of Tax Returns. The Company, at the Companys expense, shall prepare and file, or cause the accountants of the Company to prepare and file, a federal information tax return in compliance with Section 6031 of the Code and any required state and local income tax and information returns for each tax year of the Company.
Section 12.02 Reports to Current and Former Members. As soon after the end of each Fiscal Year as is practicable, the Company shall prepare and mail, or cause its accountants to prepare and mail, to each Member and, to the extent necessary, to each Former Member (or its legal representative), a report setting forth in sufficient detail such information as shall enable such Member or Former Member (or its legal representative) to prepare its federal, state and local tax returns in accordance with the laws, rules and regulations then prevailing.
Section 12.03 Tax Matters Partner.
(a) Except as otherwise provided in this Agreement, with respect to Pre-Closing Company Tax Audits, for so long as IFMI owns a plurality of the outstanding Units of the Partnership, IFMI shall designate (and which designation shall be reflected on the Companys annual federal information tax return) such Member(s) or other Person(s) (which may be or include IFMI) to serve as the tax matters partner of the Company and any Partnership Subsidiary under and pursuant to Section 6231(a)(7) of the Code and Treasury Regulations Sections 301.6231(a)(1)-1 and 301.6231(a)(7)-2 and, further, IFMI (and only IFMI) shall designate such Member(s) or other Person(s) (which may be or include IFMI) to serve in the corresponding or similar position, status or capacity for state, local and/or as applicable, foreign tax purposes (any and all such Member(s) and other Person(s) so designated by IFMI, collectively, the Tax Matters Partner). The Member(s) or other Person(s) so designated to serve as the Tax Matters Partner shall exercise its duties as Tax Matters Partner in accordance with applicable law. If the Tax Matters Partner does not act in accordance with Section 4.09(o) of this Agreement, the PrinceRidge Managers, in their sole discretion, may remove the Tax Matters Partner. In such event, the Board shall designate another Person(s) to serve as the Tax Matters Partner. For the avoidance of doubt, the Tax Matters Partners reliance on a determination, even if erroneous, by the Partnerships tax advisors that there is authority supporting a more likely than not position shall not constitute a breach of Section 4.09(o). The Tax Matters Partner shall be authorized and empowered to take and make (and/or to cause or permit Company and any Partnership Subsidiary to take and make and/or, otherwise to take and make on behalf of Company or the Partnership Subsidiary) any and all such actions and decisions in connection with any (including foreign) tax-related administrative (including, without limitation, Internal Revenue Service) or judicial examination, audit, proceeding or litigation of and/or involving the Company (any of the foregoing, a Company Tax Audit ),
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including entering into (and/or causing the Company to enter into) any settlement with the Internal Revenue Service and/or any other state, local or foreign tax authority, agency or body which may be adverse to the Members (or one or more, or all of the Members) or which otherwise may result in a different tax impact to a Member as compared to the tax affect on another Member. Each Member or other Person (for purposes of this Section 12.03, called a Pass-Thru Member) holds or controls Units as a Member on behalf of, or for the benefit of another Person, or which Pass-Thru Member is beneficially owned (directly or indirectly) by another Person or Persons shall, within fifteen (15) days following receipt from the Tax Matters Partner of any notice, demand, request for information or similar document, convey such notice or other document in writing to all holders of beneficial interests holding Units through such Pass-Thru Member. In addition to (and not in limitation of) the foregoing, in the event the Company or any Partnership Subsidiary shall be the subject of any Company Tax Audit, the Tax Matters Member shall be authorized to act for, and its decision shall be final and binding upon, the Company, any Partnership Subsidiary and each Member. The Tax Matters Partner shall use its commercially reasonable efforts to keep each of the Class A Partners (for so long as each of them is a Member) reasonably and contemporaneously apprised of any material development of any Company Tax Audit. Subject to Section 12.03(c), all expenses incurred in connection with any Company Tax Audit shall be borne by the Company. Further, in the event that any settlement, agreement, resolution or other binding arrangement of or with respect to any Company Tax Audit that could have either a material adverse effect on the Company for and/or in respect of any Pre-Interim Closing Tax Period (as defined in the Contribution Agreement) or a material adverse effect on any of the Individual Members for and/or in respect of any Pre-Interim Closing Tax Period, then the Tax Matters Partner may not enter into, consummate and/or undertake any such settlement, agreement, resolution or other binding arrangement without each PrinceRidge Managers prior written consent (not to be unreasonably withheld, conditioned or delayed). Each Member shall fully cooperate with (including, without limitation, by promptly furnishing to the Tax Matters Partner such documents, information, certifications, powers of attorney and such other information, and do all things, that the Members are required to furnish and/or that the Tax Matters Partner shall reasonably request in connection with any Company Tax Audit or, otherwise, in connection with the carrying out by the Tax Matters Partner of its authority, powers and duties under this Section 12.03 (and elsewhere hereunder).
(b) (i) The Company shall use its commercially reasonable efforts to transmit to each Member, by no later than April 1st following the end of each fiscal year, such Members estimated tax information returns (Internal Revenue Service From 1065, Schedule K-1) from the Company for such fiscal year (and with such information returns reflecting only such information that the Company shall then have in its possession); provided, however, that at least fifteen (15) days prior to the date on which the Company transmits the Schedules K-1 to the Members, the Company shall deliver the Schedules K-1 to the PrinceRidge Managers for their review and comment. The Company shall take any comments into account in good faith and with respect to which the PrinceRidge Managers shall have made a good faith attempt to provide to the Company the relevant tax authority supporting such comment. The Company shall deliver final Schedules K-1 to the Members for any fiscal year by no later than June 30th following the end of such fiscal year.
(ii) The Company shall prepare and file, or cause the accountants of the Company to prepare and file, a federal information tax return in compliance with Section
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6031 of the Code and any required state and local income tax and information returns for each tax year of the Company; provided, however, that at least fifteen (15) days prior to the date on which any such return is filed, the Company shall deliver such return to the PrinceRidge Managers for their review and comment. The Company shall take any comments into account in good faith and with respect to which the PrinceRidge Managers shall have made a good faith attempt to provide to the Company the relevant tax authority supporting such comment.
(c) Notwithstanding anything herein to the contrary,
(i) all of the expenses incurred or resulting in connection with any Company Tax Audit, that occurs on or prior to the second anniversary of the date hereof, for, in respect of and/or pertaining to any tax year ended on or before December 31, 2010 (any of which, a Pre-Closing Company Tax Audit) shall be borne by or allocated to, severally and not jointly, each of the Members, other than IFMI and Daniel Cohen, who was a Member as of the date hereof (each, a PrinceRidge Member and, collectively, the PrinceRidge Members), and each such PrinceRidge Members obligation with respect to such expenses shall not exceed the amount equal to (x) the aggregate amount of such expenses multiplied by (y) a fraction where (A) the numerator is the number of such PrinceRidge Members Units in the Company as of the date on which any applicable expenses are incurred minus any Units purchased by such PrinceRidge Member since the date hereof, and (B) the denominator is the aggregate number of all of the outstanding PrinceRidge Members Units in the Company immediately following the date hereof (PrinceRidge Members Expenses); provided, however, that each PrinceRidge Member shall have the right to satisfy its portion of the PrinceRidge Members Expenses pursuant to this Section 12.03(c)(i) by delivering to IFMI such number of additional IFMI Equity Interests that, based on the book value at the time of the indemnification claim, equals the aggregate value of such PrinceRidge Members Expenses (terms used in this sentence without definition having the meanings assigned to them in the Contribution Agreement); and
(ii) with regard to any Pre-Closing Company Tax Audit, the PrinceRidge Managers or their designated representative shall serve as the Tax Matters Partner of the Company, the Partnership and any Partnership Subsidiary and shall use their commercially reasonable efforts to keep IFMI reasonably and contemporaneously apprised of any material development of any Pre-Closing Company Tax Audit. Further, in the event that any settlement, agreement, resolution or other binding arrangement of or with respect to any Pre-Closing Company Tax Audit that could have either a material adverse effect on the Company for and/or in respect of any Post-Interim Closing Tax Period (as defined in the Contribution Agreement) or a material adverse effect on IFMI for and/or in respect of any Post-Interim Closing Tax Period, then the Company may not enter into, consummate and/or undertake any such settlement, agreement, resolution or other binding arrangement without IFMIs prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) The Company shall indemnify any Member for any interest and penalties required to be paid by such Member resulting from any adjustments made by a taxing authority to any federal, state, local or foreign tax return of the Company; provided, that any Member that serves as the Tax Matters Partner with respect to the period involving such adjustment shall not be entitled to any such indemnification to the extent such interests and penalties arise as a result of the gross negligence, bad faith or willful misconduct of such Tax Matters Partner.
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(e) The PrinceRidge Members shall, at their expense, be responsible for the preparation and timely filing of any tax return of the Company, the Partnership or a Partnership Subsidiary for any tax year ended on or before December 31, 2010, provided that prior to filing any such tax return the PrinceRidge Members provide it to IFMI.
Section 12.04 Member Basis. Upon request of the Company, each Member agrees to provide to the Board information regarding its adjusted tax basis in its Units along with documentation substantiating such amount.
Section 12.05 Tax Election. The Board shall make or revoke any tax election which the Board deems appropriate, including an election under Section 754 of the Code.
Section 12.06 Books and Records; Access; Auditors.
(a) The Company shall cause to be kept complete and accurate books of account and records with respect to the Companys business. Company information, including, without limitation, Profit Units and Equity Units, shall be kept confidential except as permitted by the Company or required to be disclosed by judicial or administrative process or by regulatory authority or other requirement of law (including federal securities laws) or directive of any governmental authority or stock exchange.
(b) The Companys books and records shall be available for inspection and copying by the Members or their duly authorized representatives during normal business hours upon prior written request solely to the extent reasonably related to such Members economic interest in the Company. The Companys books and records shall be available for inspection and copying by IFMI and its duly authorized representatives at any time. The Companys books and records (other than books required to maintain Capital Accounts) shall be maintained in accordance with GAAP.
(c) The Companys independent auditors shall be such independent accounting firm as may be selected from time to time by the Board, and, initially, shall be Grant Thornton LLP.
ARTICLE XIII
Additional Agreements
Section 13.01 Restrictive Covenants. Subject to the terms of any Supplementary Agreements, each Member, including IFMI, acknowledges that it is bound by the Restrictive Covenants as a Limited Partner of the Partnership.
Section 13.02 Observer Rights. For as long as (i) John Costas is Chairman of the Company and (ii) IFMI owns a majority of the outstanding Units of the Partnership, John Costas shall be appointed, and IFMI Parent shall cause John Costas to be appointed as, an observer entitled to be present at, observe and participate in each meeting of the board of directors of
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IFMI Parent (a Meeting). IFMI Parent shall provide John Costas, at the same time, on the same basis and in the same form as provided to its directors, (i) notice of any such Meeting and (ii) copies of any materials or documents intended to be presented, discussed or used at such Meeting. John Costas shall have no right to vote at or conduct the business of any Meeting and shall be required to maintain the confidentiality of all confidential information obtained by him or her pursuant to an appointment under this Section 13.02. IFMI Parent hereby acknowledges and agrees that it is a party to this Agreement solely for purposes of Section 13.02 hereof and shall have no rights as a Member or otherwise under this Agreement.
Section 13.03 Transactions with Affiliates. Neither the Company nor the Partnership shall (a) engage in any business transaction (or series of related transactions) with Member or any Affiliate thereof, (b) enter into any release, assignment, settlement or compromise of, any action, claim or proceeding, or make any material decision or take any material action with respect to any claim, action or proceeding pending before, or threatened to be brought by or before, any governmental authority or arbitrator between IFMI or its subsidiaries other than the Company and the Partnership, on the one hand, and either the Company or the Partnership or their subsidiaries, on the other hand, or (c) initiate any action, claim or proceeding against any Member or any Affiliate thereof (each such clause, an Interested Transaction) unless such Interested Transaction is approved in accordance with this Section 13.03. Any Interested Transaction shall require, in the case of clause (a) above, unanimous approval by the Managers not Affiliated with such Member or its Affiliates; in the case of clause (b) above, the unanimous approval by the PrinceRidge Managers; and in the case of clause (c) above, the unanimous approval by the Managers (other than any Manager that is also the Member or an Affiliate of the Member against whom such action, claim or proceeding is proposed to be brought) that do not together with their Affiliates have control of the Board.
ARTICLE XIV
Miscellaneous
Section 14.01 Entire Agreement. This Agreement and, with reference to a Member that has entered into a Supplementary Agreement, such Supplementary Agreement, supersede any and all existing agreements, oral or written, between or among the Company and the other Members, with respect to the Company.
Section 14.02 Amendments of Agreement. Any amendment to this Agreement shall be made by the Board in accordance with Section 4.09 of this Agreement; provided that to the extent no person qualifies at any time as a Qualifying PrinceRidge Member, any amendment to this Agreement that is adverse to the interests of any Individual Member shall require the written consent of such Member.
Section 14.03 Further Actions. Each Member shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be requested by the Company in connection with the achievement of its purposes or to give effect to the provisions of this Agreement and any Supplementary Agreement, in each case as are not inconsistent with the terms and provisions of this Agreement, including any documents that the Company determines to be necessary or appropriate to form, qualify or continue the Company as a limited liability company in all jurisdictions in which the Company conducts or plans to conduct its investment and other activities and all such agreements, certificates, tax statements and other documents as may be required to be filed by or on behalf of the Company.
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Section 14.04 Applicable Law. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Delaware, without reference to its choice of law rules, and, without limitation thereof, that the Act as now adopted or as may be hereafter amended shall govern this Agreement.
Section 14.05 Counterparts. Counterparts may be executed through the use of separate signature pages (or other agreement, including a Supplementary Agreement, acceptable to the Company) or in any number of counterparts with the same effect as if the parties executing such counterparts had all executed one (1) counterpart; provided, however, that each such counterpart shall have been executed by the Members on behalf of the Company.
Section 14.06 Successors and Assigns. This Agreement shall inure to the benefit of each Member and the executors, administrators, estates, heirs, legal successors and representatives and, if approved in accordance with this Agreement, transferees of the Members.
Section 14.07 No Waiver. The failure of a party to insist upon strict adherence to any term or provision of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or provision or any other term or provision of this Agreement.
Section 14.08 Survival. Sections 12.02, 13.01, 14.04, 14.06, 14.08, 14.09, 14.10, 14.11, 14.12, 14.13 and 14.14 shall survive a Members withdrawal as a Member of the Company and any termination of this Agreement. Except as expressly provided in such Supplementary Agreement, a Members or a Managers Supplementary Agreement shall (a)(i) in the case of a Member, also terminate upon such Members withdrawal as a Member of the Company or (ii) in the case of a Manager (other than a PrinceRidge Manager who remains a Member) terminate upon a Manager ceasing to be a Manager of the Company, and (b) terminate upon any termination of this Agreement.
Section 14.09 Notices. Each notice relating to this Agreement shall be in writing and shall be delivered (a) in person, by registered or certified mail or by private courier or (b) by facsimile or other electronic means, confirmed by telephone. All notices to any Member shall be delivered to such Member at the address of such Member as set forth in the records of the Company. All notices to the Company shall be delivered to the Company at its principal office and place of business. Any Member may designate a new address for notices by giving written notice to that effect to the Company. The Company may designate a new address for notices by giving written notice to that effect to each of the Members. A notice given in accordance with the foregoing clause (a) shall be deemed to have been effectively given three (3) Business Days after such notice is mailed by registered or certified mail, return receipt requested, and one (1) Business Day after such notice is sent by Federal Express or other one (1)-day service provider, to the proper address, or at the time delivered when delivered in person or by private courier. Any notice by facsimile or other electronic means shall be deemed to have been effectively given when sent and confirmed by telephone in accordance with the foregoing clause (b).
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Section 14.10 Dispute Resolution. Except as otherwise provided in this Agreement, all disputes arising under this Agreement will be resolved by arbitration in New York, New York by a single arbitrator; provided that if the parties to the dispute cannot agree on a single arbitrator within thirty (30) days, the matter will be submitted to JAMS in New York, New York for arbitration before a single arbitrator from the JAMS list, and pursuant to JAMS Comprehensive Arbitration Rules and Procedures. The fee of the arbitrator(s) will be split equally between the complainant(s) and the respondent(s). Each party will otherwise bear its own costs and attorneys fees, subject to the payment of any indemnification to which a party may be entitled. The arbitrators award will be final and binding upon such Member and the Company, and judgment upon the award may be entered in any state or federal court of competent jurisdiction in New York State, or application may be made to such court for a judicial acceptance of the award and an enforcement as the law of such jurisdiction may require or allow. Nothing in this Agreement shall restrict the ability of any party hereto to provide factual testimony during such proceedings. Notwithstanding the preceding provision, the Company may seek injunctive relief from a court of competent jurisdiction in the event of a threatened or actual breach of Article XIII hereof.
Section 14.11 Injunctive Relief.
(a) In the event of a dispute, any Member may apply to the arbitrator or arbitrators referred to in Section 14.10 to seek preliminary and/or permanent injunctive relief, including, without limitation, to present or address a breach or possible breach of any Restrictive Covenant. Any party to this Agreement also may, without waiving any remedy under this Agreement, seek from any court of competent jurisdiction any injunctive, interim or provisional relief, including, without limitation, to present or address a breach or possible breach of any Restrictive Covenant, to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunals determination of the merits of the controversy).
(b) It is specifically understood and agreed that any breach of any terms of any Restrictive Covenant is likely to result in irreparable injury to the Management Group Entities and that any remedy at law alone will be an inadequate remedy for such breach, and that, in addition to any other remedy it may have, any of the Management Group Entities shall be entitled to enforce the specific performance of this Agreement by a Member and to seek both temporary and permanent injunctive relief thereof (to the extent permitted by law), and other equitable remedies, without the necessity of proving actual damages or posting a bond or other security.
Section 14.12 Choice of Venue. Subject to Section 14.10 and Section 14.11, each Member hereby consents to the nonexclusive jurisdiction of the courts of the State of New York or any Federal court sitting in the City of New York, and hereby waives, and agrees not to assert by way of motion, as a defense or otherwise, in any such action or proceeding, any claim that such Member is not personally subject to the jurisdiction of the above-named courts, that the action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the provisions of this Agreement may not be enforced in or by such courts.
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Section 14.13 Enforceability. If any provision of this Agreement shall be deemed invalid or unenforceable as written, it shall be construed, to the greatest extent possible, in a manner that shall render it valid and enforceable, and any limitations on the scope or duration of any such provision necessary to make it valid and enforceable shall be deemed to be part thereof, and no invalidity or unenforceability of any provision shall affect any other portion of this Agreement unless the provision deemed to be so invalid or unenforceable is a material element of this Agreement, taken as a whole.
Section 14.14 Judicial Modification. If at any time any of the provisions of any Section of this Agreement shall be deemed invalid or unenforceable or are prohibited by the laws of the jurisdiction where they are to be performed or enforced, by reason of being vague or unreasonable as to duration or geographic scope or scope of activities restricted, or for any other reason, such provisions shall be considered divisible and shall become and be immediately amended to include only such restrictions and to such extent as shall be deemed to be reasonable and enforceable by the court, arbitrator or other body having jurisdiction over this Agreement, and the Company and each Member agree that such provisions, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included in this Agreement.
Section 14.15 Legal Proceedings. Any action, claim or proceeding by any Member or the Company, the Partnership or their subsidiaries, on the one hand, against any other Member or the Company, the Partnership or their subsidiaries, on the other hand, shall be brought before an arbitrator, the determinations of which shall be binding on the parties to such action, claim or proceeding. Each party to such action, claim or proceeding shall pay its own costs and expenses (including, without limitation, all fees of such partys legal counsel); provided, that, to the extent any Individual Member is a defendant in such an action, claim or proceeding, the costs and expenses (including, without limitation, all fees of such partys legal counsel) of such Individual Member shall be paid in advance by the Company as such costs and expenses are incurred by such Individual Member, but if such binding arbitration is determined against the Individual Member pursuant to a final, non-appealable order of such arbitrator, such Individual Member shall reimburse the Company for all advanced costs and expenses (including, without limitation, all fees of such Individual Members legal counsel); provided further, that, to the extent an Individual Member instigates such action, claim or proceeding, and the binding arbitration is determined in favor of such Individual Member pursuant to a final, non-appealable order of such arbitrator, the Company shall reimburse such Individual Member for his or her costs and expenses (including, without limitation, all fees of such Individual Members legal counsel).
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date set forth above.
/s/ Ahmed A. Alali |
Ahmed A. Alali |
/s/ John P. Costas |
John P. Costas |
/s/ Colette C. Dow |
Colette C. Dow |
/s/ Ronald J. Garner |
Ronald J. Garner |
/s/ Michael T. Hutchins |
Michael T. Hutchins |
/s/ Matthew G. Johnson |
Matthew G. Johnson |
[Signature Page to Fourth Amended and Restated LLC Agreement]
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/s/ Daniel G. Cohen | ||||
Daniel G. Cohen | ||||
IFMI, LLC | ||||
By: |
/s/ Daniel G. Cohen | |||
Name: | Daniel G. Cohen | |||
Title: | Chief Executive Officer and Chief Investment Officer | |||
Institutional Financial Markets, Inc., solely for purposes of Section 13.02 | ||||
By: | Daniel G. Cohen | |||
Name: | Daniel G. Cohen | |||
Title: | Chief Executive Officer and Chief Investment Officer |
[Signature Page to Fourth Amended and Restated LLC Agreement]
-51-
Appendix A
Joinder To
Fourth Amended and Restated
Limited Liability Company Agreement
of PrinceRidge Partners LLC
THIS JOINDER (Joinder) to the Fourth Amended and Restated Limited Liability Company Agreement (as amended, modified or supplemented from time to time, the Agreement) of PrinceRidge Partners LLC (the Company), is made and entered into as of , 20 by and among the Company and [Insert IFMI Manager Name] (the IFMI Manager). Capitalized terms used herein but not defined have the respective meanings assigned to them in the Agreement.
WHEREAS, pursuant to the terms of the Agreement, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under, the Board;
WHEREAS, [Insert IFMI Manager Name] desires to serve on the Board of Managers as a designated IFMI Manager; and
WHEREAS, in accordance with Section 3.01(d) of the Agreement, [Insert IFMI Manager Name] agrees to become a party to the provisions of the Agreement set forth below;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. Agreement to be Bound. The IFMI Manager hereby agrees that upon execution of this Joinder, [he][she] shall become fully bound by, and subject to, all of the covenants, terms and conditions with respect to the obligations of the Board and the Managers thereof.
2. Removal from the Board. The IFMI Manager hereby agrees that, pursuant to Article IV of the Agreement, the IFMI Manager may be removed or replaced as a Manager (i) upon the occurrence of the events set forth in Section 4.03(a) of the Agreement or (b) at any time for Cause. The IFMI Manager hereby agrees that for purposes of the Agreement, Cause shall mean the IFMI Managers:
(a) commission of, and indictment (that is not quashed within 90 days) for or formal admission to any crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company (other than routine traffic violations); provided that such crime has a material adverse effect on the business or reputation of the Company;
(b) indictment (that is not quashed within 90 days) for or formal admission to a felony;
(c) engagement in fraud, misappropriation or embezzlement that has a material adverse effect on the business or reputation of the Company;
(d) continued failure to materially adhere to written policies and practices of the Company; or
(e) material breach of the following covenant: The IFMI Manager acknowledges that (i) the primary business of the Company is currently its capital markets business (sales and trading of securities as well as investment banking) and that the Company may engage in additional or different areas of business during IFMI Managers services arrangement as a Manager of the Company hereunder (all of which are collectively referred to as the Business); (ii) the Company is one of a limited number of persons who have such a business; (iii) the Companys Business is, in part, national and international in scope; (iv) the IFMI Managers service on the Board of the Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (v) the covenants and agreements of the IFMI Manager contained in this clause (e) are essential to the business and goodwill of the Company; and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this clause (e). Accordingly, the IFMI Manager covenants and agrees during and after the period of the IFMI Managers services arrangement as a Manager of the Company, the IFMI Manager (x) shall keep secret and retain in strictest confidence all confidential matters relating to the Companys Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the IFMI Manager heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the Confidential Company Information), and (y) shall not disclose such Confidential Company Information to anyone outside of the Company unless (i) the disclosure is done with the Companys or such affiliates, as applicable, express written consent, (ii) the Confidential Company Information is at the time of receipt or thereafter becomes publicly known through no wrongful act of the IFMI Manager or is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement, (iii) the disclosure is required to be made pursuant to an order of any court or government agency, subpoena or legal process; (iv) the disclosure is made to officers or directors of the Company or its affiliates (and/or the officers and directors of such affiliates), and to auditors, counsel, and other professional advisors to the Company or its affiliates, or (v) the disclosure is made by a court or arbitrator in connection with any litigation or dispute between the Company and the IFMI Manager. Unless prohibited by law, regulation or order of a court or other governmental or regulatory body, the IFMI Manager shall as promptly as reasonably practicable supply the Company with a copy of any legal process delivered to the IFMI Manager requesting Confidential Company Information. Prior to any disclosure of Confidential Company Information, unless prohibited by law, regulation or order of a court or other governmental or regulatory body, the IFMI Manager shall notify the Company and shall cooperate and not object to the Company seeking an order protecting the confidentiality of such information.
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3. Exculpation
(a) The IFMI Manager (the Indemnified Party) shall not be liable to any Member, the Company or their Affiliates for any action or inaction, unless such action or inaction arises out of, or is attributable to, the gross negligence, willful misconduct or fraud of the Indemnified Party and such action is materially injurious to the financial condition or business reputation of the Business, nor shall the Indemnified Party be liable to any Member, the Company or their Affiliates for any action or inaction of any broker or agent of the Company or its Affiliates selected by such Indemnified Party; provided, that such broker or agent was selected, engaged or retained by such Indemnified Party in accordance with reasonable care. Any Indemnified Party may consult with counsel, accountants, investment bankers, financial advisers, appraisers and other specialized, reputable, professional consultants or advisers in respect of the affairs of the Company or its Affiliates and be fully protected and justified in any action or inaction which is taken in accordance with the advice or opinion of such persons; provided, that such persons shall have been selected in accordance with reasonable care.
(b) Notwithstanding any of the foregoing to the contrary, the provisions of this Section 3 shall not be construed so as to relieve (or attempt to relieve) the Indemnified Party of any liability to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law, but the provisions of this Section 3 shall be construed so as to effectuate the provisions of this Section 3 to the fullest extent permitted by law.
4. Indemnification.
(a) The Indemnified Party shall, in accordance with this Section 4, be indemnified and held harmless by the Company and its controlled Affiliates from and against any and all Indemnification Obligations (as defined below) arising from any and all claims, demands, actions, suits or proceedings (civil, criminal, administrative or investigative), actual or threatened, in which such Indemnified Party may be involved, as a party or otherwise, by reason of such Indemnified Partys service to or on behalf of, or management of the affairs of, the Company and its Affiliates, or rendering of advice or consultation with respect thereto, or which relate to the Company or its Affiliates or any of their properties, business or affairs; provided, that such Indemnification Obligation resulted from the action or inaction of such Indemnified Party that did not constitute gross negligence, willful misconduct or fraud which, in each such case, was materially injurious to the financial condition or business reputation of the Business and provided, further, that the Indemnified Party shall not be entitled to indemnification hereunder for any acts, omissions or transactions for which an officer or director of a Delaware corporation may not be relieved of liability under the Delaware General Corporation Law. The Company and its controlled Affiliates shall also indemnify and hold harmless the Indemnified Party from and against any Indemnification Obligation suffered or sustained by the Indemnified Party by reason of any action or inaction of any broker or agent of the Company selected by such Indemnified Party; provided, however, that such broker or agent was selected, engaged or retained by such Indemnified Party in accordance with reasonable care. The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that such Indemnification Obligation resulted from the gross negligence, willful misconduct or fraud, or lack of reasonable care, of the Indemnified Party or that the act, omission or transaction was one for which an officer or director
3
of a Delaware corporation may not be relieved of liability under the Delaware General Corporation Law. Subject to Section 14.15 of the Agreement, expenses (including legal and other professional fees and disbursements) incurred in connection with this Section 4 shall be paid by the Company as and when incurred by the Indemnified Party. Indemnification Obligations means costs, losses, claims, damages, liabilities, expenses (including reasonable legal and other professional fees and disbursements), judgments, fines, settlements and other amounts, collectively.
(b) The indemnification provided by this Section 4 shall not be deemed to be exclusive of any other rights to which the Indemnified Party may be entitled under any agreement, or as a matter of law, or otherwise, both as to action in the Indemnified Partys official capacity and to action in another capacity, (ii) shall continue after the Indemnified Party has ceased to have an official capacity with respect to the Company or its Affiliates for acts or omissions that occurred during such official capacity or otherwise when acting at the request of the Company or its Affiliates, and (iii) shall inure to the benefit of the heirs, successors and assigns of such Indemnified Party.
(c) Notwithstanding any of the foregoing to the contrary, the provisions of this Section 4 shall not be construed so as to provide for the indemnification of the Indemnified Party for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but the provisions of this Section 4 shall be construed so as to effectuate the provisions of this Section 4 to the fullest extent permitted by law.
5. Successors and Assigns. Except as otherwise provided herein, this Joinder shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns.
6. Counterparts. This Joinder 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.
7. Governing Law. THIS JOINDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE.
* * * * *
4
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the date first above written.
PRINCERIDGE PARTNERS LLC | ||
By: | ||
Name: |
||
Title: |
[Insert IFMI Manager Name] | ||
Name: |
Exhibit 10.2
EXECUTION VERSION
Fourth Amended and Restated
Limited Partnership Agreement
of
PrinceRidge Holdings LP
Fourth Amended and Restated Limited Partnership Agreement
of
PrinceRidge Holdings LP
TABLE OF CONTENTS
Page | ||||||
ARTICLE I Interpretation |
2 | |||||
Section 1.01 |
Definitions | 2 | ||||
Section 1.02 |
Pronouns; Gender; Construction | 11 | ||||
Section 1.03 |
Headings; Cross-References | 11 | ||||
ARTICLE II General Provisions |
11 | |||||
Section 2.01 |
Formation of the Partnership | 11 | ||||
Section 2.02 |
Partnership Name and Address | 11 | ||||
Section 2.03 |
Registered Agent and Registered Office | 11 | ||||
Section 2.04 |
Purposes of the Partnership | 12 | ||||
Section 2.05 |
Fiscal Year | 12 | ||||
Section 2.06 |
Maintenance of Separateness | 12 | ||||
ARTICLE III The Partners |
14 | |||||
Section 3.01 |
Current Partners; Admission of Additional Partners | 14 | ||||
Section 3.02 |
Supplementary Agreements | 15 | ||||
Section 3.03 |
Representations | 15 | ||||
Section 3.04 |
Liability of the Partners | 16 | ||||
Section 3.05 |
Limited Rights of Limited Partners | 17 | ||||
Section 3.06 |
Power of Attorney | 17 | ||||
Section 3.07 |
Bankruptcy, Dissolution, Removal, Withdrawal, Admission or Resignation of a Partner | 17 | ||||
Section 3.08 |
Associated Partners | 17 | ||||
ARTICLE IV Management of the Partnership |
18 | |||||
Section 4.01 |
General | 18 | ||||
Section 4.02 |
General Partner as Agent | 19 | ||||
Section 4.03 |
Ability to Bind the Partnership | 19 | ||||
Section 4.04 |
Officers | 20 | ||||
Section 4.05 |
No Participation in Management by Limited Partners | 20 | ||||
Section 4.06 |
Reliance by Third Parties | 20 | ||||
Section 4.07 |
Reliance by the General Partner | 20 | ||||
Section 4.08 |
Expenses | 21 | ||||
Section 4.09 |
Standards for Actions by the General Partner | 21 | ||||
Section 4.10 |
Removal and Replacement of the General Partner | 22 | ||||
Section 4.11 |
Management Availability | 22 | ||||
Section 4.12 |
Compliance with Securities and National Stock Exchange Laws, Rules and Regulations | 22 |
ARTICLE V Issuance of Units; Compensation; Loans |
23 | |||||
Section 5.01 |
Issuance of Units | 23 | ||||
Section 5.02 |
Adjustment of Profit Units and Equity Units | 23 | ||||
Section 5.03 |
Issuance of Senior Securities | 24 | ||||
Section 5.04 |
Guaranteed Payments | 24 | ||||
Section 5.05 |
Loans | 24 | ||||
ARTICLE VI Capital Accounts of Partners and Operation Thereof |
25 | |||||
Section 6.01 |
Capital Accounts | 25 | ||||
Section 6.02 |
General Allocations | 26 | ||||
Section 6.03 |
Special Allocations | 27 | ||||
Section 6.04 |
Liabilities | 28 | ||||
Section 6.05 |
Goodwill | 28 | ||||
Section 6.06 |
Allocation of Income and Loss for Tax Purposes | 28 | ||||
Section 6.07 |
Determination by the General Partner of Certain Matters | 28 | ||||
Section 6.08 |
Adjustments by the General Partner to Take Account of Certain Events | 28 | ||||
ARTICLE VII Repurchase of Units; Distributions on Units |
29 | |||||
Section 7.01 |
Repurchase of Units | 29 | ||||
Section 7.02 |
Distributions | 29 | ||||
Section 7.03 |
Limitations on Distributions and Repurchases of Units | 31 | ||||
ARTICLE VIII Withdrawal from the Partnership |
32 | |||||
Section 8.01 |
Withdrawal | 32 | ||||
Section 8.02 |
Repurchase of Units in Connection with Withdrawal | 33 | ||||
Section 8.03 |
Right to Offset | 34 | ||||
ARTICLE IX Transfers of Units |
34 | |||||
Section 9.01 |
Transfers of Units | 34 | ||||
Section 9.02 |
Involuntary Transfers; Right of First Refusal | 35 | ||||
ARTICLE X Sale of Units; Monetization Events |
35 | |||||
Section 10.01 |
Payment of Unit Sale Proceeds | 35 | ||||
Section 10.02 |
Tag Along and Drag Along Rights | 36 | ||||
Section 10.03 |
Preemptive Rights | 37 | ||||
Section 10.04 |
Monetization Events | 38 | ||||
Section 10.05 |
Allocation of Sale Proceeds Between the General Partner and the Partnership | 38 | ||||
ARTICLE XI Duration, Winding-Up and Termination of the Partnership |
39 | |||||
Section 11.01 |
Term | 39 | ||||
Section 11.02 |
Dissolution | 39 | ||||
Section 11.03 |
Winding Up | 39 |
Section 11.04 |
Final Distribution | 39 | ||||
Section 11.05 |
Time for Liquidation, etc | 40 | ||||
Section 11.06 |
Cancellation | 40 | ||||
Section 11.07 |
Final Allocations | 40 | ||||
ARTICLE XII Tax Matters; Books and Records |
41 | |||||
Section 12.01 |
Filing of Tax Returns | 41 | ||||
Section 12.02 |
Reports to Current and Former Partners | 41 | ||||
Section 12.03 |
Tax Matters Partner | 41 | ||||
Section 12.04 |
Partner Basis | 44 | ||||
Section 12.05 |
Tax Election | 44 | ||||
Section 12.06 |
Books and Records; Access; Auditors | 44 | ||||
ARTICLE XIII Restrictive Covenants |
44 | |||||
Section 13.01 |
Confidentiality | 44 | ||||
Section 13.02 |
Employee/Partner Non-Solicit and Non-Hire | 45 | ||||
Section 13.03 |
Non-Interference | 46 | ||||
Section 13.04 |
Non-Disparagement | 46 | ||||
Section 13.05 |
Communication with the Press and the Public | 46 | ||||
Section 13.06 |
Regulatory Matters | 47 | ||||
Section 13.07 |
Work Product | 47 | ||||
Section 13.08 |
Partnership Property | 47 | ||||
Section 13.09 |
Service on Company Board of Directors or Employment by Other Financial Services Entity | 48 | ||||
Section 13.10 |
Acknowledgements Related to Restrictive Covenants | 48 | ||||
Section 13.11 |
Disclosures of IFMI Parent | 48 | ||||
ARTICLE XIV Miscellaneous |
48 | |||||
Section 14.01 |
Entire Agreement | 48 | ||||
Section 14.02 |
Amendments of Agreement | 48 | ||||
Section 14.03 |
Further Actions | 49 | ||||
Section 14.04 |
Applicable Law | 49 | ||||
Section 14.05 |
Counterparts | 49 | ||||
Section 14.06 |
Successors and Assigns | 49 | ||||
Section 14.07 |
No Waiver | 49 | ||||
Section 14.08 |
Survival | 49 | ||||
Section 14.09 |
Notices | 49 | ||||
Section 14.10 |
Dispute Resolution | 50 | ||||
Section 14.11 |
Injunctive Relief | 50 | ||||
Section 14.12 |
Choice of Venue | 50 | ||||
Section 14.13 |
Enforceability | 51 | ||||
Section 14.14 |
Judicial Modification | 51 | ||||
Section 14.15 |
Legal Proceedings | 51 |
Appendix A Form of Supplementary Agreement for Limited Partners
DEFINED TERMS
Fourth Amended and Restated Limited Partnership Agreement
of
PrinceRidge Holdings LP
Dated as of May 31, 2011
This Fourth Amended and Restated Limited Partnership Agreement is made and entered into as of the date set forth above by and among the undersigned Persons and shall hereafter govern the Partnership.
R E C I T A L S:
WHEREAS, the Partnership was formed under the Act as BlueHawk Capital Management LP, pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware on January 28, 2008;
WHEREAS, the Partnership was initially governed by a Limited Partnership Agreement, dated as of May 1, 2008 (the Original Agreement);
WHEREAS, the Partnerships name was changed to VinsonForbes Group LP pursuant to a Certificate of Amendment to Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware on December 5, 2008;
WHEREAS, the Original Agreement was amended and restated in its entirety pursuant to an Amended and Restated Limited Partnership Agreement dated as of December 12, 2008 (the Amended and Restated Limited Partnership Agreement);
WHEREAS, the Amended and Restated Limited Partnership Agreement was amended and restated in its entirety pursuant to a Second Amended and Restated Limited Partnership Agreement dated as of February 1, 2009 (the Second Amended and Restated Limited Partnership Agreement);
WHEREAS, the Partnerships name was changed to PrinceRidge Holdings LP pursuant to a Certificate of Amendment to Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware on June 29, 2009;
WHEREAS, the Second Amended and Restated Limited Partnership Agreement was amended and restated in its entirety pursuant to a Third Amended and Restated Limited Partnership Agreement dated as of July 1, 2009 (the Third Amended and Restated Limited Partnership Agreement);
WHEREAS, the General Partner of the Partnership, pursuant to a resolution and consent dated as of April 15, 2011, resolved, among other matters, to amend the Third Amended and Restated Limited Partnership Agreement and to admit each of Daniel G. Cohen and IFMI as a Class A Limited Partner of the Partnership; and
WHEREAS, the current Partners, PrinceRidge Partners LLC, Ahmed A. Alali, Daniel G. Cohen, John P. Costas, Colette Dow, Ronald J. Garner, Michael T. Hutchins, Matthew G. Johnson and IFMI wish to amend and restate the Third Amended and Restated Limited Partnership Agreement in its entirety and to enter into this Agreement.
NOW, THEREFORE, the parties hereto hereby agree to continue the Partnership and hereby amend and restate the Third Amended and Restated Limited Partnership Agreement, which is replaced and superseded in its entirety by this Agreement, as follows:
ARTICLE I
Interpretation
Section 1.01 Definitions. Unless otherwise expressly provided in this Agreement, the following terms used in this Agreement shall have the following meanings:
(a) Accounting Period means a period (i) the first day of which is (A) the first Business Day of each calendar quarter, (B) the date on which there are contributions to the capital of the Partnership or any material amount is credited to a Capital Account other than on a pro rata basis or (C) such other date deemed appropriate by the General Partner; and (ii) the last day of which is (A) the day prior to the commencement of any Accounting Period, (B) the date on which there are withdrawals or distributions from the capital of the Partnership or any material amount is debited or credited to any Capital Account other than on a pro rata basis or (C) such other date deemed appropriate by the General Partner.
(b) Act means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101 et seq.), as amended from time to time.
(c) Active Partner means a Partner who has Day-to-Day Responsibilities.
(d) Additional Partner shall have the meaning set forth in Section 3.01(c).
(e) Adjusted Capital Account Deficit shall have the meaning set forth in Section 6.03(a)(iv)(A).
(f) Affiliate means, with respect to any specified Person, (i) a Person that directly or indirectly, through one (1) or more intermediaries, controls, is controlled by, or is under common control with, the Person specified, and (ii) the successors, heirs, assigns, executors, personal representatives, advisors and agents of each of the foregoing Persons and/or entities described in (i) above. For purposes of this Agreement, each Associated Partner shall be deemed to be an Affiliate of the Partner with whom such Associated Partner is associated.
(g) Agreement means this Fourth Amended and Restated Limited Partnership Agreement, dated as of the date first above written, the Appendices to this Agreement and, with respect to each Limited Partner, any Supplementary Agreement to which such Limited Partner is a party, as any of the foregoing may be amended from time to time.
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(h) Amended and Restated Limited Partnership Agreement shall have the meaning set forth in the recitals.
(i) Appendix A (or other Appendix or Appendices) means Appendix A (or other Appendix) to this Agreement.
(j) Asset Sale Proceeds means the gross proceeds minus expenses, if any, attributable to the sale of all or any portion of the Partnerships assets as part of an extraordinary capital transaction.
(k) Associated Partner shall mean any trust, limited liability company, limited partnership or similar vehicle for the primary benefit of a Partners descendants (whether natural or adopted) or other family members (including spouses and former spouses) and designated in the books and records of the Partnership as an Associated Partner, each in its capacity as a partner of the Partnership.
(l) Available Assets means, as of any date, the excess of (a) the cash, cash equivalent items and temporary investments held by the Partnership over (b) the sum of the amount of such items as the General Partner reasonably determines to be necessary for the payment of the Partnerships expenses, liabilities and other obligations (whether fixed or contingent including, to the extent determined by the General Partner, any outstanding loans made by a Partner to the Partnership to fund any operating deficits, and taking into account adjustments with respect to any advances to a Partner which are subject to recoupment), and for the establishment of appropriate reserves for such expenses, liabilities and obligations as may arise, including the maintenance of adequate working capital for the continued conduct of the Business.
(m) Board shall have the meaning set forth in the Operating Agreement.
(n) Business means the business activities of the Management Group Entities and their Affiliates.
(o) Business Day shall mean any day other than (a) Saturday and Sunday and (b) any other day on which banks located in New York City are required or authorized by law to remain closed.
(p) Capital Account means the capital account(s) established for each Partner on the books of the Partnership.
(q) Capital Net Income and Capital Net Loss mean any Net Income or Net Loss attributable to a Sale Transaction, reduced or increased by any expenses allocated thereto by the General Partner.
(r) Class A Partners means such Persons admitted to the Partnership as Class A Limited Partners in accordance with this Agreement.
(s) Code means the Internal Revenue Code of 1986, as amended.
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(t) Company means PrinceRidge Partners LLC, a Delaware limited liability company organized on January 28, 2008 as BlueHawk Management LLC.
(u) Confidential Information means any and all proprietary, confidential, or non-public information, in whatever form or medium, regarding or relating in any way to the Business, any Management Group Entity, any client, or any of their respective partners, members, stockholders, beneficial owners or Affiliates, including for example and without limitation: agreements; amount and nature of assets owned or controlled; trading and other business activities; financial information; employee information; investments, including the manner in which investments are made; business plans and investment strategies, processes and decisions; performance and returns (actual or expected) of the Business; client lists or information; personal information; personnel history; tax records; work product; the identities of any other Persons or entities who participate in any investment made or transaction entered into by any client; and to the extent not publicly available, the residences, telephone numbers, places of employment, schools, activities and any other personal information about or the interests of any Class A (or other class of)-Partner or any of such Limited Partners Associated Partners or Affiliates.
(v) Contribution Agreement means the Contribution Agreement, dated April 19, 2011 by and among the Company, the Partnership and IFMI.
(w) Copyrights shall have the meaning set forth in Section 13.07.
(x) Corporate Conversion shall have the meaning set forth in Section 10.04(a).
(y) Day-to-Day Responsibilities means an Individual Partners day-to-day role with respect to the Business.
(z) Disparaging shall have the meaning set forth in Section 13.04.
(aa) Drag Along Right shall have the meaning set forth in Section 10.02(c).
(bb) Equity Units means for each Partner, the Equity Units indicated in the books and records of the Partnership and/or in such Partners Supplementary Agreement.
(cc) Excess Allocation Amount shall have the meaning set forth in Section 11.04.
(dd) Executive Agreement shall have the meaning set forth in the Operating Agreement.
(ee) Exercising Member shall have the meaning set forth in Section 10.03(b).
(ff) Final Distribution shall have the meaning set forth in 11.04.
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(gg) Fiscal Year shall have the meaning set forth in Section 2.05.
(hh) Former Partner refers to such Persons as hereafter from time to time cease to be Partners, whether voluntarily or otherwise, in accordance with this Agreement.
(ii) General Partner shall have the meaning set forth in Section 3.01(a).
(jj) IFMI means IFMI, LLC, a Delaware limited liability company.
(kk) IFMI Manager shall have the meaning set forth in the Operating Agreement.
(ll) IFMI Parent means Institutional Financial Markets, Inc., a Maryland corporation.
(mm) Inactive Partner means a Partner whose Day-to-Day Responsibilities have ceased or been terminated by the General Partner.
(nn) Individual Partner means a Partner who is a natural person.
(oo) Involuntary Transfer means one (1) or more of the following events:
(i) the filing of a valid petition of voluntary or involuntary bankruptcy, or the insolvency of a Partner;
(ii) receipt by a Partner of notice of a public, private or judicial sale of all or any part of its Units to satisfy a judgment against or other indebtedness of such Partner;
(iii) an assignment of all or any part of a Partners Units for the benefit of one (1) or more creditors of a Partner, other than a pledge as security by IFMI of its Units in connection with any financing arrangement or guarantee in connection therewith, provided that any foreclosure upon a pledge or other Transfer to or by a secured party in connection with such arrangement or guarantee shall be deemed an Involuntary Transfer; and
(iv) the entry of a decree of divorce, or the execution by a Partner of a property settlement agreement, or any other action in connection with a pending divorce proceeding, the effect of which is to grant rights to all or any part of the Units owned by such Partner to any Person other than such Partner, in its individual capacity.
(pp) Joinder Agreement shall have the meaning set forth in the Operating Agreement.
(qq) Limited Partner means each Person admitted as a limited partner of the Partnership in accordance with this Agreement, including any Persons hereafter admitted as Limited Partners in accordance with this Agreement and excluding any Persons who cease to be Limited Partners in accordance with this Agreement.
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(rr) Management Group Entities means the Partnership and the General Partner and any subsidiary or controlled Affiliate thereof.
(ss) Managers shall have the meaning set forth in the Operating Agreement.
(tt) Mandatory Distribution shall have the meaning set forth in Section 7.02(c).
(uu) Member shall have the meaning set forth in the Operating Agreement.
(vv) Monetization Event shall mean any of the following: (a) the sale of all or any portion of the Management Group Entities business or assets (as part of an extraordinary capital transaction); (b) a public offering of all or any portion of the equity securities of a Management Group Entity (or interests in a feeder, successor or subsidiary entity pursuant to a Corporate Conversion); (c) a sale or issuance of equity interests or other transaction of a Management Group Entity that results in all or a majority of the aggregate economic ownership of such entity being held by any third-party investor; (d) any transaction or series of related transactions that results in the reduction of IFMIs Units below a majority of the then-outstanding Units thereof; or (e) any derivative or other transaction with similar effect to any of the foregoing as reasonably determined by the General Partner.
(ww) Net Income or Net Loss shall mean, with respect to any Accounting Period, the taxable income or tax loss of the Partnership for such period for federal income tax purposes as determined by the General Partner, taking into account any separately stated items, increased by the amount of any tax-exempt income of the Partnership during such period and decreased by the amount of any Code Section 705(a)(2)(B) expenditures (within the meaning of Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) of the Partnership; provided, however, that Net Income or Net Loss of the Partnership shall be computed without regard to any items of gross income, gain, loss or deduction specially allocated pursuant to Section 6.03. In the event that the Capital Accounts are adjusted pursuant to Section 6.01(b), the Net Income or Net Loss of the Partnership (and the constituent items of income, gain, loss and deduction) realized thereafter shall be computed in accordance with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
(xx) New Units shall mean any Units, whether now authorized or not, any rights, options or warrants to purchase Units and any indebtedness or class of securities of the Partnership which is convertible into Units (or which is convertible into a security which is, in turn, convertible into Units); provided that the term New Units shall not include rights, options or warrants to purchase Units and any indebtedness or class of securities of the Partnership which is convertible into Units (or which is convertible into a security which is, in turn, convertible into Units) issued (A) upon conversion or exercise of any other equity securities of the Partnership or any of its controlled subsidiaries; provided that the issuance of such equity
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securities complied with the provisions of Section 10.03, (B) in the event of any subdivision of all of the issued and outstanding Units into a greater number of interests, or (C) to employees or consultants of the Company or the Partnership pursuant to any employee stock plan or other employee benefit plan arrangement or consultancy arrangement.
(yy) Notice Year shall have the meaning set forth in Section 8.02(a).
(zz) Operating Agreement means the Fourth Amended and Restated Limited Liability Company Agreement, dated as of the date hereof, of the General Partner, as the foregoing may be amended from time to time.
(aaa) Original Agreement shall have the meaning set forth in the recitals.
(bbb) Partners means the Limited Partners and the General Partner, collectively, including any Persons hereafter admitted as Partners in accordance with this Agreement and excluding any Persons who cease to be Partners in accordance with this Agreement.
(ccc) Partnership means PrinceRidge Holdings LP, a Delaware limited partnership organized on January 28, 2008 as BlueHawk Capital Management LP.
(ddd) Partnership Subsidiary means, individually, The PrinceRidge Group LLC, a Delaware limited liability company, PrinceRidge Capital LLC, a Delaware limited liability company and each other corporation, limited liability company, partnership, trust or other entity of which a majority of the voting or equity interests are owned, directly or indirectly, by the Partnership or the Company.
(eee) Partnership Tax Audit shall have the meaning set forth in 12.03.
(fff) Passive Partners shall have the meaning set forth in Section 10.02(a).
(ggg) Pass-Thru Partner shall have the meaning set forth in Section 12.03.
(hhh) Permanent Disability shall have the meaning set forth in a Limited Partners Supplementary Agreement.
(iii) Person means any natural person, domestic or foreign limited liability company, corporation, partnership, limited partnership, joint venture, association, business trust, estate, trust, enterprise, bank holding company and any other legal or commercial entity.
(jjj) Pre-Closing Partnership Tax Audit shall have the meaning set forth in Section 12.03(c).
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(kkk) Preemptive Notice shall have the meaning set forth in Section 10.03(b).
(lll) Preemptive Notice Window shall have the meaning set forth in Section 10.03(b).
(mmm) Preemptive Reply shall have the meaning set forth in Section 10.03(b).
(nnn) Preemptive Right shall have the meaning set forth in Section 10.03(a).
(ooo) PrinceRidge Class A Partner shall have the meaning set forth in Section 12.03(c).
(ppp) PrinceRidge Class A Partners Expenses shall have the meaning set forth in Section 12.03(c).
(qqq) PrinceRidge Manager shall have the meaning set forth in the Operating Agreement.
(rrr) Profit Units means for each Limited Partner, the Profit Units indicated in the books and records of the Partnership and/or in such Partners Supplementary Agreement.
(sss) Purchaser Notice shall have the meaning set forth in Section 10.02(b).
(ttt) Qualifying PrinceRidge Individual Partner means each of the following persons: John Costas, Michael Hutchins, Ahmed Alali, Colette Dow, Ronald Garner and Matthew Johnson, so long as each such person continues to hold at least 51% of the number of Units held by such person on the date hereof.
(uuu) Restricted Period means the one (1)-year period immediately following a Limited Partners Termination Date.
(vvv) Restrictive Covenants means all of the restrictions on Limited Partners and their activities set forth in Article XIII of this Agreement.
(www) Sale Proceeds means Asset Sale Proceeds and Unit Sale Proceeds.
(xxx) Sale Transaction means a transaction that generates Asset Sale Proceeds or Unit Sale Proceeds.
(yyy) Second Amended and Restated Limited Partnership Agreement shall have the meaning set forth in the recitals.
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(zzz) Section 704(c) Property means any Partnership property (a) that is contributed to the Partnership, if there is a difference between the basis of such property in the hands of the Partnership and the fair value of such property at the time of its contribution, or (b) that is revalued pursuant to Section 6.01(b) of this Agreement if the fair value of such property differs from its adjusted basis as of the date of such revaluation.
(aaaa) Securities Act means the U.S. Securities Act of 1933, as amended.
(bbbb) Selling Partner(s) shall have the meaning set forth in Section 10.02(a).
(cccc) Source means each source of Net Income and Net Loss for the Partnership (excluding Capital Net Income) that is designated or changed from time to time by the General Partner. No consent of any Limited Partner shall be required to designate or modify any Source, unless otherwise provided in a Limited Partners Supplementary Agreement.
(dddd) Sub-Capital Account shall have the meaning set forth in Section 6.01(a)(ii).
(eeee) Subscription Commitment means a Partners or prospective Partners agreement to purchase Units, as set forth in such Partners Supplementary Agreement.
(ffff) Supplementary Agreement shall have the meaning set forth in Section 3.02.
(gggg) Tag Along Right shall have the meaning set forth in Section 10.02(b).
(hhhh) Target Final Balance shall have the meaning set forth in Section 11.07.
(iiii) Target Minimum Repurchase Amount shall have the meaning set forth in Section 8.02(a).
(jjjj) Target Repurchase Date shall have the meaning set forth in Section 8.02(a).
(kkkk) Tax Matters Partner shall have the meaning set forth in Section 12.03.
(llll) Termination and Separation Agreement means the Termination and Separation Agreement, dated May 31, 2011, by and among the Company, the Partnership, and IFMI.
(mmmm) Termination Date means the effective date of a Termination Event.
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(nnnn) Termination Event means the event that caused a Limited Partners Day-to-Day Responsibilities to have ceased or been terminated by the Limited Partner or the General Partner (e.g., due to such Limited Partners death, Permanent Disability or resignation, or due to the determination of the General Partner to terminate the Limited Partners Day-to-Day Responsibilities).
(oooo) Third Amended and Restated Limited Partnership Agreement shall have the meaning set forth in the recitals.
(pppp) Third Party Purchaser shall have the meaning set forth in Section 10.02(a).
(qqqq) Threshold Value shall mean the threshold value set forth in a Partners Supplementary Agreement.
(rrrr) Transaction Notice shall have the meaning set forth in Section 10.02(a).
(ssss) Transfer means to sell, assign, pledge, transfer or otherwise dispose of, directly or indirectly, all or any part of a Unit.
(tttt) Underlying Transaction shall have the meaning set forth in Section 10.02(a).
(uuuu) Unit Price means the price at which a Unit is purchased by a Partner or prospective Partner or repurchased by the Partnership (other than in connection with an extraordinary capital transaction or Monetization Event), and in the case of a repurchase by the Partnership, shall equal the portion of the Capital Account (or Sub-Capital Account) represented by the Units repurchased on the effective date of the repurchase.
(vvvv) Unit Sale Proceeds means the net proceeds attributable to the simultaneous sale of all or any portion of the Units of all of the Partners, after payment of expenses related thereto as determined by the General Partner; provided, that a Transfer of Units by a Partner for tax or estate planning purposes or a repurchase of Units at their Unit Price shall not be deemed to generate Unit Sale Proceeds.
(wwww) Units means the limited partnership interests, including Units of any type or class, whether existing as of the date hereof or newly issued as of some future date, such as Profit Units and Equity Units, or representing any Source, issued by the Partnership to a Partner in accordance with this Agreement, and (ii) in the case of (a) the definitions of Involuntary Transfer, Monetization Event, and Qualifying PrinceRidge Individual Partner in this Section 1.01, and (b) Sections 4.11, 8.01(a), and 8.01(c), the Company units of any type or class issued by the Company to a Member in accordance with the Operating Agreement.
(xxxx) Voluntarily Withdraw means a Limited Partners decision to withdraw as a Limited Partner of the Partnership.
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(yyyy) Withdrawal Date shall have the meaning set forth in Section 8.01(e).
(zzzz) Work Product shall have the meaning set forth in Section 13.07.
Section 1.02 Pronouns; Gender; Construction. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Person(s) may require in the context thereof. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.
Section 1.03 Headings; Cross-References. The titles of the articles and the headings of the sections of this Agreement are for convenience of reference only, and are not to be considered in construing the terms and provisions of this Agreement. References to Article or Section in this Agreement shall be deemed to refer to the indicated Article or Section of this Agreement, unless the context clearly indicates otherwise.
ARTICLE II
General Provisions
Section 2.01 Formation of the Partnership. The Partnership was formed as a limited partnership under the Act, by the filing of the Certificate of Limited Partnership of the Partnership with the Office of the Secretary of State of the State of Delaware on January 28, 2008. The General Partner, for itself and as agent for the Limited Partners, shall make every reasonable effort to assure that all other certificates and documents are properly executed and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all of the requirements for the formation of the Partnership as a limited partnership under the Act. The Partners hereby ratify the execution and filing of the Certificate of Limited Partnership and other filings made with the States of Delaware and New York prior to the date hereof.
Section 2.02 Partnership Name and Address. The name of the Partnership is PrinceRidge Holdings LP. The original name of the Partnership was BlueHawk Capital Management LP. Its principal office shall be located at 1633 Broadway, 28th Floor, New York, NY 10019, or at such other location as the General Partner in the future may designate. The General Partner shall promptly notify the Limited Partners of any change in the Partnerships address.
Section 2.03 Registered Agent and Registered Office. The address of the registered office of the Partnership in the State of Delaware is c/o National Corporate Research, Ltd., 615 South DuPont Highway, Dover, Delaware 19901. The name and address of the registered agent of the Partnership in the State of Delaware for service of process on the Partnership is National Corporate Research, Ltd., 615 South DuPont Highway, Dover, Delaware 19901. Such office and such agent may be changed from time to time by the General Partner in its discretion through appropriate filings with the Secretary of State of the State of Delaware.
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Section 2.04 Purposes of the Partnership.
(a) The Partnership is organized for the purpose of engaging, directly or indirectly through Affiliates or joint ventures, in a full range of financial services activities and may engage in any other business or activity related or unrelated to any of the foregoing activities. In addition to the foregoing, the Partnership may engage in any activities that are lawful for a limited partnership under the Act.
(b) The Partnership shall have the power to take any action and engage in any proceeding, activity and transaction that the General Partner may deem necessary or advisable in connection with the foregoing purposes.
Section 2.05 Fiscal Year. The fiscal year of the Partnership (the Fiscal Year) shall end on December 31 of each year.
Section 2.06 Maintenance of Separateness. Each of the Partnership and the Partnership Subsidiaries shall at all times be obligated to:
(a) maintain all of its business records, books of account and bank accounts separate from those of IFMI Parent, IFMI or any other Person (other than the General Partner);
(b) ensure that its assets are not commingled with the assets of IFMI Parent, IFMI or any other Person (other than the General Partner);
(c) conduct its business solely in its own name so as not to mislead third parties as to the identity of the entity with which such third parties are dealing, and correct any known misunderstanding regarding its separate identity;
(d) in the case of the Partnership, obtain, whenever necessary, proper authorization from the General Partner for any action taken or to be taken by the Partnership;
(e) maintain separate financial statements, showing its assets and liabilities separate and apart from those of any other Person and not have its assets listed on any financial statement of any other Person; provided, however, that the Partnerships assets may be included in a consolidated financial statement of its Affiliate provided that (i) appropriate notation shall be made in a footnote to such consolidated financial statements to indicate the separateness of the Partnership from such Affiliate and to indicate that the Partnerships assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other Person (other than the Partnership and the Partnership Subsidiaries) and (ii) such assets shall also be listed on the Partnerships own separate balance sheet;
(f) except as provided by Section 4.5 of the Reimbursement Agreement, provide for its operating expenses and liabilities, including its organizational expenses and the salaries of its own employees, from its own funds and not from the funds of any other Person;
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(g) observe all procedures and formalities required by this Agreement and the laws of the State of Delaware;
(h) subject to Section 13.03 of the Operating Agreement and other than as contemplated hereby, by the Contribution Agreement and by the documents, instruments or agreements entered into in connection with the Contribution Agreement, ensure that all transactions between the Partnership or such Partnership Subsidiary and any Affiliate will be at arms length and on terms no less favorable than available to either party in a similar transaction with a non-Affiliate;
(i) ensure that its initial capitalization is sufficient in light of its purpose and business;
(j) without limiting Sections 4.12 and 13.03 of the Operating Agreement, ensure that it does not, other than as set forth in Section 5.05 of this Agreement or pursuant to the Contribution Agreement, make any advance to or guarantee or become obligated for the debts of IFMI Parent or any other Person (other than the Partnership and the Partnership Subsidiaries) or hold out its credit as being available to satisfy the obligations of any Person (other than the Partnership and the Partnership Subsidiaries);
(k) other than with respect to the Companys accounting function (which may be maintained in IFMIs Philadelphia office or such other place as determined by the General Partner), maintain and conduct its business separate from that of any Affiliate and, if applicable, sublease from any Affiliate office space at a rent representing its pro rata share based upon an existing lease, of sufficient space which is separately allocated and identifiable to conduct its business;
(l) have and use its own stationery, invoices, checks and telephone number in all business of the Partnership and the Partnership Subsidiaries, respectively;
(m) without limiting Sections 4.09 and 13.03 of the Operating Agreement, ensure that it does not pledge its assets for any other Person (other than the Partnership and the Partnership Subsidiaries);
(n) other than as required by an insurance carrier, ensure that it does not enter into any agreement to be named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance policy covering the property of any other Person;
(o) ensure that it will not conceal from creditors any of its assets or participate in concealing the assets of any other Person;
(p) ensure that it holds itself out as a separate entity; and
(q) ensure that it does not identify itself as being a division or a part of any other Person and that it does not identify IFMI Parent, IFMI or any other Person as being a division or part of itself.
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(r) Notwithstanding the foregoing and anything herein to the contrary, the Partners acknowledge that, as of the date hereof, the Partnership is a subsidiary of IFMI and IFMI Parent and that the Partnerships assets, liabilities and results of operations will be included in the consolidated financial statements of IFMI Parent, and that the Partnership is subject to the obligations set forth in Section 4.12 hereof. The Partnership shall use its reasonable best efforts to comply with the foregoing covenants of this Section 2.06. Failure of the Partnership or its Limited Partners, or the Board of Managers of the Company, its Members, or the officers of the Company on behalf of the Partnership or its Partnership Subsidiaries, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Partnership or any Partnership Subsidiary as a separate legal entity or the limited liability of the Limited Partners. The unanimous consent of the Board shall be required to waive any of the foregoing covenants of this Section 2.06.
Article III
The Partners
Section 3.01 Current Partners; Admission of Additional Partners.
(a) The general partner of the Partnership is PrinceRidge Partners LLC (the General Partner).
(b) The Limited Partners and the Units issued to such Limited Partners are listed in the books and records of the Partnership and/or in such Limited Partners Supplementary Agreement. The Class A Partners are:
Ahmed A. Alali | ||
Daniel G. Cohen | ||
John P. Costas | ||
Colette C. Dow | ||
Ronald J. Garner | ||
Michael T. Hutchins | ||
Matthew G. Johnson | ||
IFMI |
(c) Subject to Section 10.03 of this Agreement, the General Partner may at any time admit one (1) or more new Partners (each, an Additional Partner) and issue Units to such Additional Partners pursuant to this Agreement, subject to the condition that each such Additional Partner shall execute a Supplementary Agreement, pursuant to which such Person is admitted as a Partner and agrees to be bound by the terms and provisions hereof (as may be modified by the terms of such Supplementary Agreement).
(d) The name of each Limited Partner and the type and number of Units issued to such Limited Partner shall be set forth in the books and records of the Partnership. The names, addresses and capital contributions of each of the Partners shall be set forth in the books and records of the Partnership.
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(e) For so long as IFMI is a Partner, any individual designated as an IFMI Manager shall execute a separate Joinder Agreement (as further described below) at the reasonable request of the Board.
Section 3.02 Supplementary Agreements. The General Partner may enter into one or more supplemental written agreements (including any Joinder Agreements or Executive Agreements) with any Limited Partner (a Supplementary Agreement, a form of which is attached hereto as Appendix A) (i) specifying the type and number of Units initially issued to such Limited Partner and (ii) waiving, modifying or supplementing the rights or obligations of such Limited Partner under this Agreement or otherwise with respect to the Partnership. Each of the Partners acknowledges and agrees that such Supplementary Agreements may provide for other rights, benefits or obligations to the Limited Partners that are parties thereto than otherwise set forth herein (including, without limitation, with respect to allocations and distributions to such Limited Partners, other compensation to such Limited Partners, indemnification and Restrictive Covenants). The General Partner may enter into more than one (1) Supplementary Agreement with a Limited Partner. For the avoidance of doubt, references herein to the Supplementary Agreement of a Limited Partner shall include all Supplementary Agreements into which the Partnership enters into with such Limited Partner. In the event of any dispute between a Limited Partner and the Partnership regarding a conflict between the terms of any such Limited Partners Supplementary Agreement and the terms of this Agreement, the terms of such Limited Partners Supplementary Agreement shall control. A Supplementary Agreement does not modify, amend, limit or supersede any provision of this Agreement, except as to matters expressly addressed in such Supplementary Agreement, and is to be construed narrowly with respect to such matters.
Section 3.03 Representations. Each Limited Partner represents, warrants and covenants to the Partnership as follows:
(a) Capacity. Such Limited Partner has the full capacity, power and authority to execute, deliver and perform its obligations under this Agreement and to subscribe for and purchase Units as a partner of the Partnership. Such Limited Partner has duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of such Limited Partner, enforceable against such Partner in accordance with its terms, subject to bankruptcy, insolvency, moratorium, and similar laws of general applicability relating to or affecting creditors rights and to general equity principles.
(b) Compliance with Laws and Other Agreements. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the performance of such Limited Partners obligations hereunder (subject to the terms of Section 3.02 above) will not conflict with, or result in any violation of or default under, any provision of any agreement (including any restrictive covenant such as a non-compete agreement) or other instrument to which such Limited Partner is a party or by which such Limited Partner or any of such Limited Partners assets are bound, or any judgment, decree, statute, order, rule or regulation applicable to such Limited Partner or such Limited Partners assets.
(c) Access to Information. Such Limited Partner has carefully reviewed this Agreement. Such Limited Partner has been provided an opportunity to ask
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questions of, and such Limited Partner has received answers thereto satisfactory to such Limited Partner from, the Partnership and its representatives regarding such documents and the terms and conditions of the offering of Units, and such Limited Partner has obtained all additional information requested by such Limited Partner of the Partnership and its representatives.
(d) Evaluation of and Ability to Bear Risks. Such Limited Partner has such knowledge and experience in financial affairs that such Limited Partner is capable of evaluating the merits and risks of purchasing Units, and such Limited Partner has not relied in connection with this investment upon any representations, warranties or agreements other than those set forth in this Agreement and, in the case of IFMI, those set forth in the Contribution Agreement. Such Limited Partners financial situation is such that such Limited Partner can afford to bear the economic risk of holding Units for an indefinite period of time, and such Limited Partner can afford to suffer the complete loss of such Partners investment in such Units.
(e) Investment Purpose. Such Limited Partner is acquiring Units pursuant to this Agreement for such Limited Partners own account for investment and not with a view to or for sale in connection with any distribution of all or any part of such Units. Such Limited Partner will not, directly or indirectly, Transfer all or any part of such Units (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of all or any part of such Units) except in accordance with the registration provisions of the Securities Act or an exemption from such registration provisions, with any applicable state or non-U.S. securities laws, and with the terms of this Agreement. Such Limited Partner understands that such Limited Partner must bear the economic risk of an investment in Units for an indefinite period of time because, among other reasons, the offering and sale of such Units have not been registered under the Securities Act and, therefore, such Units cannot be sold other than through a privately negotiated transaction unless it is subsequently registered under the Securities Act or an exemption from such registration is available. Such Limited Partner also understands that sales or Transfers of such Units are further restricted by the provisions of this Agreement, and may be restricted by other applicable securities laws.
Section 3.04 Liability of the Partners.
(a) Except as otherwise expressly provided in the Act, the debts, obligations and liabilities of the Partnership, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Partnership, and a Limited Partner shall not be obligated personally for any such debt, obligation or liability of the Partnership solely by reason of being a Limited Partner.
(b) The General Partner shall have unlimited liability for the repayment and discharge of all debts and obligations of the Partnership to the extent required under the Act. Neither the General Partner nor any of its Affiliates (other than the Partnership), nor any Limited Partner shall be liable for the return of the capital contributions of any Limited Partner, and each Limited Partner hereby waives any and all claims that it may have against the General Partner or any Affiliate thereof (other than the Partnership) and the other Limited Partners in this regard.
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Section 3.05 Limited Rights of Limited Partners. The following provisions shall apply with respect to each Limited Partner:
(a) The rights of a Limited Partner shall be limited solely to (i) such Limited Partners right to receive distributions and allocations in respect of such Limited Partners Units and Capital Account as set forth in this Agreement and (ii) such other rights as are otherwise expressly provided for in this Agreement, in a Limited Partners Supplementary Agreement and under the Act; and
(b) No Limited Partner, acting in such Partners capacity as a Limited Partner shall (i) be deemed to have any fiduciary or other duties to any Limited Partner other than the duty to act in good faith or (ii) be obligated to do or perform any act or thing in connection with the Business or the Partnership not expressly set forth in this Agreement.
Section 3.06 Power of Attorney. Provided that the applicable action or decision set forth below has been approved in accordance with Article IV, each of the Partners hereby appoints the General Partner, or any Partners then acting as the general partner of the Partnership, with power of substitution as such Limited Partners true and lawful representative and attorney-in-fact, in such Limited Partners name, place and stead to make, execute, sign, acknowledge, swear to and file:
(a) any and all instruments, certificates and other documents which may be deemed necessary or desirable to effect the winding-up and termination of the Partnership; and
(b) any business certificate, fictitious name certificate, amendment thereto, or other instrument or document of any kind necessary or desirable to accomplish the business, purpose and objectives of the Partnership, or required by any applicable federal, state or local law.
The power of attorney hereby granted by each of the Partners is coupled with an interest, is irrevocable, and shall survive, and shall not be affected by, the subsequent death, disability, incapacity, adjudication of incompetency, termination, bankruptcy or insolvency of such Partner; provided, however, that such power of attorney shall terminate upon the substitution of another Partner for all such Partners Units or upon the complete withdrawal of such Partner as a partner of the Partnership.
Section 3.07 Bankruptcy, Dissolution, Removal, Withdrawal, Admission or Resignation of a Partner. The bankruptcy, dissolution, removal, admission, withdrawal or resignation of a Partner shall not in and of itself cause a dissolution or termination of the Partnership.
Section 3.08 Associated Partners. Except as otherwise agreed to in writing by the General Partner: (i) an Associated Partner shall be deemed to take the same actions and make the same consents and elections with respect to its Units as its related Partner, including, without limitation, any election to withdraw from the Partnership; and (ii) each Associated Partner shall have the same obligations, including, without limitation, the Restrictive Covenants, and be subject to the same terms as its related Partner as set forth in this Agreement as well as in the related Partners Supplementary Agreement.
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ARTICLE IV
Management of the Partnership
Section 4.01 General. The management of the Partnership shall be vested exclusively in the General Partner. Except as otherwise expressly provided in this Agreement, the General Partner shall have the authority, on behalf of the Partnership, to take any action or make any decisions on behalf of the Partnership under this Agreement, to carry out any and all of the purposes of the Partnership set forth in Section 2.04 and to perform all acts and enter into and perform all contracts and other undertakings which it may deem necessary or advisable or incidental thereto including, without limitation, to:
(i) manage and direct the business affairs of the Partnership, including without limitation, accounting, compliance and other relevant policies and procedures;
(ii) borrow or raise monies on behalf of the Partnership, and, from time to time, without limitation as to amount or manner and time of repayment, issue, accept, endorse and execute promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and secure the payment of such or other obligations by mortgage upon, or hypothecation or pledge of, all or part of the property of the Partnership, whether at the time owned or thereafter acquired;
(iii) lend, with or without security, any securities, instruments or other property of the Partnership, including by entering into reverse repurchase agreements and total rate of return swaps;
(iv) acquire, own, lease, sublease, manage, hold, deal in, control or dispose of any interests or rights in real or personal property;
(v) open, trade and otherwise conduct accounts with brokers and dealers;
(vi) open, maintain and close bank accounts and brokerage accounts and draw checks or other orders for the payment of monies in respect thereof;
(vii) do any and all acts on behalf of the Partnership, and exercise all rights of the Partnership, with respect to its interest in any Person, including, without limitation, the voting of securities, participation in arrangements with creditors, the institution, defense and settlement or compromise of suits and administrative proceedings and other like or similar matters;
(viii) make capital expenditures or incur any commitments for capital expenditures;
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(ix) enter into, amend or terminate any contract;
(x) sell, lease, pledge or otherwise dispose of all or any of the assets of the Partnership;
(xi) take any action to merge or consolidate with or into any other entity, or dissolve, liquidate or wind up the Partnership;
(xii) organize one (1) or more corporations, partnerships or other entities formed to hold record title, as nominee for the Partnership, to securities or funds attributable to the Partnership;
(xiii) engage personnel, whether part-time or full-time, consultants, attorneys and independent accountants or such other Persons as the General Partner may deem necessary or advisable;
(xiv) authorize any Partner, officer, employee, committee or other agent of the Partnership to act for and on behalf of the Partnership in all matters incidental to the foregoing;
(xv) amend this Agreement subject to the requirements of Section 14.02;
(xvi) admit or require the withdrawal of any Partners and determine the Profit Units with respect to any Source and Equity Units to be issued to or repurchased from the Partners in accordance with the terms of this Agreement;
(xvii) enter into a Supplementary Agreement with respect to any Partner;
(xviii) make distributions to the Partners;
(xix) permit the Transfer of a Partners Units in accordance with the terms of this Agreement;
(xx) make a determination to dissolve the Partnership; and
(xxi) carry on any other activities necessary to, in connection with, or incidental to any of the foregoing or the Partnerships management and other activities.
Section 4.02 General Partner as Agent. The General Partner, to the extent of its powers set forth in this Agreement, is an agent of the Partnership for the purpose of the Partnerships business, and the actions of the General Partner taken in accordance with this Agreement shall bind the Partnership. The General Partner may authorize any Partner, officer, employee or other agent to act for and on behalf of the Partnership.
Section 4.03 Ability to Bind the Partnership. Unless otherwise expressly provided herein, the General Partner shall have the authority (a) to execute and deliver, in the
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name and on behalf of the Partnership, without limitation, checks, drafts, orders, instructions, trade orders, contracts, commitments, conveyances of real estate, leases, notes, documents evidencing lending or borrowing, or any other agreements, documents and instruments; and (b) to take any and all actions on behalf of the Partnership pursuant to this Agreement.
Section 4.04 Officers.
(a) The General Partner may appoint such officers of the Partnership as the General Partner deems appropriate and may authorize such officers to act for and on behalf of the Partnership to the extent of the General Partners authority to so act. Any officer so designated and approved shall have such authority and title and perform such duties as the General Partner may, from time to time, delegate to such officer. No officer need be a Partner, a Delaware resident or a United States citizen. Designation and approval of a Person as an officer of the Partnership shall not of itself create any contractual rights.
(b) Any officer of the Partnership may be removed as such, with or without cause, for any reason or for no reason, by the General Partner. Any officer of the Partnership may resign as such at any time upon written notice to the Partnership. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the General Partner. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.
(c) Officers of the General Partner shall be appointed as set forth in the Operating Agreement.
Section 4.05 No Participation in Management by Limited Partners. Except as otherwise expressly provided in this Agreement, the Limited Partners in their capacities as such shall not take part in the management or control of the Partnership or its management of other activities, transact any business in the Partnerships name or have the power to sign documents for or otherwise bind the Partnership.
Section 4.06 Reliance by Third Parties. Persons dealing with the Partnership are entitled to rely conclusively upon the certificate of the General Partner or of a duly authorized Partner, officer, employee or other agent of the Partnership or the General Partner, to the effect that such Person is, as applicable, the General Partner or acting as and upon the power and authority of the General Partner or upon the power and authority of any other Partner or any officer, as delegated to such Partner or officer by the General Partner as set forth in this Agreement or the Operating Agreement.
Section 4.07 Reliance by the General Partner. The General Partner and any duly authorized Partner, officer, employee or other agent of the Partnership may rely, and shall be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
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Section 4.08 Expenses.
(a) Subject to Section 6.3 of the Contribution Agreement, the Partnership shall be responsible for paying, and the General Partner shall pay directly out of Partnership funds, all reasonable costs and expenses incurred in connection with the business of the Partnership, including, without limitation, any out-of-pocket expenses of the Partners incurred in connection with the business of the Partnership in accordance with the Partnerships expense reimbursement policy, liability and other insurance premiums, expenses incurred in the preparation of financial reports and any legal, accounting and other professional fees and expenses.
Section 4.09 Standards for Actions by the General Partner.
(a) Unless otherwise specified in this Agreement, any determination, decision, consent, vote or judgment of, or exercise of discretion by, or action taken or omitted to be taken by, the General Partner under this Agreement shall be made, given, exercised, taken or omitted as the General Partner shall determine in its sole and absolute discretion, whose determination shall be final, conclusive and binding as to all Partners.
(b) In connection with the foregoing, the General Partner and any Partner or officer shall be entitled to rely in good faith on the provisions of this Agreement and on opinions, reports or statements (including financial statements, books of account any other financial information, opinions, reports or statements as to the value or amount of the assets, liabilities, profits or losses of the General Partner and the Partnership) of the following other Persons or groups: (i) one or more officers or employees of such Limited Partner or the General Partner or the Partnership, (ii) any legal counsel, certified public accountants or other Persons employed or engaged by such Limited Partner, the General Partner or the Partnership, or (iii) any other Person who has been selected with reasonable care by or on behalf of such Limited Partner, or the Company or the Partnership, in each case as to matters which such relying Person reasonably believes to be within such other Persons professional or expert competence.
(c) Subject to, and as limited by, the provisions of this Agreement, the General Partner and the officers, in the performance of their duties as such, shall owe to the Company, its Members, the Partnership and its Limited Partners duties of loyalty and due care with respect to the management and operation of the Partnership of the type owed under law by directors and officers of a business corporation incorporated under the General Corporation Law of the State of Delaware; provided, however, that the doctrine of corporate opportunity or any analogous doctrine shall not apply to the officers that are also officers of IFMI or the General Partner with respect to opportunities that arise in businesses that are not Competing Businesses (as defined in the Contribution Agreement).
(d) Neither the General Partner nor any officer shall be liable to the Partnership or any Limited Partner for any act or omission (including any breach of duty (fiduciary or otherwise)), including any mistake of fact or error in judgment taken, suffered or made by such Person if such Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Partnership and which act or omission was within the scope of authority granted to such Person; provided that such act or omission did not constitute fraud, willful misconduct, bad faith or gross negligence in the conduct of such Persons office.
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(e) The General Partner shall not be liable to the Partnership or any Limited Partner for monetary damages for breach of fiduciary duty as the General Partner; provided that the foregoing shall not eliminate or limit the liability of the General Partner: (i) for any breach of such General Partners duty of loyalty to the Partnership or its Limited Partners (as such duty is modified pursuant to the terms of this Agreement); (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of Law; or (iii) for any transaction from which the General Partner derived an improper personal benefit.
Section 4.10 Removal and Replacement of the General Partner. The General Partner, without its written consent, may not be removed as General Partner or be reclassified as a Limited Partner.
Section 4.11 Management Availability. For so long as IFMI owns a majority of the outstanding Units, upon the written request of the Chairman of IFMI Parent, the Partnership shall make available the executive officers of the Partnership (including by teleconference) to meet with officers of IFMI Parent during normal business hours and upon reasonable advance notice, and the board of directors of IFMI Parent, including, without limitation, attendance (in person or by teleconference), from time to time, at regularly scheduled board and senior management meetings.
Section 4.12 Compliance with Securities and National Stock Exchange Laws, Rules and Regulations. Notwithstanding anything in this Agreement to the contrary, so long as IFMI Parent is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and is required by applicable laws, rules, regulations or stock exchange requirements to disclose, or include in its periodic reports, information regarding the Company, the Partnership and/or the Partnership Subsidiaries, the General Partner shall, and shall cause the Partnership and the Partnership Subsidiaries to: (a) comply with all applicable federal securities laws and national securities exchange rules and regulations; (b) except to the extent compliance with this clause (b) conflicts with policies and procedures adopted by an entity in which the financial statements of the Company or the Partnership are consolidated, be bound by all policies and procedures adopted, from time to time, by IFMI Parent to ensure compliance with such laws, rules and regulations; and (c) assist and provide IFMI with all information regarding the Partnership and the Partnership Subsidiaries that IFMI requests in connection with any disclosures deemed necessary or appropriate by IFMI regarding the Partnership and the Partnership Subsidiaries, including, but not limited to: (i) disclosure of the Partnerships financial condition and results of operations (including, as deemed necessary by IFMI, as a separate reportable segment or as part of another reportable segment); (ii) disclosures in press releases, earnings releases and investor presentations; and (iii) disclosure of financial statements and pro forma financial information required by Form 8-K in connection with the admittance of IFMI as a Limited Partner of the Partnership.
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ARTICLE V
Issuance of Units; Compensation; Loans
Section 5.01 Issuance of Units.
(a) Subject to Section 4.09 of the Operating Agreement and Section 10.03 hereof, the Partnership may issue Profit Units, Equity Units or other types or classes of Units to Partners at such times and on such terms as the General Partner shall determine.
(b) With respect to Profit Units, Profit Units may be issued with respect to all Sources or different Sources. The Profit Units issued to the Limited Partners with respect to all Sources and each Source shall equal ninety-nine percent (99%) of the total number of Profit Units issued by the Partnership. One percent (1%) of the total number of Profit Units shall be issued to the General Partner.
(c) An Equity Unit shall represent a portion of Capital Net Income and Asset Sale Proceeds allocated to a Partner or Unit Sale Proceeds in which such Partner participates, as the case may be. The Equity Units of all Partners shall equal one hundred percent (100%) of the total number of Equity Units issued by the Partnership.
(d) The Subscription Commitment, if any, Unit Price (and resulting Capital Account balance) and issuance of Units to each Partner shall be set forth in the books and records of the Partnership.
(e) A Partner shall not be obligated to purchase additional Units, except as provided in such Partners Subscription Commitment, if any, or Supplementary Agreement, except as provided in Section 7.02(g)(ii) (with respect to taxes withheld or paid on behalf of such Partner), or as otherwise agreed to by such Partner in writing.
(f) Except as expressly agreed to by a Partner and the General Partner, a Partner shall not have any obligation to the Partnership or to any other Partner to restore any negative balance in its Capital Account by making additional capital contributions with respect to such Partners Units, or otherwise.
(g) The Partnership hereby irrevocably elects that all Units shall be securities governed by Article 8 of the Uniform Commercial Code as in effect in the State of Delaware and each other applicable jurisdiction. Each certificate evidencing Units, if any, shall bear the following legend: This certificate evidences Units in PrinceRidge Holdings LP and shall be a security governed by Article 8 of the Uniform Commercial Code as in effect in the State of Delaware and, to the extent permitted by applicable law, Article 8 of the Uniform Commercial Code of each other applicable jurisdiction.
Section 5.02 Adjustment of Profit Units and Equity Units.
(a) Each Partner shall initially hold the number of Profit Units and Equity Units indicated in the books and records of the Partnership and/or in its Supplementary Agreements.
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(b) The General Partner may, at any time, as provided in this Agreement, increase or decrease the number of Profit Units and/or Equity Units held by a Partner to reflect changes in the Partners relevant Capital Account and Sub-Capital Account balances.
(c) After the repurchase of a Limited Partners Units, such Limited Partner shall not be entitled to any allocation of Net Income or Net Losses with respect to Profit Units, or to Sale Proceeds, with respect to Equity Units, as applicable.
Section 5.03 Issuance of Senior Securities. Subject to Section 4.09 of the Operating Agreement and Section 10.03 hereof, the General Partner may issue one or more classes of Units that have priority over any other Units then in issue, either as to the return of the amount of a Partners capital or as to any allocation of any item of income, gain, loss, deduction or credit of the Partnership.
Section 5.04 Guaranteed Payments. Subject to Section 13.03, at the discretion of the General Partner, or as provided in a Supplementary Agreement or separate written agreement, the Partnership may make a guaranteed payment to any Partner who is also an employee of the Company or the Partnership.
Section 5.05 Loans.
(a) Without the consent of the General Partner and except as provided in Section 5.05(b), the Partnership shall not make loans to any Partner.
(b) Notwithstanding anything in this Agreement to the contrary, after the later of (x) September 30, 2011 or (y) the earlier of (1) the Final Closing (as defined in the Contribution Agreement) or March 31, 2012, each Partner shall be entitled to borrow from the Partnership up to 30% of the balance of their Capital Account; provided, however, that (i) such borrowing Partner shall provide at least 45 days prior notice of the intent to exercise this borrowing option, (ii) a determination by the General Partner shall be made that such loan would not cause material harm to the Company or the Partnership, (iii) any such loan would have a maximum term of 1 year and would accrue at an interest rate per annum equal to ten percent (10%), and (iv) any such loan would be subject to the receipt of all necessary regulatory approvals and compliance with applicable law. All loans made to Partners pursuant to this Section 5.05 shall (i) be secured by a first priority security interest in such Partners Capital Account and (ii) while the loan is outstanding, reduce the amount of such Partners Profit Units (for purposes of Net Income allocations or distributions) in proportion to the amount of such Partners Capital Account that was borrowed against. The General Partner shall have the right to cause any Partner receiving a loan to execute and deliver any documentation the General Partner reasonably deems necessary to evidence and secure such loan. Each Partner shall have the ability to exercise the borrowing option provided in this Section 5.05(b) once in any two (2) year period.
(c) Without the consent of the General Partner, no Partner shall make loans or advance money to the Partnership. Subject to Section 13.03 of the Operating Agreement, if any Partner makes any loan to the Partnership or advances money on behalf of the Partnership, the amount of any such loan or advance shall not be treated as a capital contribution
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to the Partnership, but shall be a debt due from the Partnership. Subject to Section 13.03 of the Operating Agreement, the amount of any such loan or advance by a lending Partner shall be repayable by the Partnership and shall bear interest on the terms and at the rate agreed between the Partnership and the lending Partner.
(d) No Partner shall be obligated to make any loan or advance to the Partnership absent an agreement between the Partner and the Partnership to make a loan or advance to the Partnership.
ARTICLE VI
Capital Accounts of Partners and Operation Thereof
Section 6.01 Capital Accounts.
(a) There shall be established for each Partner on the books of the Partnership a Capital Account, which shall be maintained and adjusted as provided in this Article VI. The Capital Account of a Partner shall be credited with (x) the amount of all cash contributed by such Partner for such Partners Units, (y) the fair value of any property contributed by such Partner to the Partnership (net of any liabilities secured by such property that the Partnership is considered to assume or take subject to under Section 752 of the Code) for such Partners Units, and (z) the amount of repayment, when repaid, of any loan made to such Partner pursuant to Section 5.05(b) hereof. The Capital Account of a Partner shall be credited with any amount credited to such Capital Account pursuant to this Article VI, and debited by (i) the amounts debited to such Capital Account in accordance with this Article VI, (ii) the amount of any cash distributed to such Partner from such Capital Account in accordance with Article VII or in connection with the repurchase of Units, (iii) the fair value of any asset distributed in kind to such Partner from such Capital Account pursuant to Article VII (net of any liabilities secured by such asset that such Partner is considered to assume or take subject to under Section 752 of the Code) or in connection with the repurchase of Units and (iv) the amount of any loan made to such Partner pursuant to Section 5.05(b) hereof. The Capital Account of each Partner also shall be adjusted appropriately to reflect any other adjustment required pursuant to Treasury Regulations Section 1.704-1 or 1.704-2. Notwithstanding the foregoing, nothing herein shall affect the terms of Article II of the Contribution Agreement.
(i) The General Partner may establish for any Partner a sub-capital account of any Capital Account (each, a Sub-Capital Account) to account for Net Income and Net Loss from any Source, or for any other purpose. A Sub-Capital Account generally shall be maintained and adjusted in the same manner as a Capital Account, as provided in this Agreement.
(b) Upon the occurrence of any event specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), the General Partner may cause the Capital Accounts of the Partners to be adjusted to reflect the fair value of the Partnerships assets at such time (as determined by the General Partner) in accordance with such Regulation. In such event, income, gain, loss and deductions realized thereafter shall be computed in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
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Section 6.02 General Allocations. As of the close of business on the last day of the relevant Accounting Period, subject to Section 6.03 hereof, allocations to the Partners shall be made as follows:
(a) Net Income and Net Loss, other than Capital Net Income and Capital Net Loss, shall be credited or debited, as applicable, to the Capital Accounts of the Partners pro rata in proportion to such Partners Profit Units (taking into account the reduction of any Partners outstanding Profit Units pursuant to a loan made by the Company to such Partner pursuant Section 5.05(b) hereof) as of the last day of the applicable Accounting Period for which such Net Income was earned or such Net Loss was determined; provided that, notwithstanding the foregoing, Net Income and Net Loss, other than Capital Net Income and Capital Net Loss, attributable to a specific Source for such Accounting Period shall be credited or debited, as applicable, to the Capital Accounts or Sub-Capital Accounts, as applicable, of the Partners holding Profit Units issued with respect to such Source pro rata in proportion to such Profit Units.
(b)(i) Any Capital Net Income shall be credited to the Capital Accounts of the Partners as follows:
(A) any Capital Net Income attributable to the sale of one hundred percent (100%) of the Partnerships assets shall be allocated with respect to each increment of Threshold Value pro rata among the Capital Accounts of the Partners entitled to participate in such increment of Threshold Value in proportion to such Partners Equity Units; and
(B) any Capital Net Income attributable to a sale of less than one hundred percent (100%) of the Partnerships assets shall be allocated to the Capital Accounts of the Partners pursuant to Section 6.02(b)(i)(A); provided, however, that for the purpose of this Section 6.02(b)(i)(B), each Threshold Value that has been determined up to that time shall be multiplied by the percentage of the Partnerships assets being sold.
(ii) Any Capital Net Loss shall be allocated among the Capital Accounts of the Partners pro rata in proportion to such Partners Equity Units.
(c) Notwithstanding anything herein to the contrary, any taxes that are paid by the Partnership or any entity in which the Partnership owns any direct or indirect interest with respect to any item of Net Income (or, otherwise, any income or gain) allocable, or otherwise attributable to, one or more Partners (including on account of a Partners resident or non-resident status) shall be credited against and reduce (without duplication) the amounts otherwise distributable or payable to such Partner. For the avoidance of doubt, any entity-level tax of the Partnership or any entity in which the Partnership owns any direct or indirect interest such as the New York City Unincorporated Business Tax or the employer portion of the Medicare tax shall be treated as a Partnership expense and allocated pro rata among the Partners. If any Partner receives a refund with respect to such entity-level taxes that should have been paid to the Partnership or any entity in which the Partnership owns any direct or indirect interest, such Partner shall contribute such refund to the Partnership without the receipt of any Units or other interest in the Partnership or any entity in which the Partnership owns any direct or indirect interest.
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Section 6.03 Special Allocations.
(a) Section 704(b) Allocation Limitations. Notwithstanding Section 6.02, special allocations of income and gain or specific items of income or gain may be specially allocated for any Fiscal Year (or other period) as follows:
(i) Minimum Gain Chargeback. The General Partner shall allocate items of income and gain among the Partners at such times and in such amounts as necessary to satisfy the minimum gain chargeback requirements of Treasury Regulations Sections 1.704-2(f) and 1.704-2(i)(4).
(ii) Qualified Income Offset. The General Partner shall specially allocate items of income and gain when and to the extent required to satisfy the qualified income offset requirement within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(iii) Nonrecourse Deductions. The General Partner shall allocate any nonrecourse deductions, as defined in Treasury Regulations Section 1.704-2(b)(1), of the Partnership among the Partners in a manner which complies with the requirements of Treasury Regulations Section 1.704-2(e).
(iv) Adjusted Capital Account Deficit.
(A) Notwithstanding any other provision of this Agreement, losses (or items of deduction as computed for book purposes) shall not be allocated to a Limited Partner to the extent that such Partner has or would have, as a result of such allocation, an Adjusted Capital Account Deficit. As used herein, a Limited Partners Adjusted Capital Account Deficit shall mean and refer to such Limited Partners Capital Account, increased by any amounts which such Limited Partner is obligated to restore pursuant to the terms of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and reduced by any adjustments, allocations or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6). Any loss (or items of deduction as computed for book purposes) which otherwise would be allocated to a Limited Partner, but which cannot be allocated to such Limited Partner because of the application of the immediately preceding sentence, shall instead be allocated to the other Partners in accordance with their respective Capital Account balances, subject to the limitation imposed by the immediately preceding sentence. If no Limited Partner would receive such an allocation without creating an Adjusted Capital Account Deficit, all such losses or items shall be allocated to the General Partner.
(B) Notwithstanding Section 6.02, Net Income or items thereof otherwise allocable to a Limited Partner who was not eligible to be allocated losses or deductions under clause (A) above, shall first be allocated 100% to the Partners in the amount necessary to reverse, in reverse chronological order, on a cumulative basis and without duplication, any amounts allocated to such Partners pursuant to the last two sentences of clause (A), such allocations to be made pro rata based on the amounts previously allocated to such Partners pursuant to the last two sentences of clause (A).
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(b) Adjustment of Allocations. In the event that the General Partner reasonably determines that the allocations otherwise required pursuant to Section 6.02 or 6.03(a) would not properly reflect the economic arrangement of the Partners or would otherwise cause any inequitable or onerous result for any Partner, then, notwithstanding any provision in this Agreement to the contrary, the General Partner may adjust such allocations in such manner as the General Partner reasonably determines to be required to prevent such result.
Section 6.04 Liabilities. Liabilities shall be determined in accordance with generally accepted accounting principles applied on a consistent basis; provided, however, that the General Partner may provide reserves or holdback amounts from distributions for estimated accrued expenses, liabilities or contingencies, whether or not in accordance with generally accepted accounting principles; provided that, the establishment of any reserves or holdback amounts that are not in accordance with generally accepted accounting principles shall require unanimous approval of the Board of Managers of the Company.
Section 6.05 Goodwill. Except as required by generally accepted accounting principles, no value shall be placed on the name or goodwill of the Partnership, except as determined pursuant to Sections 6.02(b), 7.02(b) and 10.01.
Section 6.06 Allocation of Income and Loss for Tax Purposes. The Partnerships ordinary income and losses, capital gains and losses and other items as determined for federal income tax purposes (and each item of income, gain, loss or deduction entering into the computation thereof) shall be allocated to the Partners in the same proportions as the corresponding book items are allocated pursuant to Sections 6.02 and 6.03. Notwithstanding the foregoing sentence, federal income tax items relating to any Section 704(c) Property shall be allocated among the Partners pursuant to the principles of Section 704(b) and 704(c) of the Code and Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e), to take into account the difference between the fair value and the tax basis of such Section 704(c) Property, as of the date of its revaluation pursuant to Section 6.01(b) of this Agreement or its contribution to the Partnership. Items described in this Section 6.06 shall neither be credited nor charged to the Partners Capital Accounts.
Section 6.07 Determination by the General Partner of Certain Matters. All matters concerning: (i) valuations; (ii) the determination and calculation, and the allocation to and among the Partners, of taxable income, deductions, credits, Net Income, Net Losses and other items of Partnership income, gain, loss, deductions and credits (including taxes thereon); (iii) tax accounting procedures and methods; and (iv) the operation of Article VI hereof, shall all be determined by the General Partner.
Section 6.08 Adjustments by the General Partner to Take Account of Certain Events. In the event that a Partner is admitted to, or withdraws from, the Partnership other than at the end of the Partnerships Fiscal Year, allocations among the Partners and accounting procedures shall be determined by the General Partner.
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ARTICLE VII
Repurchase of Units; Distributions on Units
Section 7.01 Repurchase of Units. Subject to Section 4.09 of the Operating Agreement, upon the consent of the General Partner and the consent of the affected Individual Partner, the Partnership may repurchase the Units of any Individual Partner at any time. No Limited Partner shall have the right to have the Partnership repurchase such Limited Partners Units or to withdraw capital from the Partnership, except in connection with such Limited Partners withdrawal from the Partnership in accordance with Article VIII. The price at which the Partnership shall repurchase Units from a Partner shall be the Unit Price.
Section 7.02 Distributions. Subject to Section 4.09 of the Operating Agreement, distributions shall be made to each Partner at the times and in the amounts determined by the General Partner, and if and when declared by the General Partner, shall be made as follows:
(a) Net Income.
(i) Distributions of Net Income (other than Capital Net Income) shall be made to the Partners pro rata in proportion to such Partners Profit Units (taking into account the reduction of any Partners outstanding Profit Units pursuant to a loan made by the Company to such Partner pursuant Section 5.05(b) hereof); provided, that, notwithstanding the foregoing, Net Income (other than Capital Net Income) attributable to a specific Source shall be distributed to the Partners holding Profit Units issued with respect to such Source pro rata in proportion to such Profit Units.
(b) Sale Proceeds.
(i) Proceeds of Sale of Assets (Capital EventFull). Asset Sale Proceeds distributed in connection with a sale or other disposition of one hundred percent (100%) of the Partnerships assets that does not lead to a liquidation of the Partnership shall be distributed to the Partners in accordance with, and in proportion to, their respective Equity Units. Such distribution shall be made, with respect to each increment of Threshold Value, pro rata among the Partners entitled to participate in such increment of Threshold Value in accordance with the Partners Equity Units.
(ii) Proceeds of Sale of Assets (Capital EventPartial). Asset Sale Proceeds attributable to a sale of less than one hundred percent (100%) of the Partnerships assets shall be distributed to the Partners pursuant to Section 7.02(b)(i); provided, however, that for the purpose of this Section 7.02(b)(ii), each of the Threshold Values that have been determined up to that time shall be multiplied by the percentage of the Partnerships assets being sold.
(c) Mandatory Distributions. Notwithstanding the foregoing and other than as provided for by the General Partner in accordance with Section 4.09(i) of the Operating Agreement, if there is Net Income, 50% of such Net Income shall be distributed (a Mandatory Distribution) to the Partners in accordance with, and in proportion to, their respective Profit Units or Equity Units, as applicable (but without duplication). The amount of any Mandatory
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Distributions shall be determined by the General Partner at the end of each fiscal quarter; provided, however, that the net sum of the Mandatory Distributions, if any, for each fiscal quarter shall be distributed to the Partners within 45 days after the end of each fiscal year. In determining a Partners rights to distributions pursuant to Sections 7.02(a) and (b) (including by reason of the application of Section 11.04), distributions received by such Partner pursuant to this Section 7.02(c) shall be taken into account as if received pursuant to Sections 7.02(a) and (b) (including by reason of the application of Section 11.04).
(d) Intentionally omitted.
(e) Other Distributions. Subject to Section 4.09 of the Operating Agreement and Section 11.04, distributions of amounts not covered by Sections 7.02(a), 7.02(b), 7.02(c) or 7.02(f) shall be distributed to the Partners as determined by the General Partner.
(f) Distributions In Kind.
(i) At the discretion of the General Partner, the Partnership may distribute any assets in kind. If cash and property are to be distributed in kind simultaneously, the Partnership shall distribute such cash and property in kind in proportion to each Partners Profit Units and Equity Units.
(ii) For purposes of determining amounts distributable to the respective Partners under this Section 7.02, any property to be distributed in kind shall have the value assigned to such property by the General Partner, and the amount of Net Income or Net Loss that would have been realized had such assets been sold at their fair value shall be allocated to the Capital Accounts of the Partners pursuant to Sections 6.02 and 6.03 of this Agreement immediately prior to such distribution.
(g) Tax Withholding.
(i) The General Partner may withhold and pay over to the Internal Revenue Service (or any other relevant taxing authority) such amounts as the Partnership is required to withhold or pay over, pursuant to the Code or any other applicable law, on account of a Partners distributive share of the Partnerships items of gross income, income or gain.
(ii) For purposes of this Agreement, any taxes so withheld or paid over by the Partnership with respect to a Partners distributive share of the Partnerships gross income, income or gain shall be deemed to be a distribution or payment to such Partner, reducing the amount otherwise distributable to such Partner in accordance with this Agreement (including pursuant to Section 11.04) and reducing the Capital Account of such Partner. If the amount of such taxes is greater than any such distributable amounts, then, notwithstanding anything in this Agreement to the contrary, such Partner and any successor to such Partners Units shall, as required by the Board upon the unanimous approval of the Managers, pay the amount of such excess to the Partnership, as a contribution to the capital of the Partnership.
(iii) The General Partner shall not be obligated to apply for or obtain a reduction of or exemption from withholding tax on behalf of any Partner that may be
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eligible for such reduction or exemption. To the extent that a Partner claims to be entitled to a reduced rate of, or exemption from, a withholding tax pursuant to an applicable income tax treaty, or otherwise, the Partner shall furnish the General Partner with such information and forms as such Partner may be required to complete where necessary to comply with any and all laws and regulations governing the obligations of withholding tax agents. Each Partner represents and warrants that any such information and forms furnished by such Partner shall be true and accurate and agrees to indemnify the Partnership and each of the Partners from any and all damages, costs and expenses resulting from the filing of inaccurate or incomplete information or forms relating to such withholding taxes.
(iv) Notwithstanding anything to the contrary contained in this Agreement, any Supplementary Agreement or any other agreement or arrangement to the contrary, the General Partner may condition the Partnerships issuance or grant of any vested or unvested Units or other interest in the Partnership to any Person on and upon such Person first (and may cause the Partnership to not so issue or grant any Units or interest in the Partnership until the following conditions are satisfied): (A) furnishing to the Partnership any certification, documentation and other information in connection with such issuance or grant; and (B) paying to the Partnership (or to any such one or more other Person(s) or the Internal Revenue Service or any other federal or any state, local and/or foreign tax, judicial or other governmental authority, agency, body or instrumentality), and/or making adequate provision for the payment to the Partnership of, any and all withholding, income and other taxes, all as (and in such amount that) the General Partner shall determine and require in its sole and absolute discretion.
Section 7.03 Limitations on Distributions and Repurchases of Units. Notwithstanding Sections 7.01, 7.02 and 8.02:
(a) Distributions and repurchases of Units are subject to the provision by the Partnership for (i) all Partnership liabilities in accordance with the Act and (ii) reserves or amounts held back in accordance with this Agreement;
(b) The unused portion of any reserve or amount held back shall be distributed, with interest as determined by the General Partner, after the General Partner has determined that the need therefor shall have ceased;
(c) Distributions shall be made only to the extent of Available Assets; and
(d) Distributions to, and the repurchase of Units from, any Partner are subject to the application of any provision of this Agreement that may result in a Partner not actually receiving the full (or any) amount that the Partner would have otherwise been, in the absence of such provision, entitled to receive pursuant to such distribution or repurchase (such as deductions to repay loans to the Company and the Partnerships right to offset liabilities or withhold distributions with respect to a Partner).
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ARTICLE VIII
Withdrawal from the Partnership
Section 8.01 Withdrawal.
(a) Voluntary Withdrawal. An Individual Partner may Voluntarily Withdraw (i) as of the end of any quarter upon fifteen (15) days prior written notice to the General Partner, (ii) to the extent such Individual Partner is a Qualifying PrinceRidge Individual Partner as of the date hereof, and is or becomes a PrinceRidge Manager after the date hereof, upon any event or series of events that results in such person no longer being deemed a Qualifying PrinceRidge Individual Partner and subsequent to such event such person ceases to be a Member of the Board, and (iii)at any other time with the consent of the General Partner. So long as IFMI owns a majority of the outstanding Units, IFMI may Voluntarily Withdraw only with the unanimous consent of the Board. In the event that IFMI no longer owns a majority of the outstanding Units, (a) IFMI may Voluntarily Withdraw as of the end of any quarter upon fifteen (15) days prior written notice to the General Partner, (b) at any other time with the unanimous consent of the Board, or (c) so long as there is no more than one (1) IFMI Manager, with the consent of the Board.
(b) Required Withdrawal. Notwithstanding any other provision of this Agreement, the General Partner, upon written notice to an Individual Partner, may require such Individual Partner to withdraw as a partner of the Partnership at any time, for any reason. Except as otherwise determined by the General Partner, an Individual Partner shall be deemed to have requested to Voluntarily Withdraw upon such Individual Partner becoming an Inactive Partner.
(c) Required Sale. In the event that (i) any Limited Partner owning a majority of the then outstanding Units (or its parent or subsidiary) is indicted (and such indictment is not quashed within 90 days) for a criminal violation of any securities laws (including the Securities Act of 1933, the Securities Act of 1934 or the Investment Advisers Act of 1940), and (ii) the Board of Managers of the Company (other than the Managers designated by such Limited Partner) reasonably determines that such indictment has had or would reasonably be expected to have a quantifiable material adverse effect on the Business, such Limited Partner shall be required within 150 days of receipt of such determination by the Board to sell a number of Units (if any) to a third-party such that such Limited Partner will own less than 50% of the outstanding Units. Approval of any sale pursuant to this Section 8.01(c) shall not be unreasonably withheld or delayed.
(d) Withdrawal Pursuant to Termination and Separation Agreement. Reference is made to the Recitals and Section 3.01 of the Termination and Separation Agreement, and for purposes of this Section 8.01(d), capitalized terms without definition shall have the meanings ascribed to them in the Termination and Separation Agreement. Notwithstanding any other provisions of this agreement, in the event that FINRA denies its Consent to any one of the CMAs after the consummation of the Interim Closing, then beginning on the Termination Date, the Partnership and IFMI shall, and shall cause their respective Affiliates to, as promptly as practicable, effect the withdrawal of IFMI from each of the Company and the Partnership.
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(e) Withdrawal Date. The Withdrawal Date of a Limited Partner shall be the date on which all of the Limited Partners Units have been repurchased by the Partnership or the Limited Partner otherwise no longer holds any Units of the Partnership (e.g., in the case of a Transfer permitted in accordance with this Agreement).
Section 8.02 Repurchase of Units in Connection with Withdrawal.
(a) Subject to Section 4.09 of the Operating Agreement, in connection with the withdrawal of a Partner from the Partnership, the Partnership shall repurchase such Partners Units for the aggregate Unit Price with respect to such Partners Units; provided, that, except in the case of (x) a withdrawal pursuant to Sections 8.01(a)(ii) or 8.01(b) in connection with which the Partnership must effect within 45 days of such withdrawal such repurchase, or (y) a withdrawal pursuant to Section 8.01(a)(ii) or 8.01(b) where, after giving effect to such withdrawal no PrinceRidge Class A Partner would constitute a Qualifying PrinceRidge Individual Partner, in connection with which the Partnership must effect within 45 days of the later of (1) such withdrawal and (2) the date on which IFMI does not exercise its right to waive or ceases to waive the requirement in Section 4.03(b) of the Operating Agreement such repurchase from all then current PrinceRidge Class A Partners, the Partnership may effect such repurchase in one or more transactions at any time, but in no event before the repayment of any loan made by the Partnership to such Partner pursuant to Section 5.05 of this Agreement, and shall use its commercially reasonable efforts to effect such repurchase no later than the end of the applicable anniversary of the date, as designated below, the Partner gave its notice or was required to withdraw (the Notice Year) and shall repurchase no less than the percentages, as designated below, of the Partners Units outstanding at the applicable anniversary dates (each, a Target Minimum Repurchase Amount) for the aggregate Unit Price with respect to the Units being repurchased on or before the applicable anniversary dates (each a Target Repurchase Date):
(A) Subject to the terms of any Supplementary Agreement, in the event of any withdrawal by any Partner prior to the one (1) year anniversary of the of execution of this Agreement and such Partner has not contributed additional capital to the Company, the following Target Minimum Repurchase Amounts and Target Repurchase Dates shall be used:
(i) the last day of the month in which the first anniversary of the date of the notice of withdrawal occurs, 20%;
(ii) the last day of the month in which the second anniversary of the date of the notice of withdrawal occurs, 25%;
(iii) the last day of the month in which the third anniversary of the date of the notice of withdrawal occurs, 33 1/3%;
(iv) the last day of the month in which the fourth anniversary of the date of the notice of withdrawal occurs, 50%; and
(v) the last day of the month in which the fifth anniversary of the date of the notice of withdrawal occurs, 100%.
(B) Subject to the terms of any Supplementary Agreement, in the event of any withdrawal by any Partner (i) subsequent to the one (1) year anniversary of the execution of this Agreement or (ii) at any time after such Partner has contributed additional capital to the Company, the following Target Minimum Repurchase Amounts and Target Repurchase Dates shall be used:
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(i) the last day of the month in which the first anniversary of the date of the notice of withdrawal occurs, 33 1/3%;
(ii) the last day of the month in which the second anniversary of the date of the notice of withdrawal occurs, 50%; and
(iii) the last day of the month in which the third anniversary of the date of the notice of withdrawal occurs, 100%.
The aggregate Unit Price with respect to the Units being repurchased shall be paid no later than thirty (30) days after the effective date of each such repurchase.
(b) For the avoidance of doubt, a Partner who has given its notice to withdraw or any Limited Partner who has been required to withdraw by the General Partner shall continue to participate in the Net Income, Net Losses and any Sale Proceeds during the time and to the extent its Units remain outstanding and have not been repurchased by the Partnership.
(c) Notwithstanding Section 8.02(a), in the event that IFMI permits a PrinceRidge Class A Partner that is no longer a Qualifying PrinceRidge Individual Partner to serve on the Board, then the Partnership shall not be required to effectuate the repurchase required by Section 8.02(a)(y) until 45 days after IFMI has revoked, in its sole discretion, its permission for a non-Qualifying PrinceRidge Individual Partner to serve on the Board, so long as such revocation was made in accordance with Section 4.03(b) of the Operating Agreement.
(d) Reference is made to Section 3.01 of the Termination and Separation Agreement, and for purposes of this Section 8.02(d), capitalized terms without definition shall have the meanings ascribed to them in the Contribution Agreement. Notwithstanding Section 8.02(a), in connection with a withdrawal of IFMI pursuant to Section 8.01(d), the Partnership and IFMI shall effect the transactions set forth in the Termination and Separation Agreement.
Section 8.03 Right to Offset. Subject to Section 13.03 of the Operating Agreement, the Partnership shall have the right to offset against any payments due to a Limited Partner any amounts owed to the Partnership by such Limited Partner, including, without limitation, principal and interest on any loans from the Partnership or Company to each Limited Partner.
ARTICLE IX
Transfers of Units
Section 9.01 Transfers of Units.
(a) Except (i) as otherwise expressly provided in this Agreement, including with respect to Section 10.02 and Section 10.03, or as required pursuant to the Contribution Agreement, (ii) Transfers of Units by a Partner for tax or estate planning purposes, and (iii) a pledge as security by IFMI of its Units in connection with any financing arrangement
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or guarantee in connection therewith (it being understood and agreed that any foreclosure or other Transfer in connection with such arrangements or guarantees shall not be permitted without the unanimous consent of the Board), no Limited Partner shall have the right, directly or indirectly, to Transfer all or any part of its Units without the consent of the General Partner, which consent may be withheld for any reason or for no reason. Any purported direct or indirect Transfer of all or any part of a Unit in contravention of this Section 9.01(a) shall be null and void and of no force and effect.
(b) Notwithstanding anything in this Agreement to the contrary, a Partner may generally Transfer its Units with the consent of the General Partner, only (i) in circumstances in which the tax basis of the Units in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferor, (ii) to members of the Partners immediate family (brothers, sisters, spouse, parents and children), or (iii) as a distribution from a qualified retirement plan or an individual retirement account. The General Partner may permit other Transfers under such other circumstances and conditions as it, in its sole discretion, deems appropriate; provided, however, that prior to any such Transfer, the General Partner shall consult with counsel to the Partnership to ensure that such Transfer will not cause the Partnership to be treated as a publicly traded partnership taxable as a corporation.
Section 9.02 Involuntary Transfers; Right of First Refusal. In the event of an Involuntary Transfer of all or any part of a Partners Units, such Partner shall immediately give written notice, by registered mail or by hand delivery, to the General Partner (or to the Class A Partners, in the case of the General Partner), which notice shall (A) describe the event constituting the Involuntary Transfer, (B) list the names and addresses of all parties involved, (C) state the Profit Units and Equity Units of the Partner in the Partnership affected by the Involuntary Transfer, and (D) state the amount of any judgment or other indebtedness with respect to which such Involuntary Transfer was suffered. The occurrence of the event which constitutes an Involuntary Transfer shall constitute an offer to the General Partner (or to the Class A Partners, in the case of the General Partner). Upon receipt of such notice by the General Partner (or by the Class A Partners, in the case of the General Partner), it shall have the right to purchase all of the Units then owned by the offeror Partner which shall be necessary to satisfy (as fully as possible) the judgment or other indebtedness for which the Involuntary Transfer was suffered, at the fair value as established by an independent appraiser selected by the General Partner (or by the Class A Partners, in the case of the General Partner).
ARTICLE X
Sale of Units; Monetization Events
Section 10.01 Payment of Unit Sale Proceeds.
(a) Unit Sale Proceeds attributable to a sale of one hundred percent (100%) of the Partners Units shall be paid to the Partners with respect to each increment of Threshold Value pro rata among the Partners entitled to participate in such increment of Threshold Value pro rata in proportion to such Partners Equity Units.
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(b) Unit Sale Proceeds attributable to a sale of less than one hundred percent (100%) of the Partners Units shall be paid to the Partners pursuant to Section 10.01(a); provided, however, that for the purpose of this Section 10.01(b), each of the Threshold Values that have been determined up to that time shall be multiplied by the percentage of the Units being sold.
(c) Notwithstanding any other provision of this Agreement, any distribution of Unit Sale Proceeds to any Partner shall first be used for the repayment of any loan made to such Partner in accordance with Section 5.05 of this Agreement.
Section 10.02 Tag Along and Drag Along Rights. The Limited Partners shall have the following rights in connection with a sale of Units of the Partnership:
(a) Transaction Notice. If the General Partner or a Class A Partner receives a bona fide offer from a third party, relating to the purchase, directly or indirectly, by such third party (such third party, a Third Party Purchaser) of the General Partners and/or Class A Partners (the Selling Partner(s)) Units, and the General Partner determines to sell (or consent to a Class A Partners sale of), such Units and such sale to the Third Party Purchaser is approved by the General Partner (subject to Section 4.09 of the Operating Agreement), the General Partner shall deliver a notice (a Transaction Notice) to the Third Party Purchaser, the Selling Partner(s) and the non-selling Partners (the Passive Partners) stating that the Selling Partner(s) intends to sell its Units and setting forth the principal terms of such sale, including the portion of such Units to be sold, and the consideration for such sale, as well as the principal conditions to such sale (such subject transaction, the Underlying Transaction).
(b) Tag Along Right. Except with respect to a sale pursuant to Section 8.01(c), each Passive Partner shall be entitled to sell to the Third Party Purchaser the same portion (expressed as a percentage) of its Units as is being sold by the Selling Partner(s), on the same terms and conditions as the Selling Partner(s) in the Underlying Transaction, if within thirty (30) days of its receipt of such notice the Passive Partner delivers a notice (a Purchaser Notice) to the General Partner stating that it intends to exercise its right to effect such sale (such right, the Tag Along Right). Such sale by the Passive Partners, however, shall not occur earlier than ten (10) days after delivery of the Purchaser Notice and only simultaneously with and subject to the Underlying Transaction.
(c) Drag Along Right. The General Partner shall be entitled to require each of the Passive Partners to sell to the Third Party Purchaser the same portion (expressed as a percentage) of its Units as is being sold by the Selling Partner(s) on the same terms and conditions as the Selling Partner(s) in the Underlying Transaction, if the General Partner states in the Transaction Notice that it intends to exercise such right (such right, the Drag Along Right); provided that such Passive Partner shall not be required to make any representations or warranties other than with respect to unencumbered title to its Units and the power, authority and legal right to transfer such Units and such Passive Partner shall not be required to provide an indemnity. Such sale by the Passive Partners, however, shall not occur earlier than ten (10) days after delivery of the Transaction Notice and only simultaneously with and subject to the Underlying Transaction.
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(d) When calculating the portion of the Unit Sale Proceeds to which a Partner would be entitled for the purpose of a Sale Transaction under this Section 10.02, such sale proceeds shall be paid to each Partner participating in such Sale Transaction based on the amounts each Partner would have received pursuant to Section 10.01.
(i) In the event that the consideration being paid in the Underlying Transaction consists of more than one (1) form of consideration, then each Partner participating in such Underlying Transaction shall receive its pro rata share of each such form of consideration.
Section 10.03 Preemptive Rights.
(a) In the event that, from time to time following the date hereof, the Partnership proposes to sell or issue New Units to any Person, each then-existing Member shall have the right (a Preemptive Right) to purchase a pro rata portion of the New Units proposed to be sold or issued equal to the percentage determined by dividing (x) the Units held by each such Limited Partner at the time of such proposed sale or issuance by (y) the aggregate Units in the Partnership at the time of such proposed sale or issuance. Each Limited Partner will be entitled to purchase all or part of such New Units at the same price and on the same terms as such New Units are proposed to be sold or issued by the Company pursuant to this Section 10.03.
(b) Prior to the sale or issuance of any New Units to any Person, the Partnership shall cause to be given to each Limited Partner written notice of the Partnerships intention to make such sale or issuance (the Preemptive Notice). The Preemptive Notice shall set forth the aggregate number of Units to be sold or issued, the proposed purchasers, the proposed date of sale or issuance (which date shall not be less than twenty (20) Business Days after the date of delivery of the Preemptive Notice, the consideration that the Company will receive therefore and all other material terms and conditions of such sale or issuance. Each Limited Partner shall have thirty (30) Business Days (the Preemptive Notice Window) from the date of receipt of the Preemptive Notice to agree to purchase up his or her pro rata portion of the New Units offered to such Limited Partner by the Partnership pursuant to this Section 10.03 for the price and upon the terms specified in the Preemptive Notice by giving written notice to the Company and stating therein the quantity of such New Units such Member elects to purchase (the Preemptive Reply). In the event that a Limited Partner delivers a Preemptive Reply (such Member, an Exercising Member), the Partnership shall sell to such Exercising Member, and such Exercising Member shall purchase from the Partnership, for the consideration and on the terms set forth in the Preemptive Notice the number of Units that such Exercising Member has elected to purchase on the same day the Partnership sells or issues (or would have sold or issued) the Units described in the Preemptive Notice.
(c) In the event that any Limited Partner fails to exercise in full the Preemptive Rights set forth in this Section 10.03 within the Preemptive Notice Window, the Partnership shall have thirty (30) Business Days thereafter to sell or issue the New Units not elected to be purchased under this Section 10.03 at the price and upon terms no more favorable to the purchasers than specified in the Preemptive Notice. In the event that the Company has not sold such New Units within such subsequent thirty (30) Business Day period, the Partnership shall not thereafter sell or issue any New Units without first offering such New Units in the manner provided in this Section 10.03.
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Section 10.04 Monetization Events.
(a) General. In the event the General Partner determines to pursue a Monetization Event, the Partners shall, at the request and under the direction of the General Partner, take all actions necessary or desirable to effect any conversion deemed necessary by the General Partner in connection with such Monetization Event (including, without limitation, whether by conversion to a subchapter C corporation, merger or consolidation into any entity, recapitalization or otherwise), giving effect to the same economic and corporate governance provisions contained herein (Corporate Conversion).
(b) In the event that a Monetization Event is approved by the General Partner, each Partner shall be deemed hereby to consent to such Monetization Event (including any related Corporate Conversion) and agrees (i) to vote in favor of such transaction, to the extent any such vote is required for the consummation of such transaction (ii) to enter into such agreements, and to make such representations, warranties and indemnities therein, with respect to such Monetization Event, as may be necessary to effectuate such Monetization Event, provided that any such representations, warranties and indemnities shall not disproportionately adversely affect any Partner or Partners without such Partners consent, and (iii) that it will, in connection with such Monetization Event, consent to, cooperate with, and raise no objections against the Monetization Event, and shall enter into such transfer, vesting, holdback, forfeiture and other restrictions with respect to equity interests received in connection with such conversion as shall be reasonably required pursuant to the determination of the General Partner. If a Partner fails or refuses to vote as required by this Section 10.04(b), then such Partner hereby grants to the General Partner an irrevocable proxy, coupled with an interest, to vote on behalf of such Partner in accordance with this Section 10.04(b), and, if applicable, hereby appoints the General Partner as its attorney-in-fact, to Transfer its Units in accordance with the terms of this Section 10.04(b). In the event that any Partner fails or refuses to comply with the provisions of this Section 10.04(b), the Partnership and the other Partners may elect to proceed with the Monetization Event notwithstanding such failure or refusal and, in such event and upon tender of the specified consideration to any such Partner, such Partner shall be deemed to have withdrawn at such time.
Section 10.05 Allocation of Sale Proceeds Between the General Partner and the Partnership. For the avoidance of doubt, for purposes of determining the amount of Sale Proceeds allocable to the Partners in connection with any Sale Transaction involving the Partnership, Sale Proceeds paid for assets or Units of the Partnership shall be aggregated and allocated one hundred percent (100%) to the Partnership and zero percent (0%) to the General Partner.
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ARTICLE XI
Duration, Winding-Up and Termination of the Partnership
Section 11.01 Term. The term of the Partnership began on the date the Certificate of Limited Partnership of the Partnership was filed, and shall continue until cancellation of the Certificate of Limited Partnership of the Partnership in accordance with this Agreement.
Section 11.02 Dissolution. Subject to Section 4.09 of the Operating Agreement, there shall be a dissolution of the Partnership and its affairs shall be wound up upon the first to occur of any of the following events:
(i) the decision of the General Partner to dissolve the Partnership;
(ii) the entry of a decree of judicial dissolution of the Partnership pursuant to Section 17-802 of the Act or any successor provision thereof; or
(iii) at any time there are no Partners, unless the business of the Partnership is continued in accordance with the Act.
Section 11.03 Winding Up. Upon the dissolution of the Partnership, the General Partner (or any duly designated representative) shall use all commercially reasonable efforts to liquidate all of the Partnership assets and wind up the affairs of the Partnership in an orderly manner; provided that if in the judgment of the General Partner (or such representative) an asset of the Partnership should not be liquidated, the General Partner (or such representative) shall allocate, on the basis of the value of any assets of the Partnership not sold or otherwise disposed of, any unrealized gain or loss based on such value to the Partners Capital Accounts as though the assets in question had been sold on the date of such allocation and, after giving effect to any such adjustment, distribute said assets in accordance with Article VII, subject to the priorities set forth in Article VII; provided further, that the General Partner (or such other representative) will attempt to liquidate sufficient Partnership assets to satisfy in cash (or make reasonable provision in cash for) the debts and liabilities referred to in Article VII.
Section 11.04 Final Distribution. After the application or distribution of the proceeds of the liquidation of the Partnership assets in one or more installments to the satisfaction of the liabilities to creditors of the Partnership, including to the satisfaction of the expenses of the winding-up, liquidation and dissolution of the Partnership (whether by payment or the making of reasonable provision for payment thereof), the remaining proceeds, if any, plus any remaining assets of the Partnership shall be distributed to and among the Partners as follows: (i) first, to any Partner (whether an individual or entity) whose aggregate allocations of Net Income (other than Capital Net Income) pursuant to Section 6.02(a) only from and after the date hereof and not otherwise in connection with any Sale Transaction or the Partnerships dissolution and/or liquidation shall exceed the aggregate prior distributions of the Partnership to such Partner pursuant to Section 7.02(a) and Section 7.02(c), to the extent such distribution under Section 7.02(c) relates to Section 7.02(a) (such Partners Excess Allocation Amount), until the
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aggregate amount(s) so distributed to such Partner shall equal such Partners Excess Allocation Amount (and if there shall be more than one such Partner having an Excess Allocation Amount, then the foregoing distributions of this clause (i) shall be made in proportion to each such Partner in proportion to their respective Excess Allocation Amounts); and (ii) the balance shall be distributed to the Partners as Asset Sale Proceeds in accordance with Section 7.02(b)(i) (the amount that each Partner would be distributed, such Partners Final Distribution).
Section 11.05 Time for Liquidation, etc. A reasonable time period shall be allowed for the orderly winding up and liquidation of the assets of the Partnership and the discharge of liabilities to creditors so as to enable the Partnership to seek to minimize potential losses upon such liquidation. The provisions of this Agreement shall remain in full force and effect during the period of winding-up and until the filing of a certificate of cancellation of the Certificate of Limited Partnership of the Partnership with the Secretary of State of the State of Delaware.
Section 11.06 Cancellation. Upon completion of the foregoing, the General Partner (or any duly designated representative) or such other Person as required by the Act shall execute, acknowledge and cause to be filed a certificate of cancellation of the Certificate of Limited Partnership of the Partnership with the Secretary of State of the State of Delaware. The provisions of this Agreement shall remain in full force and effect during the period of winding-up and until the filing of such certificate of cancellation.
Section 11.07 Final Allocations. Notwithstanding anything herein to the contrary, the Partnerships income, gain, losses, deductions and credits for the Fiscal Year or other period in which the Partnership dissolves and liquidates shall be allocated to and among the Partners in a manner such that the Capital Account balance of each Partner, immediately after giving effect to such allocations, shall, as nearly as possible, equal such Partners Final Distribution. For purposes of this Section 11.07, the allocation provisions contained in this Agreement are intended to produce a final Capital Account balance for each Partner (such Partners Target Final Balance) that is equal to such Partners Final Distribution and that to the extent that the Partnership determines that the allocation provisions of this Agreement would not produce the Target Final Balance for any Partner, then this Agreement shall be automatically amended, and allocations of items of Partnership income (including gross income), gain, deductions and/or losses shall be allocated in such manner as the General Partner determines to be necessary to produce such Target Final Balance for each Partner (and, if and to the extent the General Partner determines it to be necessary, for any prior Fiscal Year or other period if the United States federal income tax return of the Partnership for such prior Fiscal Year or other period has not yet been filed or is still open and can be amended, shall be specially allocated as the General Partner determines to be necessary to cause the respective positive Capital Account balance of each Partner to be equal to such Partners Target Final Balance). This Section 11.07 shall apply without regard to any allocation or re-allocation that may be required and/or imposed by the Internal Revenue Service or any other tax authority in any audit, proceeding or otherwise.
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ARTICLE XII
Tax Matters; Books and Records.
Section 12.01 Filing of Tax Returns. The General Partner, at the Partnerships expense, shall prepare and file, or cause the accountants of the Partnership to prepare and file, a federal information tax return for the Partnership and each Partnership Subsidiary in compliance with Section 6031 of the Code and any required state and local income tax and information returns for each tax year of the Partnership.
Section 12.02 Reports to Current and Former Partners. As soon after the end of each Fiscal Year as is practicable, the General Partner shall cause the Partnership to prepare and mail, or cause its accountants to prepare and mail, to each Partner and, to the extent necessary, to each Former Partner (or its legal representative), a report setting forth in sufficient detail such information as shall enable such Partner or Former Partner (or its legal representative) to prepare its federal, state and local tax returns in accordance with the laws, rules and regulations then prevailing.
Section 12.03 Tax Matters Partner.
(a) Except as otherwise provided in this Agreement, with respect to Pre-Closing Partnership Tax Audits, the General Partner (and only the General Partner) shall designate (and which designation shall be reflected on the Partnerships annual federal information tax return) such Partner(s) or other Person(s) (which may include the General Partner) to serve as the tax matters partner of the Partnership and any Partnership Subsidiary pursuant to the Section 6231(a)(7) of the Code and Treasury Regulations Sections 301.6231(a)(1)-1 and 301.6231(a)(7)-2 and, further, the General Partner (and only the General Partner) shall designate such Partner(s) or other Person(s) (which may be or include the General Partner) to serve in the corresponding or similar position, status or capacity for state, local and/or as applicable, foreign tax purposes (any and all such Partner(s) and other Person(s) so designated by the General Partner, collectively, Tax Matters Partner ). The Partner(s) or other Person(s) so designated to serve as the Tax Matters Partner shall exercise its duties as Tax Matters Partner in accordance with applicable law. If the Tax Matters Partner does not act in accordance with Section 4.09(o) of the Operating Agreement, the PrinceRidge Managers, in their sole discretion, may remove the Tax Matters Partner. In such event, the Board shall designate another Person(s) to serve as the Tax Matters Partner. For the avoidance of doubt, the Tax Matters Partners reliance on a determination, even if erroneous, by the Partnerships tax advisors that there is authority supporting a more likely than not position shall not constitute a breach of Section 4.09(o). The Tax Matters Partner shall be authorized and empowered to take and make (and/or to cause or permit the Partnership and any Partnership Subsidiary to take and make and/or, otherwise to take and make on behalf of the Partnership and any Partnership Subsidiary) any and all such actions and decisions in connection with any (including foreign) tax-related administrative (including, without limitation, Internal Revenue Service) or judicial examination, audit, proceeding or litigation of and/or involving the Partnership or any Partnership Subsidiary (any of the foregoing, a Partnership Tax Audit), including entering into (and/or causing the Partnership or any Partnership Subsidiary to enter into) any settlement with the Internal Revenue Service and/or any other state, local or foreign tax authority, agency or body which may be
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adverse to the Partners (or one or more, or all of the Members) or which otherwise may result in a different tax impact to a Partner as compared to the tax affect on another Partner. Each Partner or other Person (for purposes of this Section 12.03, called a Pass-Thru Partner ) that holds or controls Units as a Partner on behalf of, or for the benefit of another Person, or which Pass-Thru Partner is beneficially owned (directly or indirectly) by another Person or Persons shall, within fifteen (15) days following receipt from the Tax Matters Partner of any notice, demand, request for information or similar document, convey such notice or other document in writing to all holders of beneficial interests holding Units through such Pass-Thru Partner. In addition to (and not in limitation of) the foregoing, in the event the Partnership or any Partnership Subsidiary shall be the subject of any Partnership Tax Audit, the Tax Matters Partner shall be authorized to act for, and its decision shall be final and binding upon, the Partnership, each Partnership Subsidiary, and each Partner. The Tax Matters Partner shall use its commercially reasonable efforts to keep each of the Class A Partners (for so long as each of them is a Partner) reasonably and contemporaneously apprised of any material development of any Partnership Tax Audit. Subject to Section 12.03(c) below, all expenses incurred in connection with any Partnership Tax Audit shall be borne by the Partnership. Further, in the event that any settlement, agreement, resolution or other binding arrangement of or with respect to any Partnership Tax Audit that could have either a material adverse effect on the Partnership for and/or in respect of any Pre-Interim Closing Tax Period (as defined in the Contribution Agreement) or a material adverse effect on any of the Individual Partners for and/or in respect of any Pre-Interim Closing Tax Period, then the Tax Matters Partner may not enter into, consummate and/or undertake any such settlement, agreement, resolution or other binding arrangement without each PrinceRidge Managers prior written consent (not to be unreasonably withheld, conditioned or delayed). Each Partner shall fully cooperate with (including, without limitation, by promptly furnishing to the Tax Matters Partner such documents, information, certifications, powers of attorney and such other information, and do all things, that the Partners are required to furnish and/or that the Tax Matters Partner shall reasonably request in connection with any Partnership Tax Audit or, otherwise, in connection with the carrying out by the Tax Matters Partner of its authority, powers and duties under this Section 12.03 (and elsewhere hereunder).
(b)(i) The General Partner shall use its commercially reasonable efforts to transmit to each Partner, by no later than April 1st following the end of each fiscal year, such Partners estimated tax information returns (Internal Revenue Service From 1065, Schedule K-1) from the Partnership for such fiscal year (and with such information returns reflecting only such information that the Partnership shall then have in its possession); provided, however, that at least fifteen (15) days prior to the date on which the Partnership transmits the Schedules K-1 to the Partners, the Partnership shall deliver the Schedules K-1 to the PrinceRidge Managers for their review and comment. The Partnership shall take any comments into account in good faith and with respect to which the PrinceRidge Managers shall have made a good faith attempt to provide to the Partnership the relevant tax authority supporting such comment. The Partnership shall deliver final Schedules K-1 to the Partners for any fiscal year by no later than June 30th following the end of such fiscal year.
(ii) The General Partner shall prepare and file, or cause the accountants of the Partnership to prepare and file, a federal information tax return in compliance with Section 6031 of the Code and any required state and local income tax and information returns for each tax year of the Partnership; provided, however, that at least fifteen (15) days
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prior to the date on which any such return is filed, the Partnership shall deliver such return to the PrinceRidge Managers for their review and comment. The Partnership shall take any comments into account in good faith and with respect to which the PrinceRidge Managers shall have made a good faith attempt to provide to the Partnership the relevant tax authority supporting such comment.
(c) Notwithstanding anything herein to the contrary:
(i) all of the expenses incurred or resulting in connection with any Partnership Tax Audit, that occurs on or prior to the second anniversary of the date hereof, for, in respect of and/or pertaining to any tax year ended on or before December 31, 2010 (any of which, a Pre-Closing Partnership Tax Audit) shall be borne by and allocated to, severally and not jointly, each of the Class A Partners on the date hereof (other than IFMI and Daniel Cohen) (each, a PrinceRidge Class A Partner and, collectively, the PrinceRidge Class A Partners), and each such PrinceRidge Class A Partners obligation with respect to such expenses shall not exceed the amount equal to (x) the aggregate amount of such expenses multiplied by (y) a fraction where (A) the numerator is the number of such PrinceRidge Class A Partners Units in the Partnership as of the date on which any applicable expenses are incurred minus any Units purchased by such PrinceRidge Class A Partner since the date hereof, and (B) the denominator is the aggregate number of all of the outstanding PrinceRidge Class A Partners Units in the Partnership immediately following the date hereof (PrinceRidge Class A Partners Expenses); provided, however, that each PrinceRidge Class A Partner shall have the right to satisfy its portion of the PrinceRidge Class A Partners Expenses pursuant to this Section 12.03(c)(i) by delivering to IFMI such number of additional IFMI Equity Interests that, based on the book value at the time of the indemnification claim, equals the aggregate value of such PrinceRidge Class A Partners Expenses (terms used in this sentence without definition having the meanings assigned to them in the Contribution Agreement); and
(ii) with regard to any Pre-Closing Partnership Tax Audit, the PrinceRidge Managers or their designated representative shall serve as the Tax Matters Partner of the Partnership, the Company and any Partnership Subsidiary and shall use their commercially reasonable efforts to keep IFMI reasonably and contemporaneously apprised of any material development of any Pre-Closing Partnership Tax Audit. Further, in the event that any settlement, agreement, resolution or other binding arrangement of or with respect to any Pre-Closing Partnership Tax Audit that could have either a material adverse effect on the Partnership for and/or in respect of any Post-Interim Closing Tax Period (as defined in the Contribution Agreement) or a material adverse effect on IFMI for and/or in respect of any Post-Interim Closing Tax Period, then the Partnership may not enter into, consummate and/or undertake any such settlement, agreement, resolution or other binding arrangement without IFMIs prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) The Partnership shall indemnify any Partner for any interest and penalties required to be paid by such Partner resulting from any adjustments made by a taxing authority to any federal, state, local or foreign tax return of the Partnership; provided that any Partner that serves as the Tax Matters Partner with respect to the period involving such adjustment shall not be entitled to any such indemnification to the extent such interests and penalties arise as a result of the gross negligence, bad faith or willful misconduct of such Tax Matters Partner.
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(e) The PrinceRidge Class A Partners shall, at their expense, be responsible for the preparation and timely filing of any tax return of the Partnership or a Partnership Subsidiary for any tax year ended on or before December 31, 2010, provided that prior to filing any such tax return the PrinceRidge Class A Partners provide it to IFMI.
Section 12.04 Partner Basis. Upon request of the General Partner, each Partner agrees to provide to the General Partner information regarding its adjusted tax basis in its Units along with documentation substantiating such amount.
Section 12.05 Tax Election. The General Partner may cause the Partnership to make or revoke any tax election which the General Partner deems appropriate, including an election under Section 754 of the Code.
Section 12.06 Books and Records; Access; Auditors.
(a) The General Partner shall cause to be kept complete and accurate books of account and records with respect to the Partnerships business. Partnership information, including without limitation Profit Units and Equity Units, shall be kept confidential except as permitted by the General Partner or required to be disclosed by judicial or administrative process or by regulatory authority or other requirement of law (including federal securities laws) or directive of any governmental authority or stock exchange.
(b) The Partnerships books and records shall be available for inspection and copying by the Active Partners or their duly authorized representatives during normal business hours upon prior written request solely to the extent reasonably related to such Active Partners economic interest in the Company. The Partnerships books and records shall be available for inspection and copying by IFMI and its duly authorized representatives at any time. The Partnerships books and records (other than books required to maintain Capital Accounts) shall be maintained in accordance with GAAP.
(c) The Partnerships independent auditors shall be such independent accounting firm as may be selected from time to time by the General Partner, and, initially, shall be Grant Thornton LLP.
ARTICLE XIII
Restrictive Covenants
Section 13.01 Confidentiality.
(a) Subject to the terms of any Supplementary Agreements, each Limited Partner acknowledges and agrees that such Limited Partner will have access to Confidential Information from time to time. Each Limited Partner further recognizes that the Business operates in a highly competitive marketplace and that the success of the Business in the marketplace depends upon its goodwill and sound reputation as well as that of the Class A
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Partners. Each Limited Partner recognizes that, in order to protect the legitimate interests of the Business, it is necessary for the Partnership to preserve and protect all such Confidential Information.
(b) Each Limited Partner agrees and acknowledges that, while a Limited Partner and after becoming a Former Partner, without limitation in time, any and all Confidential Information shall be considered and kept as the private and privileged records of the Person to which such Confidential Information relates and shall not be divulged to any Person, firm, corporation, or other entity by a Limited Partner, except:
(i) as requested or required to be disclosed by judicial or administrative process or by regulatory or supervisory authority or other requirement of law or of a recognized stock exchange or directive of any governmental authority; or
(ii) with the written consent of the General Partner.
(c) Except as required by law, rule, regulation or stock exchange requirements, each Partner agrees that, upon withdrawal from the Partnership for any reason whatsoever, such Partner will use commercial reasonable efforts to surrender to the Partnership any and all documents or records, whether original or a copy, regardless of form, whether written, electronic or otherwise recorded, which have been prepared, received or otherwise obtained by such Partner.
(d) Except as the General Partner authorizes in writing or as required by law, the terms of this Agreement and a Limited Partners Supplementary Agreement(s) shall not be disclosed to anyone; provided, that, a Limited Partner may disclose this Agreement and such Limited Partners Supplementary Agreement to such Limited Partners spouse and legal and financial advisors.
(e) In the event that a Limited Partner is required by law to disclose any Confidential Information, such Limited Partner shall promptly notify the General Partner in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure.
Section 13.02 Employee/Partner Non-Solicit and Non-Hire. Subject to the terms of any Supplementary Agreements, during the period beginning on the date that a Limited Partner is admitted to the Partnership until the end of the Restricted Period, the Limited Partner and such Limited Partners Associated Partners, if any, shall not, directly or indirectly, either alone or jointly with or on behalf of any third party, whether on such Partners own account or as a principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, in any manner solicit or induce the resignation of any partner, member or employee, or hire, or assist any other person in hiring, any person who is or was a partner, member or employee of any Management Group Entity or Affiliate thereof during the twelve (12) month period preceding the Limited Partners Termination Date; provided, however, that this Section 13.02 shall not restrict the ability of IFMI or Daniel G. Cohen to solicit or hire, or assist any other person in hiring, any person who is or was an employee whose compensation is or was subject to the Reimbursement Agreement (as defined in the Contribution Agreement).
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Section 13.03 Non-Interference. No Limited Partner or Former Partner shall at any time, directly or indirectly, on behalf of himself or herself or any other Person, in any way willfully at any time interfere or attempt to interfere in any material respect with the relationships between the Business and any of its clients, investors, financing sources, capital market intermediaries, partners or members.
Section 13.04 Non-Disparagement. Each Limited Partner or Former Partner shall not, and shall use its reasonable best efforts to ensure that its Affiliates and its and the respective Affiliates representatives do not, at any time make, publish or communicate, directly or indirectly, in writing, orally, by electronic means or otherwise, directly or indirectly, to any Person, (i) any Disparaging remarks, comments or statements concerning the business, affairs, personnel, investors, investments, activities or any other matter relating to any Management Group Entity or Affiliate thereof, any other Partner, or any client, or (ii) any remarks, comments or statements concerning any aspect of the termination of such Limited Partners relationship with the Business; provided that this Section 13.04 shall not apply to truthful statements made in or in connection with any legal proceeding or governmental or regulatory proceeding, investigation, inquiry or filing. Disparaging remarks, comments or statements are those that impugn the character, honesty, integrity, morality, or business acumen or abilities, in connection with any aspect of the operation of the business of the individual or entity being disparaged.
Section 13.05 Communication with the Press and the Public.
(a) Subject to Section 13.11 and the terms of any Supplementary Agreement, each Limited Partner or Former Partner shall not, and shall procure that its Affiliates and its and the respective Affiliates representatives do not, publish or make any statement, whether verbal, written or by electronic means, directly or indirectly, to any member of the press (whether or not such statement is attributed to such Limited Partner or Former Partner or its respective Affiliates) or to the public (including without limitation at any conference or seminar) concerning the Business or any other matter relating to the Management Group Entities or their Affiliates (whether or not such statements contain Confidential Information) without prior written approval from the General Partner.
(b) Subject to Section 13.11, each Limited Partner or Former Partner shall not, and shall procure that its Affiliates and its and the respective Affiliates representatives do not, publish, disseminate, or contribute to the publication or dissemination as an author or source, in any book, periodical, article, or other medium, any information regarding the Business, the Class A Partners, any other Partner or regarding such Limited Partners or Former Partners or its respective Affiliates experiences with the Business, the Class A Partners or any other Partners, without the prior written consent of the General Partner.
(c) Nothing contained in this Section 13.05 shall prevent a Limited Partner from identifying itself as a limited partner of the Partnership and disclosing a general description of such Limited Partners role in connection with the Partnership, subject to Section 13.01.
(d) For the avoidance of doubt, this Section 13.05 shall not limit such Limited Partners ability to perform such Limited Partners Day-to-Day Responsibilities.
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Section 13.06 Regulatory Matters. No Limited Partner shall take any action that would subject the Management Group Entities to regulation under the Bank Holding Company Act of 1956, as amended.
Section 13.07 Work Product. All ideas, inventions, discoveries, systems, interfaces, protocols, concepts, formats, suggestions, creations, developments, arrangements, designs, programs, products, processes, investment strategies, materials, valuation models, risk management tools, portfolio optimization tools, computer programs or software, databases, improvements or other properties related to the business of the Partnership and its controlled Affiliates conceived, made or developed while a Limited Partner is associated with the Partnership or any of its controlled Affiliates, whether conceived by such Limited Partner alone or working with others, and whether patentable or not (the Work Product), shall be owned by, and belong exclusively to, the Partnership or its relevant Affiliate. Work Product shall not include (i) any generalized ideas, concepts, knowledge, methods, techniques, skills, processes or know-how gained or learned by, or otherwise retained in the memory of such Limited Partner; (ii) any information that, prior to being conceived, made or developed by such Limited Partner, was publicly available or was generally known in the investment management industry, including any works or elements in the public domain; or (iii) ideas, inventions, discoveries, systems, interfaces, protocols, concepts, formats, suggestions, creations, developments, arrangements, designs, programs, products, processes, investment strategies, materials, valuation models, risk management tools, portfolio optimization tools, computer programs or software, databases, improvements or other properties related to the businesses of IFMI or its Affiliates (other than the Management Group Entities) that are not Competing Businesses (as defined in the Contribution Agreement). Any such Limited Partner shall assign to the Partnership such Limited Partners entire rights to the Work Product and agree to execute any documents and take any action reasonably requested by the General Partner to protect the rights of the Partnership or its relevant Affiliate in any Work Product. Any copyrightable subject matter created by a Limited Partner within the scope of such Limited Partners responsibilities to the Partnership and its controlled Affiliates, whether containing or involving Confidential Information or not, shall be deemed a work-made-for-hire under Chapter 17 of the United States Code, entitled Copyrights, and the Partnership or its relevant Affiliate shall be deemed the author and owner thereof for any purposes whatsoever. In the event of any unauthorized publication of any Confidential Information, the Partnership or its relevant Affiliate shall automatically own the Copyright in such publication.
Section 13.08 Partnership Property. All memoranda, lists, notes, charts, graphs, records, models, strategies, tools and other documents or papers (and all hard or electronic copies or summaries thereof) relating to the Partnership or any of its Affiliates, including but not limited to information relating to Confidential Information, whether written or stored on an electronic media system, made or compiled by a Partner, or on behalf of a Partner, or made available to an Partner related to the Partnership or any of its Affiliates shall be the property of the Partnership or such Affiliate, as the case may be, and shall, unless otherwise agreed to by the General Partner or in the case of IFMI, unless the retention of which is required by applicable laws, rules, regulations or stock exchange requirements or unless otherwise agreed to by the then current PrinceRidge Managers, be delivered to the Partnership promptly upon the withdrawal of such Partner from the Partnership or sale of such Partners interest in the Partnership, or at any other time upon request. In the case of electronically stored property, a Partner shall, unless the
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retention of which is required by applicable laws, rules, regulations or stock exchange requirements, make all reasonable efforts to destroy such property within five (5) days after such Partners Withdrawal Date or the date of such sale and at any other time upon the request of the General Partner, or in the case of IFMI, upon the request of the then current PrinceRidge Managers.
Section 13.09 Service on Company Board of Directors or Employment by Other Financial Services Entity. An Active Partner shall not, without the prior written consent of the General Partner (i) serve as a member of the board of directors or equivalent position of any corporation or other company or (ii) receive compensation for services provided, in any capacity, from any other financial services company.
Section 13.10 Acknowledgements Related to Restrictive Covenants. Each Limited Partner acknowledges that the terms of the Restrictive Covenants, including, without limitation, the duration of the Restricted Period, are reasonable and necessary in view of the nature of the business in which the Partnership is engaged because the Partnerships business is global in scope and given such Limited Partners position with the Partnership and such Limited Partners knowledge of the Partnerships business. Each Limited Partner recognizes that the amount of such Limited Partners compensation and/or economic interest in the Partnership and relationship to the Partnerships Affiliates justifies such Limited Partners agreements set forth in the Restrictive Covenants. Each Limited Partner agrees that any harm to such Limited Partner caused by the enforcement of the Restrictive Covenants will be outweighed by the harm to the Partnership should the Restrictive Covenants not be enforced.
Section 13.11 Disclosures of IFMI Parent. Notwithstanding anything to the contrary contained herein, disclosures contained in any document filed with or submitted to the Securities and Exchange Commission or the Financial Industry Regulatory Authority, and disclosures made in connection with the filing or submission of any such document, by IFMI Parent and/or any of its subsidiaries shall be deemed not to be a violation by IFMI of any provision of this Article XIII. IFMI shall notify the Board before making any such disclosures.
ARTICLE XIV
Miscellaneous
Section 14.01 Entire Agreement. This Agreement and, with reference to a Limited Partner that has entered into a Supplementary Agreement, such Supplementary Agreement, supersede any and all existing agreements, oral or written, between or among the Partnership and the other Limited Partners, with respect to the Partnership.
Section 14.02 Amendments of Agreement. Any amendment to this Agreement shall be made by the General Partner in accordance with Section 4.09 of the Operating Agreement; provided, that to the extent no Person qualifies at any time as a Qualifying PrinceRidge Individual Partner, any amendment to this Agreement that is materially adverse to the interests of any Individual Partner shall require the written consent of such Partner.
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Section 14.03 Further Actions. Each Partner shall execute and deliver such other certificates, agreements and documents, and take such other actions, as may reasonably be requested by the Partnership in connection with the achievement of its purposes or to give effect to the provisions of this Agreement and any Supplementary Agreement, in each case as are not inconsistent with the terms and provisions of this Agreement, including any documents that the General Partner determines to be necessary or appropriate to form, qualify or continue the Partnership as a limited partnership in all jurisdictions in which the Partnership conducts or plans to conduct its investment and other activities and all such agreements, certificates, tax statements and other documents as may be required to be filed by or on behalf of the Partnership.
Section 14.04 Applicable Law. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Delaware, without reference to its choice of law rules, and, without limitation thereof, that the Act as now adopted or as may be hereafter amended shall govern this Agreement.
Section 14.05 Counterparts. Counterparts may be executed through the use of separate signature pages (or other agreement, including a Supplementary Agreement, acceptable to the General Partner) or in any number of counterparts with the same effect as if the parties executing such counterparts had all executed one (1) counterpart; provided, however, that each such counterpart shall have been executed by the General Partner.
Section 14.06 Successors and Assigns. This Agreement shall inure to the benefit of each Partner and the executors, administrators, estates, heirs, legal successors and representatives and, if approved in accordance with this Agreement, transferees of the Partners.
Section 14.07 No Waiver. The failure of a party to insist upon strict adherence to any term or provision of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or provision or any other term or provision of this Agreement.
Section 14.08 Survival. Article VIII, Sections 14.04, 14.06, 14.08, 14.09, 14.10, 14.11, 14.12, 14.13 and 14.14, shall survive a Limited Partners withdrawal as a Limited Partner of the Partnership and any termination of this Agreement. A Limited Partners Supplementary Agreement shall also terminate upon such Limited Partners withdrawal as a Limited Partner of the Partnership and any termination of this Agreement, except as expressly provided in such Supplementary Agreement.
Section 14.09 Notices. Each notice relating to this Agreement shall be in writing and shall be delivered (a) in person, by registered or certified mail or by private courier or (b) by facsimile or other electronic means, confirmed by telephone. All notices to any Partner shall be delivered to such Partner at the address of such Partner as set forth in the records of the Partnership. All notices to the Partnership shall be delivered to the Partnership at its principal office and place of business. Any Partner may designate a new address for notices by giving written notice to that effect to the Partnership. The Partnership may designate a new address for notices by giving written notice to that effect to each of the Partners. A notice given in accordance with the foregoing clause (a) shall be deemed to have been effectively given three (3)
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Business Days after such notice is mailed by registered or certified mail, return receipt requested, and one (1) Business Day after such notice is sent by Federal Express or other one (1)-day service provider, to the proper address, or at the time delivered when delivered in person or by private courier. Any notice by facsimile or other electronic means shall be deemed to have been effectively given when sent and confirmed by telephone in accordance with the foregoing clause (b).
Section 14.10 Dispute Resolution. Except as otherwise provided in this Agreement, all disputes arising under this Agreement will be resolved by arbitration in New York, New York by a single arbitrator; provided that if the parties to the dispute cannot agree on a single arbitrator within thirty (30) days, the matter will be submitted to JAMS in New York, New York for arbitration before a single arbitrator from the JAMS list, and pursuant to JAMS Comprehensive Arbitration Rules and Procedures. The fee of the arbitrator(s) will be split equally between the complainant(s) and the respondent(s). Each party will otherwise bear its own costs and attorneys fees, subject to the payment of any indemnification to which a party may be entitled. The arbitrators award will be final and binding upon such Partner and the Partnership, and judgment upon the award may be entered in any state or federal court of competent jurisdiction in New York State, or application may be made to such court for a judicial acceptance of the award and an enforcement as the law of such jurisdiction may require or allow. Nothing in this Agreement shall restrict the ability of any party hereto to provide factual testimony during such proceedings. Notwithstanding the preceding provision, the Partnership may seek injunctive relief from a court of competent jurisdiction in the event of a threatened or actual breach of Article XIII hereof.
Section 14.11 Injunctive Relief.
(a) In the event of a dispute, any Partner may apply to the arbitrator or arbitrators referred to in Section 14.10 to seek preliminary and/or permanent injunctive relief, including, without limitation, to present or address a breach or possible breach of any Restrictive Covenant. Any party to this Agreement also may, without waiving any remedy under this Agreement, seek from any court of competent jurisdiction any injunctive, interim or provisional relief, including, without limitation, to present or address a breach or possible breach of any Restrictive Covenant, to protect the rights or property of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunals determination of the merits of the controversy).
(b) It is specifically understood and agreed that any breach of any terms of any Restrictive Covenant is likely to result in irreparable injury to the Management Group Entities and clients and that any remedy at law alone will be an inadequate remedy for such breach, and that, in addition to any other remedy it may have, any of the Management Group Entities shall be entitled to enforce the specific performance of this Agreement by a Limited Partner and to seek both temporary and permanent injunctive relief thereof (to the extent permitted by law), and other equitable remedies, without the necessity of proving actual damages or posting a bond or other security.
Section 14.12 Choice of Venue. Subject to Section 14.10 and Section 14.11, each Partner hereby consents to the nonexclusive jurisdiction of the courts of the State of New
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York or any federal court sitting in the City of New York, and hereby waives, and agrees not to assert by way of motion, as a defense or otherwise, in any such action or proceeding, any claim that such Limited Partner is not personally subject to the jurisdiction of the above-named courts, that the action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the provisions of this Agreement may not be enforced in or by such courts.
Section 14.13 Enforceability. If any provision of this Agreement shall be deemed invalid or unenforceable as written, it shall be construed, to the greatest extent possible, in a manner that shall render it valid and enforceable, and any limitations on the scope or duration of any such provision necessary to make it valid and enforceable shall be deemed to be part thereof, and no invalidity or unenforceability of any provision shall affect any other portion of this Agreement unless the provision deemed to be so invalid or unenforceable is a material element of this Agreement, taken as a whole.
Section 14.14 Judicial Modification. If at any time any of the provisions of Article XIII or any other Section of this Agreement shall be deemed invalid or unenforceable or are prohibited by the laws of the jurisdiction where they are to be performed or enforced, by reason of being vague or unreasonable as to duration or geographic scope or scope of activities restricted, or for any other reason, such provisions shall be considered divisible and shall become and be immediately amended to include only such restrictions and to such extent as shall be deemed to be reasonable and enforceable by the court, arbitrator or other body having jurisdiction over this Agreement, and the Partnership and each Limited Partner agree that such provisions, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included in this Agreement.
Section 14.15 Legal Proceedings. Any action, claim or proceeding by any Partner or the Company, the Partnership or their subsidiaries, on the one hand, against any other Partner or the Company, the Partnership or their subsidiaries, on the other hand, shall be brought before an arbitrator, the determinations of which shall be binding on the parties to such action, claim or proceeding. Each party to such action, claim or proceeding shall pay its own costs and expenses (including, without limitation, all fees of such partys legal counsel); provided, that, to the extent any Individual Partner is a defendant in such an action, claim or proceeding, the costs and expenses (including, without limitation, all fees of such partys legal counsel) of such Individual Partner shall be paid in advance by the Partnership as such costs and expenses are incurred by such Individual Partner, but if such binding arbitration is determined against the Individual Partner pursuant to a final, non-appealable order of such arbitrator, such Individual Partner shall reimburse the Partnership for all advanced costs and expenses (including, without limitation, all fees of such Individual Partners legal counsel); provided further, that, to the extent an Individual Partner instigates such action, claim or proceeding, and the binding arbitration is determined in favor of such Individual Partner pursuant to a final, non-appealable order of such arbitrator, the Partnership shall reimburse such Individual Partner for his or her costs and expenses (including, without limitation, all fees of such Individual Partners legal counsel).
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date set forth above.
GENERAL PARTNER: PRINCERIDGE PARTNERS LLC | ||
By: |
/s/ John P. Costas | |
Name: John P. Costas | ||
Title: Managing Member | ||
By: |
/s/ Michael T. Hutchins | |
Name: Michael T. Hutchins | ||
Title: Managing Member | ||
LIMITED PARTNERS: | ||
/s/ Ahmed A. Alali | ||
Ahmed A. Alali | ||
/s/ John P. Costas | ||
John P. Costas | ||
/s/ Colette C. Dow | ||
Colette C. Dow | ||
/s/ Ronald J. Garner | ||
Ronald J. Garner | ||
/s/ Michael T. Hutchins | ||
Michael T. Hutchins | ||
/s/ Matthew G. Johnson | ||
Matthew G. Johnson |
[Signature Page Fourth Amended and Restated Limited Partnership Agreement]
/s/ Daniel G. Cohen | ||
Daniel G. Cohen | ||
IFMI, LLC | ||
By: | /s/ Daniel G. Cohen | |
Name: | Daniel G. Cohen | |
Title: | Chief Executive Officer and Chief Investment Officer |
[Signature Page to Fourth Amended and Restated Limited Partnership Agreement]
Each other Person who shall sign a Supplementary Agreement in the form attached hereto or other form acceptable to the General Partner and who shall be accepted in writing by the General Partner as a Limited Partner
[Signature Page to Fourth Amended and Restated Limited Partnership Agreement]
Appendix A
Name: (the Limited Partner)
Date: [ ], 2011
Amended and Restated Supplementary Agreement
PrinceRidge Holdings LP Class A Limited Partner
PrinceRidge Partners LLC Member
This amended and restated supplementary agreement (this Supplementary Agreement) to the Fourth Amended and Restated Limited Partnership Agreement (the Partnership Agreement) of PrinceRidge Holdings LP (the Partnership), dated as of [ ], 2011, and the Fourth Amended and Restated Limited Liability Company Agreement (the LLC Agreement, and together with the Partnership Agreement, the Agreements) of PrinceRidge Partners LLC (the Company), dated as of [ ], 2011, reflects the agreements with respect to certain matters concerning the rights of the Limited Partner with respect to the Partnership and the Company. [This Supplementary Agreement amends and restates the Supplementary Agreement of the Limited Partner dated February 1, 2009 and shall replace and supersede any other supplementary agreement executed between the Limited Partner and the Partnership or the Company, other than the Limited Partners Executive Agreement executed [as of the date hereof] in connection with the Agreements.]
The Limited Partner hereby agrees that, subject to acceptance in writing by the Company and the Managing Members by counter-signature of this Supplementary Agreement, effective as of the date specified above the undersigned shall become and be a party to this Supplementary Agreement.
This Supplementary Agreement is made and entered into as of the date set forth above by and among the undersigned and shall hereafter govern the Limited Partners interest in the Partnership, as provided in the Partnership Agreement and this Supplementary Agreement, and in the Company, as provided in the LLC Agreement and this Supplementary Agreement.
All capitalized terms used but not defined herein shall have the meanings given to such terms in the Partnership Agreement or the LLC Agreement, as applicable. While this Supplementary Agreement is written as a single agreement for the convenience of the parties, for the avoidance of doubt, the obligations of the Partnership on the one hand, and the Company on the other hand, are several and not joint. The Partnership shall not be responsible for any obligations of the Company with respect to the Limited Partner and the Company shall not be responsible for any obligations of the Partnership with respect to the Limited Partner.
1. Date of Admission.
(a) With respect to the Partnership: January 28, 2008
(b) With respect to the Company: January 28, 2008
2. Classes of Interests.
(a) With respect to the Partnership: Limited Partner, Class A Interest
(b) With respect to the Company: Member
3. Title. Pursuant to the Executive Agreement.
4. Day-to-Day Responsibilities. Pursuant to the Executive Agreement.
5. Guaranteed Payment. Pursuant to the Executive Agreement.
6. Termination Payment. Pursuant to the Executive Agreement
7. Profit Share (subject to change, as provided in the Partnership Agreement and the LLC Agreement).
(a) Profit Units.
(i) With respect to the Partnership: [ ] Profit Units.
(ii) With respect to the Company: [ ] Profit Units.
(b) Sources.
(i) With respect to the Partnership: All
(ii) With respect to the Company: All
8. Equity Share (participation in Sale Proceeds, subject to change, as provided in the Partnership Agreement and the LLC Agreement).
(a) Equity Units.
(i) With respect to the Partnership: [ ] Equity Units.
(ii) With respect to the Company: [ ] Equity Units.
(b) Threshold Value.
(i) With respect to the Partnership: [ ].
(ii) With respect to the Company: [ ].
9. Subscription Commitment: As of the date hereof, $[ ] has been contributed by the Limited Partner.
10. Pari Passu Treatment of Members/Class A Partners Regarding Units. Subject to Section 7.03 of the Partnership Agreement and Section 7.03 of the LLC Agreement and adjustments for Tax Distributions, distributions on Units held by the Limited Partner shall be made to the Limited Partner pro rata and pari passu with the other Class A Partners; provided, that, if the Company or Partnership makes a distribution in kind to the Limited Partner, the Company and the Partnership shall not distribute to the Limited Partner more than the Limited Partners proportionate share of the securities or assets distributed to all Class A Partners. For the avoidance of doubt, in the case of a repurchase of the Limited Partners Units, the Limited Partner shall be entitled to receive cash for such Units, except in the case of a Monetization Event, in which case the Limited Partner shall receive the same type of consideration in the same proportions as the other Class A Partners (whether cash, securities or other assets).
11. Tax Distributions. (a) Tax Distribution means an amount of cash equal to the difference between the Limited Partners Presumed Tax Liability and the amount of cash distributed to the Limited Partner by the Partnership for such Fiscal Year. Presumed Tax Liability for the Limited
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Partner for any Fiscal Year means an amount equal to the product of (A) the amount of U.S. federal, state and local taxable income allocated to the Limited Partner by the Partnership for the prior Fiscal Year and (B) the Presumed Tax Rate as of December 31 of such prior Fiscal Year. Presumed Tax Rate means the effective combined federal, state and local income tax rate applicable to a natural person residing in New York, New York, taxable at the highest marginal federal income tax rate and the highest marginal New York State and New York City income tax rates (taking into account the character of such income and after giving effect to the federal income tax deduction for such state and local income taxes and disregarding the effects of Internal Revenue Code Sections 67 and 68).
(b) Notwithstanding anything in the Agreements to the contrary, commencing in the first full Fiscal Year following the Limited Partners Termination Date, the Limited Partner shall have the right, but not the obligation, to receive, with respect to each such Fiscal Year, a Tax Distribution from the Limited Partners Capital Account in an amount equal to the Limited Partners Presumed Tax Liability, based upon a Presumed Tax Rate of no less than thirty-five percent (35%). Each such Tax Distribution shall be made no later than the first business day of the month of April following the applicable Fiscal Year.
12. Issuance of Additional Units. To the extent that a Limited Partners share of Net Income for a Fiscal Year is not distributed to the Limited Partner by the first business day of the month of April of the following Fiscal Year but distributions of Net Income for such Fiscal Year are made to other Limited Partners by that date (other than Tax Distributions and deemed distributions in connection with withholding taxes pursuant to Section 7.02(f) of the Agreements), the Limited Partners share of Net Income for such Fiscal Year shall be deemed to have purchased additional Profit Units and Equity Units on behalf of the Limited Partner as of the first day of such following Fiscal Year.
13. Look-Back Participation in Sale Proceeds. So long as an event constituting Cause had not occurred with respect to the Limited Partner, if (i) the Limited Partners Units are repurchased by the Company or the Partnership (other than at the request of the Limited Partner), and (ii) a Sale Transaction or Monetization Event closes on or prior to the 12-month anniversary of any such repurchase, the Limited Partner shall be entitled to participate in the Sale Proceeds from such Sale Transaction or Monetization Event to the same extent as if the Limited Partner held the same number of Units as of such closing date as the Limited Partner held on the day prior to the date of the relevant repurchase (adjusted for any subsequent increase or decrease in Units to which all Class A Partners were subject).
14. Access to Books and Records. After the Limited Partners Termination Date and until the 90th day after delivery to the Limited Partner of the annual audit of the Partnership for the Fiscal Year in which the Limited Partners Withdrawal Date occurs, the Limited Partner shall have the right to (a) inspect and copy books and records of the Company and the Partnership at reasonable times for purposes solely related to confirming the Limited Partners economic interest in the Company and the Partnership and (b) receive financial statements and similar summary or aggregated financial information of the Company and the Partnership (Summary Information); provided, that, such Limited Partner shall not be permitted to inspect or have copies of business records that relate to the day-to-day activities or trade secrets of the Business (Proprietary Information); provided, further, if the Limited Partner believes that the Summary Information is insufficient to verify such Limited Partners economic interest in the Company or the Partnership, the Company and the Partnership shall permit an independent accounting firm, paid by the Limited Partner, to review the books and records of the Company and the Partnership on behalf of the Limited Partner for the purpose of verifying the Limited Partners economic interest in the Company and the Partnership, so long as such independent accounting firm has entered into a confidentiality agreement satisfactory to the Company and agrees that it shall not disclose the details of any Proprietary Information to the Limited Partner or, except in customary legal or regulatory circumstances, to any other party.
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15. Amendments to LLC Agreement or Partnership Agreement. The Company shall not, without the Limited Partners written consent, amend the LLC Agreement or the Partnership Agreement in any manner that reduces the rights or increases the obligations of the Limited Partner with respect to the Units held by the Limited Partner or under this Supplementary Agreement.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date set forth above.
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[Name] | ||
PRINCERIDGE PARTNERS LLC | ||
By: |
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Name: | ||
Title: | ||
PRINCERIDGE HOLDINGS LP | ||
By: |
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Name: | ||
Title: | ||
By: |
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Name: | ||
Title: |
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Exhibit 10.3
EXECUTION VERSION
TERMINATION AND SEPARATION AGREEMENT
TERMINATION AND SEPARATION AGREEMENT, dated as of May 31, 2011 (the Agreement), by and among IFMI, LLC, a Delaware limited liability company (IFMI), PrinceRidge Holdings LP, a Delaware limited partnership (PrinceRidge), and PrinceRidge Partners LLC, a Delaware limited liability company (PrinceRidge GP and together with PrinceRidge, the PrinceRidge Entities). Reference is made to (i) that certain Contribution Agreement, dated as of April 19, 2011 (the Contribution Agreement), by and among IFMI, PrinceRidge and PrinceRidge GP, (ii) the Fourth Amended and Restated Limited Partnership Agreement of PrinceRidge Holdings LP, dated as of May 31, 2011 (the Partnership Agreement), and (iii) the Fourth Amended and Restated Limited Liability Company Agreement of PrinceRidge Partners LLC, dated as of May 31, 2011 (the Operating Agreement).
WHEREAS, pursuant to the Contribution Agreement, the parties hereto have (i) consummated one or more Transactions and (ii) executed and delivered one or more Ancillary Agreements;
WHEREAS, pursuant to the Contribution Agreement, (i) the PrinceRidge Group submitted a CMA with FINRA in connection with the proposed change in control effectuated upon the consummation of the Transactions and (ii) CCCM submitted a CMA with FINRA in connection with the proposed change in control effectuated upon the consummation of the Transactions (collectively, the CMAs); and
WHEREAS, in the event that FINRA denies its Consent to any one of the CMAs after the consummation of the Interim Closing, the Parties have determined that, as a consequence thereof: (a) IFMI must withdraw from PrinceRidge and PrinceRidge GP, the IFMI Equity Interests must be returned to the PrinceRidge Entities, and the PrinceRidge Entities must return the Contributed Assets to IFMI, including in particular the CCCM Equity Interests; (b) each of the Executive Agreements must be terminated; (c) the Constituent Documents of the PrinceRidge Entities must be amended and restated to restore such Constituent Documents to the form of such Constituent Documents prior to the consummation of the Interim Closing; and (d) each party must take any other actions reasonably determined by the parties to be necessary to effect the intent of this Agreement (collectively, the Termination and Separation Events);
NOW, THEREFORE, in consideration of the promises and the mutual covenants and provisions herein set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, upon the terms and subject to the conditions contained herein, and intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Contribution Agreement.
ARTICLE II
TERMINATION
Section 2.01 Termination of the Contribution Agreement. Following the receipt of a notification by any party hereto that FINRA has denied its Consent to either of the CMAs (the Termination Date), the parties hereto acknowledge and agree that the Contribution Agreement shall, subject to the survival of certain provisions pursuant to Section 2.02, be deemed automatically terminated, effective as of the Interim Closing Date. For purposes of this Agreement, the period of time beginning on the Termination Date and ending on the date on which the Separation (as defined below) is complete is referred to as the Termination Period. Each party shall be responsible for all costs and expenses incident to its negotiation and preparation of the Contribution Agreement and to its performance and compliance with all agreements and conditions contained herein or therein.
Section 2.02 Survival of Certain Provisions Under the Contribution Agreement. Sections 5.5 and Article 11 of the Contribution Agreement shall survive the termination of the Contribution Agreement. The Confidentiality Agreement shall survive the termination of the Contribution Agreement.
Section 2.03 Status Quo Ante. The parties hereto agree that the intent and purpose of this Agreement and the Termination and Separation Events is to return each of the parties, to the extent commercially practicable and possible, to its status quo ante as of immediately prior to the Interim Closing Date. Further, the parties hereto hereby agree to use their reasonable best efforts to implement and effectuate the Termination and Separation Events in a manner that would not result in the recognition by, and/or allocation to, either party of any (or as little as possible) taxable income or gain for United States federal, state, local and foreign tax purposes (and shall cause IFMI and each PrinceRidge Entity to) report the Termination and Separation Events consistently with this treatment for all Tax and Tax Return purposes.
ARTICLE III
WITHDRAWAL AND SEPARATION
Section 3.01 IFMI Withdrawal and Separation.
(a) Beginning on the Termination Date, each of the parties hereto shall, and shall cause its respective Affiliates to, as promptly as practicable, (i) effect the withdrawal of IFMI from each of PrinceRidge and PrinceRidge GP pursuant to Section 8.01(d) of the Partnership Agreement and the Operating Agreement, respectively, (ii) effect the return of the IFMI Equity Interests to the PrinceRidge Entities, and (iii) effect the return of the CCCM Equity Interests and Assumed Liabilities to IFMI from the PrinceRidge Entities or their Subsidiaries (the Separation).
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(b) The parties hereto agree that the valuation of the IFMI Equity Interests for purposes of the Separation shall be calculated as follows: (i) the PrinceRidge Membership Equity, calculated as of the Termination Date, multiplied by (ii) a percentage equal to (A) the number of Equity Interests in the PrinceRidge Entities, respectively, owned by IFMI on the Termination Date, divided by (B) the total number of Equity Interests in the PrinceRidge Entities, respectively, outstanding on the Termination Date (the Separation Amount).
(c) The parties hereto agree that the valuation of CCCM for purposes of the Separation shall be the CCCM Membership Equity calculated as of the Termination Date (Termination Date CCCM Membership Equity).
(d) As promptly as practicable following the Termination Date. the calculation of the Separation Amount and the calculation of the Termination Date CCCM Membership Equity, the parties shall effect the Separation and transfer of the Separation Amount as follows:
(i) in the event that the Termination Date CCCM Membership Equity is less than the Separation Amount, PrinceRidge shall transfer to IFMI: (A) 100% of the CCCM Equity Interests free and clear of all Liens, and (B) cash or cash equivalents in an amount equal to the Separation Amount minus the Termination Date CCCM Membership Equity, or
(ii) in the event that the Termination Date CCCM Membership Equity exceeds the Separation Amount, simultaneously: (A) PrinceRidge shall transfer to IFMI 100% of the CCCM Equity Interests free and clear of all Liens, and (B) IFMI shall transfer to the PrinceRidge Entities cash or cash equivalents in an amount equal to the Termination Date CCCM Membership Equity minus the Separation Amount.
Section 3.02 Further Actions. In connection with the Separation and concurrent with the actions set forth in Section 3.01, as promptly as practicable following the Termination Date, as applicable at the time of Separation:
(a) IFMI shall, or shall cause its Affiliates to, assume from the PrinceRidge Entities any Assumed Liabilities;
(b) IFMI shall cause the IFMI Managers to resign from the Board;
(c) IFMI shall immediately repay any loan amount, if any, outstanding pursuant to Section 5.05 of the Partnership Agreement and Operating Agreement, respectively; and
(d) IFMI and the PrinceRidge Entities shall terminate the Reimbursement Agreement.
Section 3.03 Employees.
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(a) As of the Termination Date, (i) the employment of each employee of CCCM that was an employee of any of the PrinceRidge Entities and whose employment was transferred from such PrinceRidge Entity to CCCM on or after the Interim Closing Date (each a PrinceRidge Transferee) shall be transferred to a PrinceRidge Entity and (ii) the employment of each Transferring Employee whose employment was transferred from IFMI or CCCM to a PrinceRidge Entity on or after the Interim Closing Date (each a CCCM Transferee) shall be transferred to CCCM. Except for the PrinceRidge Transferees, all employees of CCCM, including employees of CCCM who were hired by CCCM after the Interim Closing Date, shall remain employees of CCCM following the Termination Date (the CCCM Employees).
(b) IFMI or such Affiliate shall assume the responsibilities of any employment arrangement with any CCCM Employee or CCCM Transferee, effective as of the Termination Date. Each CCCM Employee and CCCM Transferee shall be covered under the IFMI Benefit Plans beginning on the Termination Date. To the greatest extent possible, the IFMI Benefit Plans shall recognize each CCCM Employees and CCCM Transferees prior service with CCCM and IFMI and its Affiliates for eligibility and vesting purposes and, in the case of vacation or severance benefits, for purposes of determining the appropriate level of benefits. With respect to any IFMI Benefit Plans, IFMI shall, and shall cause its Affiliates to, to the maximum extent possible under the IFMI Benefit Plans: (a) cause there to be waived any eligibility requirements or pre-existing condition limitations to the same extent waived under comparable PrinceRidge Benefit Plans and (b) give effect, in determining any deductible and maximum out-of-pocket limitations, to amounts paid by such CCCM Employees and CCCM Transferees with respect to comparable PrinceRidge Benefit Plans. IFMI shall grant to all CCCM Employees and CCCM Transferees credit for, and immediately make available to each CCCM Employee and CCCM Transferee, the paid-time off time earned but not yet used by such CCCM Employee and CCCM Transferee as of immediately prior to the Termination Date. Notwithstanding the foregoing, the PrinceRidge Benefit Plans shall retain any and all coverage obligations with respect to any claim for benefits under such plans incurred during the period in which a CCCM Employee or CCCM Transferee was participating in the PrinceRidge Benefit Plans.
(c) The PrinceRidge Entities shall assume the responsibilities of any employment arrangement with each PrinceRidge Transferee, effective as of the Termination Date.
Section 3.04 Ancillary Agreements.
(a) Assignment and Assumption Documents. The parties hereto shall, and shall cause their respective Affiliates to, execute any assignment and assumption agreements or membership or partnership transfer instruments that may be necessary or appropriate in connection with the Assumed Liabilities, effective as of the Interim Closing Date.
(b) Executive Agreements. The parties hereto shall, and shall cause their respective Affiliates to, terminate each of the Executive Agreements effective as of the Interim Closing Date.
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(c) Reimbursement Agreement. The parties hereto shall, and shall cause their respective Affiliates to settle any outstanding amounts owed pursuant to the Reimbursement Agreement as of immediately prior to the Termination Date and terminate the Reimbursement Agreement effective as of the Interim Closing Date.
Section 3.05 Constituent Documents of the PrinceRidge Entities. The parties hereto shall, and shall cause their respective Affiliates to, (a) amend and restate the Constituent Documents of the PrinceRidge Entities as promptly as practicable following the Termination Date, using substantially the same form as the Constituent Document of such PrinceRidge Entity as in effect immediately prior to the Interim Closing, and (b) terminate the IFMI Supplementary Agreement. Such amendment and restatement of the Constituent Documents of the PrinceRidge Entities and termination of the IFMI Supplementary Agreement shall be effective on the last day of the Termination Period and as of the Interim Closing Date.
Section 3.06 Further Assurances. During and after the Termination Period, each of the parties hereto shall cooperate with each other, and execute and deliver, or cause to be executed and delivered, all such other instruments, including instruments of withdrawal, assignment and transfer, and take all such other actions as are necessary or desirable, consistent with the terms of this Agreement, to implement and effectuate the Termination and Separation Events and the other provisions and purposes of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Mutual Representations and Warranties. Each of IFMI, on the one hand, and each of the PrinceRidge Entities, on the other hand, hereby represents and warrants to the other that: (a) it has full power and authority to enter into this Agreement and to perform its obligations hereunder in accordance with the provisions of this Agreement, (b) this Agreement has been duly authorized, executed and delivered by such party, and (c) this Agreement constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity. Each party agrees that no party is in breach or default of the Contribution Agreement, and each party has agreed to the terms of, and has executed, this Agreement without admitting any liability or wrongdoing of any nature.
ARTICLE V
RELEASE
Section 5.01 Mutual Releases. Effective as of the Termination Date, except as set forth in this Agreement (and with respect to any rights hereunder), each of IFMI, on the one hand, and the PrinceRidge Entities, on the other hand, unconditionally, irrevocably and fully releases and forever discharges the other and each of the others Affiliates and Representatives from any and all claims, demands, liens, agreements, contracts, covenants, actions, suits, causes of actions, obligations, controversies, debts, costs, expenses, damages, judgments, orders and
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liabilities of whatever kind or nature, in law or equity, by statute or otherwise, whether now known or unknown, vested or contingent, suspected or unsuspected (collectively, Claims) in connection with the transactions contemplated hereby (collectively, the Released Claims). The consequences of the foregoing waiver have been explained by counsel to each party hereto. Each party hereto acknowledges that it may hereafter discover facts different from, or in addition to, those which it now knows or believes to be true with respect to the Released Claims, and agrees that the releases contained herein shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery thereof. For the avoidance of doubt, the mutual releases described herein shall in no way relieve any part from any duties, obligations, liabilities and actions arising under, or in connection with the Termination and Separation Events or this Agreement.
ARTICLE VI
INDEMNIFICATION
Section 6.01 Indemnification.
(a) IFMI shall indemnify, defend, and hold harmless the PrinceRidge Entities (for the benefit of each of the non-IFMI Partners of PrinceRidge and each of the non-IFMI Members of PrinceRidge GP), and the PrinceRidge Entities shall indemnify, defend, and hold harmless IFMI, with respect to any and all Claims, including all reasonable costs, expenses and attorneys fees incurred in the defense of any and all Claims, arising out of and/or in relation to any actual or alleged breach of this Agreement by such party or any of its successors or assigns. None of the parties hereto shall have any liability to any other party under any provision of this Agreement under any circumstances for punitive, consequential, special or incidental damages, lost profits or diminution in value relating to alleged breach of this Agreement.
(b) IFMI shall indemnify, defend and hold harmless the PrinceRidge Entities (for the benefit of each of the non-IFMI Partners of PrinceRidge and each of the non-IFMI Members of PrinceRidge GP) from and against any and all Losses arising out of or relating to the CCCM Liabilities and the Liabilities assumed by IFMI or its Affiliates referenced in Section 3.02(a) of this Agreement.
(c) The PrinceRidge Entities shall indemnify, defend and hold harmless IFMI and its Affiliates from and against any and all Losses arising out of or relating to any Liabilities retained by the PrinceRidge Entities following the Separation.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. Each party hereto shall pay its own costs and expenses (including all legal, accounting, broker, finder and investment banker fees) relating to this Agreement, the Termination and Separation Events and the Ancillary Agreements.
Section 7.02 Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES AND THE ADJUDICATION AND THE
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ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT JURISDICTION.
Section 7.03 Consent to Jurisdiction. Each party hereto, by its execution hereof, (a) hereby irrevocably submits to the non-exclusive jurisdiction of the State Courts of the State of New York, New York County or the United States District Court located in the State of New York, New York County, for the adjudication of any dispute hereunder of in connection herewith or with the Termination and Separation Events, (b) hereby waives to the extent not prohibited by applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (c) hereby agrees not to commence any such action other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the above-named courts whether on the grounds of forum non conveniens or otherwise. Each party hereby (i) consents to service of process in any such action in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its address specified in the Contribution Agreement, shall constitute good and valid service of process in any such action, and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process.
Section 7.04 Waiver of Jury Trial. The parties each hereby waive trial by jury in any judicial proceeding involving, directly or indirectly, any matters (whether sounding in tort, contract or otherwise) in any way arising out of, related to or connected with this Agreement or the Termination and Separation Events.
Section 7.05 Binding Effect; No Third Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the parties hereto and their respective successors and permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof. This Agreement shall be enforceable solely by the parties hereto. Without the prior written consent of the other parties hereto, this Agreement may not be assigned by any of the parties hereto and any purported assignment made without such consent shall be null and void; provided, that no consent shall be required for any party hereto to assign any or all of its rights and obligations hereunder to a Subsidiary, provided that the transferor remains liable hereunder.
Section 7.06 Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The
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headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the context of this Agreement otherwise requires, (i) words of any gender are deemed to include each other gender, (ii) words using singular or plural number also include the plural or singular, respectively, (iii) the terms hereof, herein, hereby, hereto, and derivative or similar words refer to this entire Agreement, (iv) all references to dollars or $ shall be to United States dollars, (v) the words include, includes or including shall be deemed to be followed by without limitation.
Section 7.07 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by electronic (including portable document format) or facsimile signature.
Section 7.08 Entire Agreement. This Agreement, together with the Contribution Agreement and the other agreements, instruments, certificates and documents executed and delivered in connection therewith, constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, written or oral, between the parties with respect to such subject matter.
Section 7.09 Severability. If any provision of this Agreement, or the application thereof to any Person or circumstance, is invalid or unenforceable in any jurisdiction, (a) a substitute and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable in such jurisdiction, the intent and purpose of their invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability of such provision affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 7.10 Amendments and Waivers. This Agreement may not be amended, altered or modified except by written instrument executed by each of (a) IFMI and (b) the PrinceRidge Managers, who the parties agree will act in place of the PrinceRidge Entities for such purpose. The failure by any party hereto to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of or non-compliance with this Agreement shall be held to be a waiver of any other or subsequent breach or non-compliance. Any waiver made by any party hereto in connection with this Agreement shall not be valid unless agreed to in writing by such party.
Section 7.11 Notice. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or when sent by telecopier (with receipt confirmed); provided, that a copy is also sent by registered mail, return receipt requested, or by courier addressed to the respective address set forth in the Contribution Agreement (or to such other address as a party may designate by notice to the other).
[Signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the parties as of the date first above written.
IFMI, LLC | ||
By: | /s/ Daniel G. Cohen | |
Name: | Daniel G. Cohen | |
Title: | Chief Executive Officer and Chief | |
Investment Officer | ||
PRINCERIDGE HOLDINGS LP | ||
By: | PrinceRidge Partners LLC, its general partner | |
By: | /s/ John P. Costas | |
Name: | John P. Costas | |
Title: | Managing Member | |
By: | /s/ Michael T. Hutchins | |
Name: | Michael T. Hutchins | |
Title: | Managing Member | |
PRINCERIDGE PARTNERS LLC | ||
By: | /s/ John P. Costas | |
Name: | John P. Costas | |
Title: | Managing Member | |
By: | /s/ Michael T. Hutchins | |
Name: | Michael T. Hutchins | |
Title: | Managing Member |
[Signature Page to Termination and Separation Agreement]
Exhibit 10.4
EXECUTION VERSION
EXECUTIVE AGREEMENT
THIS EXECUTIVE AGREEMENT (this Agreement) is dated as of May 31, 2011, by and among PrinceRidge Holdings LP (the Company), an indirect subsidiary of Institutional Financial Markets, Inc. (the Parent), Parent, Daniel G. Cohen (the Executive) and IFMI, LLC, a majority-owned subsidiary of Parent (IFMI).
WHEREAS, IFMI, the Company and PrinceRidge Partners LLC entered into a Contribution Agreement dated as of April 19, 2011 (the Contribution Agreement);
WHEREAS, the Company wishes that the Executive act as its Vice Chairman, and the Executive wishes to provide such services, on the terms set forth below, effective as of the Interim Closing Date (as defined in the Contribution Agreement) (such date the Effective Date);
WHEREAS, Executive is a party to an Employment Agreement, dated February 18, 2009, with Parent and IFMI (the IFMI Employment Agreement).
NOW THEREFORE, the parties hereto agree as follows:
1. Term. Subject to the terms and conditions set forth herein, the Executive hereby agrees to provide services to the Company and the Company agrees to compensate the Executive for an initial term commencing as of the Effective Date and continuing through December 31, 2013, unless sooner terminated in accordance with the provisions of Section 4 or Section 5, with such arrangement to continue for successive one-year periods in accordance with the terms of this Agreement (subject to termination as aforesaid) unless either party notifies the other party of non-renewal in writing prior to three (3) months before the expiration of the initial term and each annual renewal, as applicable. (The period during which the Executive provides services hereunder being hereinafter referred to as the Term.) This Agreement shall be binding on the Parties as of the date hereof; provided, however, that in the event that the Interim Closing does not occur or the Contribution Agreement is terminated, this Agreement shall terminate without any further obligation of the Parties and shall be null and void.
2. Duties. During the Term, the Executive shall serve as the Companys Vice Chairman, reporting directly to the Chairman of the Board and the Board of Managers of PrinceRidge Partners LLC (the General Partner), and as the Companys Chief Investment Officer and Managing Director and head of Structured Products, reporting directly to the Chief Executive Officer of the Company. The Executive shall faithfully perform for the Company the duties customarily attendant to Executives position of said office and shall perform such other duties of an executive, managerial or administrative nature as shall be reasonably specified and reasonably designated from time to time by the Board of Managers of the General Partner (the Board).
3. Compensation.
3.1 Guaranteed Payment. The Company shall pay the Executive a guaranteed payment at the rate of $200,000.00 per annum for the period beginning on the Effective Date
through December 31, 2011 (the Guaranteed Payment), payable in equal monthly installments. For each year thereafter, the Executives Guaranteed Payment shall equal the sum of: (a) $200,000 and (b) the amount of the Initial Annual Allocation (as herein determined), if any, for the immediately preceding calendar year. (Any such amount shall constitute the Guaranteed Payment as of the time of the calculation.) For United States federal, state and local tax purposes, each Guaranteed Payment shall be treated and reported by the Company and the Partners as a guaranteed payment within the meaning of Section 707(c) of the Internal Revenue Code of 1986, as amended (the Code) and the Treasury Regulations promulgated thereunder.
3.2 Initial Annual Allocation. The Executive shall be entitled to an annual allocation from the Company equal to 20% of Adjusted Profit, up to a maximum of $800,000 (the Initial Annual Allocation). For purposes hereof, (a) for each fiscal year beginning after December 31, 2011, Adjusted Profit means an amount equal to (i) net profit of the Company in such fiscal year as determined in accordance with generally accepted accounting principles in the United States, less (ii) an amount (the Retained Earnings Amount) equal to the Retained Earnings Percentage multiplied by $62,801,000, plus (iii) equity compensation expense relating to awards under the Amended and Restated Cohen Brothers, LLC 2009 Equity Award Plan (the 2009 Plan) included in the determination of net profit under clause (a)(i) above, and (b) for the fiscal year ending December 31, 2011, Adjusted Profit means an amount equal to (i) net profit of the Company for the period from the Effective Date to and including December 31, 2011 as determined in accordance with generally accepted accounting principles in the United States, less (ii) the Retained Earnings Amount multiplied by a fraction, (x) the numerator of which is the number of days from the Effective Date to and including December 31, 2011, and (y) the denominator of which is 365, plus (iii) equity compensation expense relating to awards under the 2009 Plan included in the determination of net profit under clause (b)(i) above. For purposes hereof, the Retained Earnings Percentage means the percentage equal to 5% plus the 3-month LIBOR rate, expressed as a percentage, as published in the Wall Street Journal (or, if such rate is not published in the Wall Street Journal, then such rate as determined by the Company in good faith based upon another reputable source) as of the last business day of such fiscal year. The Initial Annual Allocation shall be payable in cash within 75 days after the end of such fiscal year (the Initial Annual Allocation Payment Date). For a period of sixty (60) days following the Initial Annual Allocation Payment Date, the Executive shall have the opportunity to purchase additional units (the value of which shall not exceed the Initial Annual Allocation) representing a partnership interest of the Company (Units) at a price equal to the then-current book value of the Company; provided, however, that if the ownership interest of Parent and its affiliates in the Company is below 51% or if the purchase of Units in connection with the Initial Annual Allocation and the Supplemental Annual Allocation (defined below) will dilute the ownership interest of Parent and its affiliates in the Company below 51%, the purchase of the additional Units shall require the advance written approval of (1) Parent, if there are three IFMI Managers on the Board, or (2) the Board, if there are less than three IFMI Managers on the Board at such time.
3.3 Supplemental Annual Allocation. In addition to any amounts payable under Section 3.2, Executive shall be entitled to an annual allocation from the Company equal to 8 1/3% of Post-Initial Allocation Profit (the Supplemental Annual Allocation). For purposes hereof,
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Post-Initial Allocation Profit means an amount, determined in accordance with generally accepted accounting principles as in effect from time to time, equal to (a) net profit of the Company in a fiscal year as determined in accordance with generally accepted accounting principles in the United States, less (b) without duplication of amounts netted in the foregoing clause (a), the aggregate amount of Initial Annual Allocations paid to Executive under Section 3.2 hereof and paid to up to two other executives of the Company (determined by the Board in its discretion) in accordance with provisions of executive agreements or other arrangements that are substantially the same as set forth in Section 3.2 hereof, plus (c) if agreed by the Company, restructuring charges attributable to the transactions contemplated by the Contribution Agreement, plus (d) equity compensation expense relating to awards under the 2009 Plan included in the determination of net profit under clause (a) above. The Supplemental Annual Allocation shall be payable in cash within 75 days after the end of such fiscal year (the Supplemental Annual Allocation Payment Date). For a period of sixty (60) days following the Supplemental Annual Allocation Payment Date, the Executive shall have the opportunity to purchase additional Units (the value of which shall not exceed the Supplemental Annual Allocation) at a price equal to the then-current book value of the Company; provided, however, that if the ownership interest of Parent and its affiliates in the Company is below 51% or if the purchase of Units in connection with the Initial Annual Allocation and the Supplemental Annual Allocation will dilute the ownership interest of Parent and its affiliates in the Company below 51%, the purchase of the additional Units shall require the advance written approval of (1) Parent, if there are three IFMI Managers on the Board, or (2) the Board, if there are less than three IFMI Managers on the Board at such time.
3.5 Benefits-In General. The Executive shall be permitted during the Term to participate in any group life, hospitalization or disability insurance plans, health programs, retirement plans, fringe benefit programs and other benefits that may be available to other senior executives of the Company generally, in each case to the extent that the Executive is eligible under the terms of such plans or programs.
3.6 Vacation. The Executive shall be entitled to vacation of no less than 20 business days per year, to be credited in accordance with ordinary Company policies.
3.7 Expenses-In General. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses actually incurred (and, in the case of reimbursement, paid) by the Executive during the Term in the performance of the Executives services under this Agreement, in accordance with the Companys policies regarding such reimbursements.
3.8 Priority Allocations Of Company Income and Gain In Respect of Initial Annual Allocations and Supplemental Annual Allocations. Notwithstanding anything in the LP Agreement to the contrary and prior to the allocation to any Partner (including the Executive in his capacity as a Partner) of any Net Income, Net Loss, Capital Net Income, Capital Net Loss and/or, otherwise, any income (gross or net), gain, loss and/or deduction of the Company for any fiscal year (or other period) of the Company under the LP Agreement (and/or applicable law): (a) the Executive shall be specially allocated, and the Company shall specially allocate to the Executive, an amount of Company gross income and/or gain for such fiscal year (or other period) (Company Income) equal to the sum of the Executives Initial Annual Allocation (if any) for
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such fiscal year (or other period), the Executives Supplemental Annual Allocation (if any) for such fiscal year (or other period) and any Unallocated Amount for such fiscal year (or other period) (such sum, the Special Allocation Amount for such fiscal year (or other period)); and (b) if the Special Allocation Amount for such fiscal year (or other period) exceeds the Companys Company Income for such fiscal year (or other period), then any such excess shall constitute the Unallocated Amount for the immediately succeeding fiscal year (or other period) (including for purposes of this Section 3.8). Notwithstanding anything in the LP Agreement to the contrary, the Companys Net Income, Net Loss, Capital Net Income, Capital Net Loss and/or, otherwise, any income (gross or net), gain, loss and/or deduction of the Company for any fiscal year (or other period) of the Company allocable (or to be allocated) to the Partners (including the Executive in his capacity as a Partner) pursuant to the LP Agreement (and/or applicable law) for such fiscal year (or other period) shall be computed without regard to any Company Income so specially allocated to the Executive pursuant to this Section 3.8. All capitalized terms referred to in this Section 3.8 shall have the meaning set forth in the LP Agreement.
4. Termination upon Death or Disability. If the Executive dies during the Term, the Term shall terminate as of the date of death, and the obligations of the Company to or with respect to the Executive shall terminate in their entirety upon such date except as otherwise provided under this Section 4. If the Executive is unable to perform substantially and continuously the duties assigned to him due to a disability as defined for purposes of the Companys long-term disability plan then in effect, or, if no such plan is in effect, by virtue of ill health or other disability for more than 180 consecutive or non-consecutive days out of any consecutive 12-month period, the Company shall have the right, to the extent permitted by law, to terminate the services arrangement hereunder upon notice in writing to the Executive. Upon termination of the services arrangement hereunder due to death or disability, (i) the Executive (or the Executives estate or beneficiaries in the case of the death of the Executive) shall be entitled to receive any Guaranteed Payment and other benefits (including any allocations for a fiscal year completed before termination of this Agreement and the services arrangement hereunder but not yet paid (the Prior Year Allocations)) earned and accrued under this Agreement prior to the date of termination, as well as any allocations (the Partial Year Allocations) under Sections 3.2 and 3.3 of this Agreement for any portion of a fiscal year completed before termination and earned and accrued but not yet paid under this Agreement prior to the termination of the services arrangement hereunder (and reimbursement under this Agreement for expenses actually incurred prior to the termination of this Agreement and the services arrangement hereunder); (ii) the Executive (or the Executives estate or beneficiaries in the case of the death of the Executive) shall be entitled to receive a single-sum payment equal to the Guaranteed Payments that would have been paid to him for the remainder of the year in which the termination occurs; (iii) the Executive (or the Executives estate or beneficiaries in the case of the death of the Executive) shall receive a single-sum payment equal to the sum of (x) the Initial Annual Allocation and (y) the Supplemental Annual Allocation earned by the Executive, if any, in the fiscal year preceding the date of termination (which amount shall be annualized to the extent the termination occurs prior to the completion of a full fiscal year) multiplied by a fraction (x) the numerator of which is the number of days in the fiscal year preceding the termination and (y) the denominator of which is 365 and (iv) the Executive (or the Executives estate or beneficiaries in the case of the death of the Executive) shall have no further rights to any other compensation or benefits hereunder, or
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any other rights hereunder (but, for the avoidance of doubt, shall receive such disability and death benefits as may be provided under the Companys plans and arrangements in accordance with their terms). Unless the payment is required to be delayed pursuant to Section 7.14(b) below, the cash amounts payable pursuant to clauses (i), (ii) and (iii) above shall be paid to the Executive (or the Executives estate or beneficiaries in the case of the death of the Executive) within 60 days following the date of his termination of the services arrangement hereunder on account of death or disability. Other than the Partial Year Allocations and Prior Year Allocations, all payments under this Section 4 shall be considered a guaranteed payment from the Company.
5. | Certain Terminations of the Services Arrangement; Certain Benefits. |
5.1 Termination by the Company for Cause; Termination by the Executive without Good Reason.
(a) For purposes of this Agreement, Cause shall mean the Executives:
(i) commission of, and indictment (that is not quashed within 90 days) for or formal admission to any crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company (other than routine traffic violations); provided that such crime has a material adverse effect on the business or reputation of the Company;
(ii) indictment (that is not quashed within 90 days) for or formal admission to a felony, except for a felony under state law that is (A) solely related to the operation of a motor vehicle or boat, and (B) of the lowest class or degree of felony in a state that so classifies felonies (for purposes of clarification, the exception set forth in this clause shall not apply with respect to a felony for which Executive is indicted in a state that does not classify felonies);
(iii) engagement in fraud, misappropriation or embezzlement that has a material adverse effect on the business or reputation of the Company;
(iv) continued failure to materially adhere to written policies and practices of the Company and/or the General Partner; or
(v) material breach of any of the provisions of Section 6;
provided, that the Company shall not be permitted to terminate this Agreement and the services arrangement hereunder for Cause except (x) on written notice of the Companys intent to terminate for Cause (which shall include reasonable detail of the specific event constituting Cause) given to the Executive at any time not more than 60 calendar days following the occurrence of any of the events described in clause (iii) through (v) above (or, if later, the Companys knowledge thereof), and (y) if the Executive has been provided with an opportunity (with counsel of his choice) to contest the proposed reason(s) of Cause set forth in the notice at meeting of the Board. Notwithstanding the foregoing, in the event that the Company provides written notice to the Executive that Cause exists as a result of the occurrence of the events described in clause (iv) or (v), the Executive shall have 30 calendar days from the date of such notice to cure any such event that is reasonably curable and, if the Executive does so to the reasonable satisfaction of the Company, such event shall not constitute Cause hereunder.
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(b) The Company may terminate this Agreement and the services arrangement hereunder for Cause, and the Executive may terminate this Agreement and the services arrangement hereunder on at least 30 days written notice given to the Company. If the Company terminates this Agreement and the services arrangement hereunder for Cause, or the Executive terminates this Agreement and the services arrangement hereunder and the termination by the Executive is not for Good Reason in accordance with Section 5.2, (i) the Executive shall receive the Guaranteed Payment and other benefits (including any Prior Year Allocations), as well as the Partial Year Allocations (and reimbursement under this Agreement for expenses actually incurred prior to the termination of this Agreement and the services arrangement hereunder); and (ii) the Executive shall have no further rights to any other compensation, benefits or bonuses under this Agreement on or after the termination the services arrangement hereunder. Unless the payment is required to be delayed pursuant to Section 7.14(b) below, the cash amounts payable to the Executive under this Section 5.1(b) shall be paid to the Executive in a single-sum payment within 60 days following the date of the termination of his service arrangement with the Company pursuant to this Section 5.1(b).
Other than the Partial Year Allocations and Prior Year Allocations, all payments under this Section 5.1 shall be considered guaranteed payments from the Company.
5.2 Termination by the Company without Cause; Termination by the Executive for Good Reason.
(a) For purposes of this Agreement, Good Reason shall mean, unless otherwise consented to by the Executive,
(i) (a) the material reduction of the Executives title, authority, duties or responsibilities, or (b) the assignment to the Executive of duties materially inconsistent with the Executives position or positions with the Company (including his role as a member of the Board);
(ii) a reduction in the annual Guaranteed Payment of the Executive below the amount calculated in accordance with Section 3.1 of this Agreement or any modification of the Guaranteed Payment formula, Initial Annual Allocation formula or Supplemental Annual Allocation formula without Executives written consent;
(iii) the Companys material breach of this Agreement; or
(iv) Executive is required to relocate his office more than 30 miles outside of the Borough of Manhattan, New York.
Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist unless notice of termination on account thereof (specifying a termination date no later than 30 days from the date of such notice) is given no later than 30 days after the time at which the event or condition purportedly giving rise to Good Reason first occurs or arises and (ii) if there exists (without
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regard to this clause (ii)) an event or condition that constitutes Good Reason, the Company shall have 30 days from the date notice of such a termination is given to cure such event or condition and, if the Company does so, such event or condition shall not constitute Good Reason hereunder.
(b) The Company may terminate this Agreement and the services arrangement hereunder and the Executive may terminate this Agreement and the services arrangement hereunder at any time for any reason or no reason. If the Company terminates the services arrangement hereunder and the termination is not covered by Section 4 or 5.1 or the Executive terminates the services arrangement hereunder for Good Reason:
(i) the Executive shall receive a single-sum payment equal to accrued but unpaid Guaranteed Payments and other benefits (including any Prior Year Allocations), as well as the Partial Year Allocations (and reimbursement under this Agreement for expenses actually incurred prior to the termination of the services arrangement hereunder);
(ii) the Executive shall receive a single-sum payment of an amount equal to 3.0 times (a) the average of the Guaranteed Payment amounts paid to Executive over the three calendar years prior to the date of termination, (b) if less than three years have elapsed between the date of this Agreement and the date of termination, the highest Guaranteed Payment paid to Executive in any calendar year prior to the date of Termination, or (c) if less than 12 months have elapsed from the date of this Agreement to the date of termination, the highest Guaranteed Payment received in any month times 12; and
(iii) the Executive shall receive a single-sum payment equal to the sum of (x) the Initial Annual Allocation and (y) the Supplemental Annual Allocation earned by the Executive, if any, in the fiscal year preceding the date of termination (which amount shall be annualized to the extent the termination occurs prior to the completion of a full fiscal year) multiplied by a fraction (x) the numerator of which is the number of days in the fiscal year preceding the termination and (y) the denominator of which is 365.
Unless the payment is required to be delayed pursuant to Section 7.14(b) below, the cash amounts payable to the Executive under this Section 5.2(b) shall be paid to the Executive within 60 days following the date of his termination his services arrangement with the Company hereunder pursuant to this Section 5.2(b).
Other than the Partial Year Allocations and Prior Year Allocations, all payments under this Section 5.2 shall be considered guaranteed payments from the Company.
5.3 Change of Control. Without duplication of the foregoing, upon a Change of Control (as defined below) while the Executive is providing services to the Company or an affiliate pursuant to this Agreement, all outstanding unvested equity-based awards shall fully vest and shall become immediately exercisable, as applicable. Only with respect to a Change of Control transaction that is first announced after the nine-month anniversary of the date hereof, there will be a transition period (Transition Period) which will begin on the date of the Change of Control and end on the first anniversary of such Change of Control. If the Executive terminates the services arrangement with the Company hereunder within the six-month period
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following the Transition Period, such termination shall be deemed a termination by the Executive for Good Reason covered by Section 5.2. For purposes of this Agreement, Change of Control shall mean the occurrence of any of the following on or after the date hereof:
(i) any person, including a group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), but excluding Executive, any Family Member of Executive, the Company, IFMI, LLC, any entity or person controlling, controlled by or under common control with Executive, any Family Member of Executive, the Company, IFMI, LLC, any employee benefit plan of the Company or any such entity, and any group (as such term is used in Section 13(d)(3) of the Exchange Act) of which any of the foregoing persons or entities is a member), is or becomes the beneficial owner (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of Parent representing 50% or more of either (A) the combined voting power of Parents then outstanding securities or (B) the then outstanding Common Stock of Parent (in either such case other than as a result of an acquisition of securities directly from Parent, IFMI, LLC or the Company); provided, however, that, in no event shall a Change of Control be deemed to have occurred upon a public offering of the Common Stock under the Securities Act of 1933, as amended (for purposes hereof, Family Member means (I) a persons spouse, parent, sibling and descendants (whether natural or adopted), (II) any family limited partnership, limited liability company or other entity wholly owned, directly or indirectly, by such person and/or such persons spouse, parent, sibling and/or descendants (whether natural or adopted), and (III) any estate or trust for the benefit of such person and/or such persons spouse, parent, sibling and/or descendants (whether natural or adopted)); or
(ii) any consolidation or merger of Parent where the stockholders of Parent, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of the entity issuing cash or securities in the consolidation or merger (or of its ultimate parent entity, if any);
(iii) there shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of Parent, other than a sale or disposition by Parent of all or substantially all of Parents assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by persons (as defined above) who beneficially hold shares of Common Stock of Parent, as applicable, immediately prior to such sale or (B) the approval by stockholders of Parent of any plan or proposal for the liquidation or dissolution of Parent, as applicable; or
(iv) the members of the Board of Directors of Parent at the beginning of any consecutive 24-calendar-month period (the Incumbent Directors) cease for any reason other than due to death to constitute at least a majority of the members of the Board of Directors of Parent; provided that any director whose election, or nomination for election by the Parents stockholders, was approved by a vote of at least a majority of the members of the Board of Directors of Parent then still in office who were members of the Board of Directors of Parent at the beginning of such 24-calendar-month period, shall be deemed to be an Incumbent Director;
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provided, however, that, following the Final Closing Date (as defined in the Contribution Agreement), each of the foregoing shall constitute a Change of Control for purposes hereof if and only if at the time of any such occurrence the Company is directly or indirectly a subsidiary of Parent and the results of operations of the Company are consolidated in Parents financial statements in accordance with generally accepted accounting principles as in effect from time to time.
5.4 Parachutes. If any amount payable to or other benefit receivable by the Executive pursuant to this Agreement would be deemed to constitute a Parachute Payment (as defined below), alone or when added to any other amount payable or paid to or other benefit receivable or received by the Executive which is deemed to constitute a Parachute Payment (whether or not under an existing plan, arrangement or other agreement), and would result in the imposition on the Executive of an excise tax under Section 4999 of the Code, then the Parachute Payments shall be reduced (but not below zero) so that the maximum amount of the Parachute Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Parachute Payments to be subject to the excise tax imposed by Section 4999 of the Code. Any such reduction shall be made by first reducing severance benefits (if any). Notwithstanding the foregoing, if the reduction of Parachute Payments under this Section 5.4 would be equal to or greater than $50,000, then there shall be no such reduction and the full amount of the Parachute Payment shall be payable. Parachute Payment shall mean a parachute payment as defined in Section 280G of the Code. The calculation under this Section 5.4 shall be as determined by the Companys independent accountants.
5.5 Execution of Release. The Executive acknowledges that, if required by the Company prior to making the payments and benefits set forth in this Section 5 (other than accrued but unpaid Guaranteed Payments and other benefits), all such payments and benefits are subject to his execution of a commercially reasonable mutual release containing a release from liability by (a) the Executive of the Released Parties, and (b) the Released Parties of the Executive, his estate and his heirs. Released Parties shall mean the Company, the General and Partner and their respective affiliates, successors, subsidiaries, related entities, divisions, partnerships, joint ventures predecessors or assigns, and each of their respective past and present officers, directors, partners, executives, managers, owners, employees, trustees, agents, attorneys, insurers, representatives, employee benefit plans or programs (and the trustees, administrators, fiduciaries, sponsors and insurers of such plans or programs), and each and all of their successors and assigns and any other persons acting by, through, under or in concert with any of the aforementioned persons or entities. If Executive fails to execute such release, or such release does not become irrevocable within 60 days following the date of the termination of the Executives services arrangement with the Company hereunder, all such payments and benefits set forth in this Section 5 shall be forfeited.
5.6 Exculpation.
(a) The Executive shall not be liable to any Member or Partner or to the Company, PrinceRidge Partners LLC (the LLC) or their Affiliates for any action or inaction, unless such action or inaction arises out of, or is attributable to, the gross negligence, willful misconduct or fraud of the Executive and such action is materially injurious to the financial condition or business reputation of the Business, nor shall the Executive be liable to any Member
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or Partner or to the Company, the LLC or their Affiliates for any action or inaction of any broker or agent of the Company, the LLC or their Affiliates selected by such Executive; provided, that such broker or agent was selected, engaged or retained by such Executive in accordance with reasonable care. Any Executive may consult with counsel, accountants, investment bankers, financial advisers, appraisers and other specialized, reputable, professional consultants or advisers in respect of the affairs of the Company, the LLC or their Affiliates and be fully protected and justified in any action or inaction which is taken in accordance with the advice or opinion of such persons; provided, that such persons shall have been selected in accordance with reasonable care. All capitalized terms used but not defined in this Agreement shall have the meanings given to such terms in the LP Agreement or the LLC Agreement (each as defined below), as applicable.
(b) Notwithstanding any of the foregoing to the contrary, the provisions of this Section 5.6 shall not be construed so as to relieve (or attempt to relieve) the Executive of any liability to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law, but the provisions of this Section 5.6 shall be construed so as to effectuate the provisions of this Section 5.6 to the fullest extent permitted by law.
5.7 Indemnification.
(a) The Executive shall, in accordance with this Section 5.7, be indemnified and held harmless by the Company, the LLC and their controlled Affiliates from and against any and all Indemnification Obligations (as defined below) arising from any and all claims, demands, actions, suits or proceedings (civil, criminal, administrative or investigative), actual or threatened, in which such Executive may be involved, as a party or otherwise, by reason of such Executives service to or on behalf of, or management of the affairs of, the Company, the LLC and their Affiliates, or rendering of advice or consultation with respect thereto, or which relate to the Company, the LLC or their Affiliates or any of their properties, business or affairs; provided, that such Indemnification Obligation resulted from the action or inaction of such Executive that did not constitute gross negligence, willful misconduct or fraud which, in each such case, was materially injurious to the financial condition or business reputation of the Business and provided, further, that the Executive shall not be entitled to indemnification hereunder for any acts, omissions or transactions for which an officer or director of a Delaware corporation may not be relieved of liability under the Delaware General Corporation Law. The Company, the LLC and their controlled Affiliates shall also indemnify and hold harmless the Executive from and against any Indemnification Obligation suffered or sustained by the Executive by reason of any action or inaction of any broker or agent of the Company selected by such Executive; provided, however, that such broker or agent was selected, engaged or retained by such Executive in accordance with reasonable care. The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that such Indemnification Obligation resulted from the gross negligence, willful misconduct or fraud, or lack of reasonable care, of the Executive or that the act, omission or transaction was one for which an officer or director of a Delaware corporation may not be relieved of liability under the Delaware General Corporation Law. Subject to Section 14.15 of the LLC Agreement and Section 14.15 of the LP Agreement, expenses (including legal and other professional fees and disbursements) incurred in connection with this Section 5.7 shall
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be paid by the Company as and when incurred by the Executive. Indemnification Obligations means costs, losses, claims, damages, liabilities, expenses (including reasonable legal and other professional fees and disbursements), judgments, fines, settlements and other amounts, collectively.
(b) The indemnification provided by this Section 5.7 (i) shall not be deemed to be exclusive of any other rights to which the Executive may be entitled under any agreement, or as a matter of law, or otherwise, both as to action in the Executives official capacity and to action in another capacity, (ii) shall continue after the Executive has ceased to have an official capacity with respect to the Company, the LLC or their Affiliates for acts or omissions that occurred during such official capacity or otherwise when acting at the request of the Company, the LLC or their Affiliates, and (iii) shall inure to the benefit of the heirs, successors and assigns of such Executive.
(c) Notwithstanding any of the foregoing to the contrary, the provisions of this Section 5.7 shall not be construed so as to provide for the indemnification of the Executive for any liability to the extent (but only to the extent) that such indemnification would be in violation of applicable law or that such liability may not be waived, modified or limited under applicable law, but the provisions of this Section 5.7 shall be construed so as to effectuate the provisions of this Section 5.7 to the fullest extent permitted by law.
5.8 Termination of the Services Arrangement Pursuant to the Termination and Separation Agreement. The Company, IFMI, and the General Partner have entered into a Termination and Separation Agreement. Pursuant to the Termination and Separation Agreement, in the event of a Termination and Separation Event (as defined in the Termination and Separation Agreement), this Agreement, and Executives services arrangement hereunder, shall terminate effective as of the date hereof. In such instance, Executive shall be entitled only to the Guaranteed Payments under Section 3.1 and Benefits under Section 3.5 from the date hereof through the Termination Date (as defined in the Termination and Separation Agreement) and Executive shall not be entitled to any other compensation, benefits, bonuses, allocations or equity incentive compensation of any kind. For the avoidance of doubt, Executive shall not be entitled to any compensation, benefits, bonuses or allocations under Sections 3.2, 3.3, 3.4, 3.6, 4, 5.1(b), 5.2(b), 5.3, 5.4 and the covenants set forth Section 6.2 shall not apply
6. Covenants of the Executive.
6.1 Confidentiality. The Executive acknowledges that (i) the primary business of the Company is currently its capital markets business (sales and trading of securities as well as investment banking) and that the Company may engage in additional or different areas of business during Executives services arrangement with the Company hereunder (all of which are collectively referred to as the Business); (ii) the Company is one of a limited number of persons who have such a business; (iii) the Companys Business is, in part, national and international in scope; (iv) the Executives work for the Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (v) the covenants and agreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company; and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 6. Accordingly, the
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Executive covenants and agrees during and after the period of the Executives services arrangement with the Company and its affiliates, the Executive (x) shall keep secret and retain in strictest confidence all confidential matters relating to the Companys Business and the business of any of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the Confidential Company Information), and (y) shall not disclose such Confidential Company Information to anyone outside of the Company unless (i) the disclosure is done with the Companys or such affiliates, as applicable, express written consent, (ii) the Confidential Company Information is at the time of receipt or thereafter becomes publicly known through no wrongful act of the Executive or is received from a third party not under an obligation to keep such information confidential and without breach of this Agreement, (iii) the disclosure is required to be made pursuant to an order of any court or government agency, subpoena or legal process; (iv) the disclosure is made to officers or directors of the Company or its affiliates (and/or the officers and directors of such affiliates), and to auditors, counsel, and other professional advisors to the Company or its affiliates, or (v) the disclosure is made by a court or arbitrator in connection with any litigation or dispute between the Company and the Executive. Unless prohibited by law, regulation or order of a court or other governmental or regulatory body, the Executive shall as promptly as reasonably practicable supply the Company with a copy of any legal process delivered to the Executive requesting Confidential Company Information. Prior to any disclosure of Confidential Company Information, unless prohibited by law, regulation or order of a court or other governmental or regulatory body, the Executive shall notify the Company and shall cooperate and not object to the Company seeking an order protecting the confidentiality of such information.
6.2 Noncompetition/Nonsolicitation.
(a) For a period of three months following the end of the Term (the Noncompetition Period), in either case regardless of the reason the Term of this Agreement and the services arrangement hereunder ends (including, but not limited to, nonrenewal of this Agreement by either Executive or the Company), Executive shall not, directly or indirectly, engage or participate in, or become employed by, or affiliated with, or render advisory or any other services to, any person or business entity or organization, of whatever form, that competes with the Company or any of its affiliates in any country in which the Company or any of its affiliates operates; provided, however that this Section 6.2(a) shall not apply to the Executive with respect to opportunities (in whatever form) that arise in businesses that are not Competing Businesses (as defined in the Contribution Agreement).
(b) For a period of 12 months following the end of the Term, regardless of the reason the Term of this Agreement and the services arrangement hereunder ends (including, but not limited to, nonrenewal of this Agreement by either Executive or the Company), Executive shall not, directly or indirectly, (i) solicit, induce, cause or otherwise attempt to solicit, induce or cause any person who is employed or engaged by the Company or its subsidiaries (collectively, the Company Affiliates) to (A) end his or her employment or engagement with any of the Company Affiliates, (B) accept employment or other engagement with any person or entity other than any of the Company Affiliates, or (C) in any manner interfere with the business of the Company Affiliates, or (ii) hire any person who was an employee of any of the Company
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Affiliates at the time of such termination or within the six-month period prior to such termination (provided, that this clause (ii) shall not apply to any employee who has been terminated by any of the Company Affiliates); provided, however, this Section 6.2(b) shall not restrict the ability of Executive to, directly or indirectly, hire, solicit, induce or cause, or assist any person in doing any of the foregoing, any person who is or was an employee whose compensation is or was subject to the Reimbursement Agreement (as defined in the Contribution Agreement).
(c) During the Noncompetition Period, regardless of the reason the Term of this Agreement and the services arrangement hereunder ends (including, but not limited to, nonrenewal of this Agreement by either Executive or the Company), Executive shall not, directly or indirectly, solicit, induce, direct or do any act or thing which may interfere with or adversely affect the relationship of any of the Company Affiliates with any person or entity who was a material customer or client of such entities or with whom such entities were actively seeking to form a business relationship either at the time of the termination of Executives employment or within the six-month period immediately preceding such termination, or otherwise induce or attempt to induce any such person or entity to cease doing business, reduce or otherwise limit its business with any of the Company Affiliates. For purposes hereof, material customer or client means a customer or client that is one of the 25 largest customers or clients of such entity.
Executive specifically acknowledges that the temporal and geographical limitations hereof, in view of the nature of the Companys Business (as defined herein), are reasonable and necessary to protect the Companys legitimate business interests.
6.3 Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by him of any of the provisions of Sections 6.1 and 6.2 (the Restrictive Covenants) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the provisions of Sections 6.1 or 6.2, the Company and its affiliates, in addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages), shall have the right and remedy to have the Restrictive Covenants specifically enforced by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants.
6.4 Outside Activities. Section 13.09 of the Fourth Amended and Restated Limited Partnership Agreement of the Company shall not apply to Executive.
7. Other Provisions.
7.1 Severability. The Executive acknowledges and agrees that (i) he has had an opportunity to seek advice of counsel in connection with this Agreement and (ii) the Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions.
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7.2 Duration and Scope of Covenants. If any court or other decision-maker of competent jurisdiction determines that any of the Executives covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration or geographical scope of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced.
7.3 Enforceability; Jurisdiction; Arbitration. Any controversy or claim arising out of or relating to this Agreement, the breach of this Agreement (other than a controversy or claim arising under Section 6, to the extent necessary for the Company (or its affiliates, where applicable) to avail itself of the rights and remedies referred to in Section 6.3) and /or your services arrangement hereunder with the Company in general that are not resolved by the Executive and the Company (or its affiliates, where applicable) shall be submitted to arbitration in New York, New York in accordance with the law of the State of New York and the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association or, if applicable, in accordance with the rules and procedures of the Financial Industry Regulatory Authority. The determination of the arbitrator(s) shall be conclusive and binding on the Company (or its affiliates, where applicable) and the Executive and judgment may be entered on the arbitrator(s) award in any court having jurisdiction.
7.4 Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows:
(i) If to the Company, to:
PrinceRidge Holdings LP
1633 Broadway, 28th Floor
New York, NY 10019
Attention: General Counsel
Or such other address that may be designated by the Company from time to time,
With copy to:
Institutional Financial Markets, Inc.
2929 Arch Street, 17th Floor
Philadelphia, PA 19104
Attention: General Counsel
(ii) If to the Parent, to:
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Institutional Financial Markets, Inc.
2929 Arch Street, 17th Floor
Philadelphia, PA 19104
Attention: General Counsel
Or such other address that may be designated by the Company from time to time,
(iii) If to IFMI, to:
IFMI, LLC
2929 Arch Street, 17th Floor
Philadelphia, PA 19104
Attention: General Counsel
Or such other address that may be designated by the Company from time to time,
(iv) If to the Executive, to:
Daniel G. Cohen |
1240 North Casey Key Road |
Osprey, FL 33559 |
Any such person may by notice given in accordance with this Section 7.4 to the other parties hereto designate another address or person for receipt by such person of notices hereunder.
7.5 Entire Agreement. Other than the IFMI Employment Agreement, this Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.
7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
7.8 Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the
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Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however , that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law.
7.9 Withholding. The Parent shall be entitled to withhold from any payments or deemed payments made by Parent any amount of tax withholding it determines to be required by law.
7.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, executors and legal representatives.
7.11 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto.
7.12 Survival. Anything contained in this Agreement to the contrary notwithstanding, the provisions of Sections 4, 5 and 6 and any other provisions of this Agreement expressly imposing obligations that survive termination of Executives services arrangement hereunder, and the other provisions of this Section 7 to the extent necessary to effectuate the survival of such provisions, shall survive termination of this Agreement and any termination of the Executives services arrangement hereunder.
7.13 Existing Agreements. The Executive represents to the Company that he is not subject or a party to any employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit him from executing this Agreement or limit his ability to fulfill his responsibilities hereunder.
7.14 Section 409A.
(a) Interpretation. Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of section 409A of the Code, to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with section 409A. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment. In no event may the Executive, directly or indirectly, designate the calendar year of payment.
(b) Payment Delay. Notwithstanding any provision to the contrary in this Agreement, if on the date of the termination of Executives services arrangement hereunder, the
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Executive is a specified employee (as such term is defined in section 409A(a)(2)(B)(i) of the Code and its corresponding regulations) as determined by the Board (or its delegate) in its sole discretion in accordance with its specified employee determination policy, then all cash severance payments payable to the Executive under this Agreement that are deemed as deferred compensation subject to the requirements of section 409A of the Code shall be postponed for a period of six months following the Executives separation from service with the Company (or any successor thereto). The postponed amounts shall be paid to the Executive in a lump sum within 30 days after the date that is 6 months following the Executives separation from service with the Company (or any successor thereto). If the Executive dies during such six-month period and prior to payment of the postponed cash amounts hereunder, the amounts delayed on account of section 409A of the Code shall be paid to the personal representative of the Executives estate within 60 days after Executives death. If any of the cash payments payable pursuant to this Agreement are delayed due to the requirements of section 409A of the Code, there shall be added to such payments interest during the deferral period at an annualized rate of interest equal to 5%.
(c) Reimbursements. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses actually incurred during the Executives lifetime (or during a short period of time specified in this Agreement), (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 all eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to the liquidation or exchange for another benefit. Any tax gross up payments to be made hereunder shall be made not later than the end of the Executives taxable year next following the Executives taxable year in which the related taxes are remitted to the taxing authority.
7.15 Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
7.16 Supplementary Agreement. For purposes of the Fourth Amended and Restated Limited Liability Company Agreement of PrinceRidge Partners LLC (the LLC Agreement) and the Fourth Amended and Restated Limited Partnership Agreement of the Company (the LP Agreement), this Agreement shall be treated as a Supplementary Agreement (as defined thereunder).
7.17 LP/LLC Agreements. For the avoidance of doubt, the amounts due to Executive hereunder shall not be subject to reduction based on amounts to which Parent or other partners or members of PrinceRidge Holdings LP or PrinceRidge Partners LLC are entitled pursuant to the LP Agreement or the LLC Agreement or any other agreement by, among or including the parties hereto.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first above written.
PRINCERIDGE HOLDINGS LP | ||
By: | /s/ John P. Costas | |
Name: | John P. Costas | |
Title: | Chairman | |
INSTITUTIONAL FINANCIAL MARKETS, INC. | ||
By: | /s/ Joseph W. Pooler, Jr. | |
Name: | Joseph W. Pooler, Jr. | |
Title: | Executive Vice President and Chief Financial Officer | |
IFMI, LLC | ||
By: | /s/ Joseph W. Pooler, Jr. | |
Name: | Joseph W. Pooler, Jr. | |
Title: | Executive Vice President and Chief Financial Officer | |
PRINCERIDGE PARTNERS LLC (only with respect to Sections 5.6 and 5.7) | ||
By: | /s/ John P. Costas | |
Name: | John P. Costas | |
Title: | Chairman |
EXECUTIVE | ||
Signed: | /s/ Daniel G. Cohen | |
Name: | Daniel G. Cohen |
[Signature Page to Daniel G. Cohen Executive Agreement]
Exhibit 99.1
IFMI & PRINCERIDGE COMPLETE STRATEGIC TRANSACTION
Philadelphia and New York, June 1, 2011 Institutional Financial Markets, Inc. (NYSE AMEX: IFMI) (IFMI) is pleased to announce the completion of its transaction with PrinceRidge Holdings LP (PrinceRidge), pursuant to which IFMI contributed the equity interests in a subsidiary comprising a substantial part of its capital markets segment to PrinceRidge in exchange for a majority of the equity interest in PrinceRidge. This transaction furthers IFMIs objective of expanding its capital markets business.
We are excited to announce the completion of our investment in PrinceRidge. The two platforms are complementary with very little overlap. Our clients will have access to an expanded set of product offerings, and we expect our combined results to drive value for our shareholders, said Daniel G. Cohen, Chairman and Chief Executive Officer of IFMI.
With an improved capital position, increased scale, and enhanced opportunities, PrinceRidge is well positioned to provide value to our customers. We believe that together we have the right combination of resources to effectively compete in todays marketplace, said John P. Costas, Chairman of PrinceRidge.
Over sixty of IFMIs capital markets professionals and certain support staff are now working under PrinceRidge. It is anticipated that most of the professionals in IFMIs European capital markets operation will join their U.S. colleagues as part of the new structure after PrinceRidge obtains an FSA license in the United Kingdom.
IFMI and PrinceRidge have completed the initial 30-day review by FINRA, pursuant to which FINRA did not take any action to halt the transaction or impose interim restrictions on the transaction. The final closing of the transaction remains subject to final FINRA approval.
About IFMI
IFMI is an investment firm specializing in credit-related fixed income investments. IFMI was founded in 1999 as an investment firm focused on small-cap banking institutions, but has grown into a more diversified fixed income specialist. IFMIs primary operating segments are: Capital Markets and Asset Management. The Companys Capital Markets segment consists of credit-related fixed income sales and trading as well as new issue placements in corporate and securitized products. IFMIs Asset Management segment manages assets through listed and private companies, funds, managed accounts, and collateralized debt obligations. As of March 31, 2011, IFMI managed approximately $9.6 billion in credit-related fixed income assets in a variety of asset classes including U.S. trust preferred securities, European hybrid capital securities, Asian commercial real estate debt, and mortgage- and asset-backed securities. For more information, please visit www.ifmi.com.
About PrinceRidge
PrinceRidge is a financial services firm built upon extensive industry experience, professionalism, and integrity. The firm is client-oriented and fixed-income focused. PrinceRidge offers a variety of financial
services to their customer base including sales and trading in corporate credit and structured products and investment banking services such as new issue placements, underwritings, and M&A advisory. PrinceRidge is committed to employing the highest quality professionals with significant industry experience, deep product knowledge, integrity, and entrepreneurial spirit. For more information about The PrinceRidge Group LLC please visit www.princeridge.com.
Forward-looking Statements
This communication contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as may, might, will, should, expect, plan, anticipate, believe, estimate, predict, potential, or continue or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this communication are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements expressed or implied in the forward-looking statements including, but not limited to, the receipt of final approval of FINRA and the final closing of the PrinceRidge transaction or the unwinding of the transaction with PrinceRidge if final FINRA approval is not obtained, in addition to those discussed under the heading Risk Factors and Managements Discussion and Analysis of Financial Condition in our filings with the Securities and Exchange Commission (SEC), which are available at the SECs website at www.sec.gov and our website at www.ifmi.com/sec-filings. Such risk factors include the following: (a) a decline in general economic conditions or the global financial markets, (b) losses caused by financial or other problems experienced by third parties, (c) losses due to unidentified or unanticipated risks, (d) lack of liquidity, i.e. ready access to funds for use in our businesses, (e) the ability to attract and retain personnel, (f) litigation and regulatory issues, (g) competitive pressure, and (h) a potential Ownership Change under Section 382 of the Internal Revenue Code. As a result, there can be no assurance that the forward-looking statements included in this communication will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this communication might not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact for IFMI: | ||
Investors: | Media: | |
Institutional Financial Markets, Inc. | Joele Frank, Wilkinson Brimmer Katcher | |
Joseph W. Pooler, Jr., 215-701-8952 | James Golden, 212-895-8665 | |
Chief Financial Officer | jgolden@joelefrank.com | |
investorrelations@ifmi.com |
Contact for PrinceRidge:
PrinceRidge Holdings LP
Colette C. Dow, 646-792-5601
Chief Operating Officer
CDow@princeridge.com
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