Exhibit 10.4

TAX RECEIVABLE AGREEMENT

dated as of November 23, 2011

--------------------------------------------------------------------------------

TABLE OF CONTENTS

PAGE

 

ARTICLE 1

  DEFINITIONS      1   

Section 1.01.

  Definitions      1   

Section 1.02.

  Other Definitional and Interpretative Provisions      8   

ARTICLE 2

  DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT      9   

Section 2.01.

  Basis Adjustment      9   

Section 2.02.

  Exchange Basis Schedule      9   

Section 2.03.

  Tax Benefit Schedule      9   

Section 2.04.

  Procedures, Amendments      10   

ARTICLE 3

  TAX BENEFIT PAYMENTS      10   

Section 3.01.

  Payments      10   

Section 3.02.

  No Duplicative Payments      12   

Section 3.03.

  Pro Rata Payments      12   

ARTICLE 4

  TERMINATION      12   

Section 4.01.

  Early Termination and Breach of Agreement      12   

Section 4.02.

  Early Termination Notice      13   

Section 4.03.

  Payment upon Early Termination      14   

Section 4.04.

  Scheduled Termination      14   

ARTICLE 5

  SUBORDINATION AND LATE PAYMENTS      14   

Section 5.01.

  Subordination      14   

Section 5.02.

  Late Payments by the Corporation      14   

ARTICLE 6

  NO DISPUTES; CONSISTENCY; COOPERATION      15   

Section 6.01.

  Member Participation in the Corporation and MNG’s Tax Matters      15   

Section 6.02.

  Consistency      15   

Section 6.03.

  Cooperation      15   

ARTICLE 7

  MISCELLANEOUS      16   

Section 7.01.

  Notices      16   

Section 7.02.

  Counterparts      17   

Section 7.03.

  Entire Agreement; No Third-Party Beneficiaries      17   

 

i

--------------------------------------------------------------------------------

Section 7.04.

  Governing Law      17   

Section 7.05.

  Severability      17   

Section 7.06.

  Successors; Assignment; Amendments; and Waivers      18   

Section 7.07.

  Titles and Subtitles      18   

Section 7.08.

  Resolution of Disputes      19   

Section 7.09.

  Reconciliation      20   

Section 7.10.

  Withholding      21   

Section 7.11.

  Admission of the Corporation into a Consolidated Group; Transfers of Corporate
Assets      21   

Section 7.12.

  Confidentiality      22   

Section 7.13.

  No Joint Venture      22   

Section 7.14.

  Partnerships      22   

 

ii

--------------------------------------------------------------------------------

TAX RECEIVABLE AGREEMENT

This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”),
dated as of November 23, 2011, is hereby entered into by and among Manning &
Napier, Inc., a Delaware corporation (the “Corporation”), Manning & Napier
Group, LLC, a Delaware limited liability company (“MNG”), Manning & Napier
Capital Company, LLC and each of the other undersigned parties hereto identified
as “Members.”

RECITALS

WHEREAS, the Members hold Class A Units (“Units”) in MNG, which is treated as a
partnership for U.S. federal income tax purposes;

WHEREAS, the Corporation is the managing member of, and holds Class A Units in
MNG;

WHEREAS, the Members shall from time to time transfer or sell their Units to the
Corporation (an “Exchange”, and each such date an Exchange occurs, an “Exchange
Date”) in connection with the initial public offering of Class A common stock of
the Corporation (“Class A Shares”) or pursuant to the Exchange Agreement (as
defined below) in exchange for cash or the Class A Shares;

WHEREAS, MNG and each of its direct and indirect subsidiaries which are treated
as partnerships for U.S. federal income tax purposes (MNG or each such
subsidiary, a “Partnership Subsidiary”) have or will have in effect an election
under Section 754 of the Internal Revenue Code of 1986, as amended (the “Code”),
for each Taxable Year (as defined below) in which an Exchange occurs, which
election is expected to result in an adjustment to the Tax basis of the assets
owned by MNG and such subsidiaries, solely with respect to the Corporation; and

WHEREAS, the parties to this Agreement desire to make certain arrangements to
treat a portion of any tax benefits realized by the Corporation as a result of
any Exchange as additional consideration for the Exchange;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions. As used in this Agreement, the terms set forth in
this Article 1 shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

--------------------------------------------------------------------------------

“Advisory Firm” means an independent law or accounting firm that is nationally
recognized as being expert in Tax matters.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls (as defined below), is
Controlled by, or is under common Control with, such first Person.

“Agreed Rate” means 30-day LIBOR plus 100 basis points.

“Agreement” is defined in the preamble of this Agreement.

“Amended Schedule” is defined in Section 2.04(b).

“Applicable Member” means in respect of that portion of any Tax Benefit Payment
that arises from an Exchange or a deemed Exchange pursuant to clause (v) of the
definition of “Valuation Assumptions”, the Exchanging Member or Member deemed to
Exchange, as applicable.

“Basis Adjustment” means the adjustment (which can be positive or negative) to
the Tax basis of an Exchange Asset as a result of an Exchange and the payments
made pursuant to this Agreement, as calculated under Section 2.01, under
Section 732(b) of the Code (in a situation where, as a result of one or more
Exchanges, MNG becomes an entity that is disregarded as separate from its owner
for Tax purposes), Section 1012, or Sections 743(b) and 754 of the Code (in
situations where, following an Exchange, MNG remains in existence as an entity
for Tax purposes) or otherwise, as applicable, and, in each case, comparable
sections of state, local and foreign Tax laws. Notwithstanding any other
provision of this Agreement, the amount of any Basis Adjustment resulting from
an Exchange of one or more Units shall be determined without regard to any
Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had
not occurred.

A “Beneficial Owner” of a security means a Person who directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares: (i) voting power, which includes the power to vote, or to direct the
voting of, such security and/or (ii) investment power, which includes the power
to dispose of, or to direct the disposition of, such security. The terms
“Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“Board” means the board of directors of the Corporation.

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of New York shall not be regarded as a Business Day.

“Change of Control” means the occurrence of any of the following events:

(i) any “person” or “group” (as such terms are defined in Sections 13(d) and
14(d) of the Exchange Act, or any successor provisions thereto) other than the
Members, their Affiliates and their Permitted Transferees:

 

2

--------------------------------------------------------------------------------

(A) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of 50% or more of the voting
stock of the Corporation;

(B) in the context of a consolidation, merger or other corporate reorganization
in which the Corporation is not the surviving entity, has 50% or more of the
voting stock generally entitled to elect directors of such surviving entity (or
in the case of a triangular merger, of the parent entity of such surviving
entity), calculated on a fully diluted basis; or

(C) has obtained the power (whether or not exercised) to elect a majority of the
directors of the Corporation or its successors;

(ii) the Corporation or its successors, together with the Members and their
respective Permitted Transferees, cease to own 50% or more of the equity
interests of MNG; or

(iii) the sale of all or substantially all the assets of the Corporation or of
MNG.

“Class A Shares” is defined in the Recitals of this Agreement.

“Code” is defined in the Recitals of this Agreement.

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

“Corporation” is defined in the Preamble of this Agreement.

“Corporation Return” means the U.S. federal, state, local and/or foreign Tax
Return, as applicable, of the Corporation filed with respect to Taxes for any
Taxable Year.

“Cumulative Realized Tax Benefit” for a Taxable Year means the cumulative amount
of Realized Tax Benefits for all Taxable Years of the Corporation, up to and
including such Taxable Year, net of the cumulative amount of Realized Tax
Detriments for the same period. The Realized Tax Benefit and Realized Tax
Detriment for each Taxable Year shall be determined based on the most recent Tax
Benefit Schedule or Amended Schedule, if any, in existence at the time of such
determination.

“Default Rate” means 30-day LIBOR plus 300 basis points.

“Deferrable Portion” is defined in Section 3.01(a).

“Determination” shall have the meaning ascribed to such term in Section 1313(a)
of the Code or similar provision of state, local and foreign Tax law, as
applicable, or any other event (including the execution of a Form 870—AD) that
finally and conclusively establishes the amount of any liability for Tax. A
Determination shall include the expiration of all periods of limitations
relating to the assessment of Tax for a Taxable Year.

 

3

--------------------------------------------------------------------------------

“Dispute” is defined in Section 7.08(a).

“Early Termination Conditions” means, with respect to an Early Termination
Payment, following: (i) an Early Termination Schedule becoming final and
binding, and (ii) either (A) no Payment Condition is applicable or (B) a Payment
Condition has been satisfied.

“Early Termination Date” means the date of an Early Termination Notice for
purposes of determining the Early Termination Payment.

“Early Termination Notice” is defined in Section 4.02.

“Early Termination Schedule” is defined in Section 4.02.

“Early Termination Payment” is defined in Section 4.03(b).

“Early Termination Rate” means 30-day LIBOR in effect on the applicable date
plus 100 basis points.

“Exchange” is defined in the Recitals of this Agreement; “Exchanged” and
“Exchanging” shall have correlative meanings.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Agreement” means that certain Exchange Agreement, dated as of
November 23, 2011, by and among the Corporation, the Members and the other
parties thereto, as the same may be amended from time to time in accordance with
the terms thereof.

“Exchange Assets” means each asset that is held by MNG or by any of its direct
or indirect subsidiaries that is treated as a partnership or disregarded entity
for purposes of the applicable Tax, at the time of an Exchange.

“Exchange Basis Schedule” is defined in Section 2.02.

“Exchange Date” is defined in the Recitals of this Agreement.

“Exchange Payment” is defined in Section 5.01.

“Expert” is defined in Section 7.09.

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the
liability for Taxes of the Corporation (or MNG, but only with respect to income
realized by MNG the Tax liability for which is allocable to the Corporation for
such Taxable Year using the same methods, elections, conventions and similar
practices used on the relevant Corporation Return) but using the Non-Stepped Up
Tax Basis instead of the Tax basis of the Exchange Assets and excluding any
deduction attributable to Imputed Interest.

“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or
483 or other provision of the Code and any similar provision of state, local and
foreign Tax law with respect to the Corporation’s payment obligations under this
Agreement.

 

4

--------------------------------------------------------------------------------

“Initiating Party” is defined in Section 7.08(a).

“Interest Amount” is defined in Section 3.01(b).

“LIBOR” means for each month (or portion thereof) during any period, an interest
rate per annum equal to the rate per annum reported, on the date two days prior
to the first day of such month, as published by Reuters (or other commercially
available source providing quotations of LIBOR) for London interbank offered
rates for U.S. dollar deposits for such month (or portion thereof).

“LLC Agreement” means, with respect to MNG, the Amended and Restated Limited
Liability Company Agreement dated as of October 1, 2011, among the Corporation
and the Members, as the same may be amended from time to time in accordance with
the terms thereof.

“Market Value” means, with respect to the Class A Shares, on any given date:
(i) if the Class A Shares are listed for trading on the New York Stock Exchange,
the closing sale price per share of the Class A Shares on the New York Stock
Exchange on that date (or, if no closing sale price is reported, the last
reported sale price), (ii) if the Class A Shares are not listed for trading on
the New York Stock Exchange, the closing sale price (or, if no closing sale
price is reported, the last reported sale price) as reported on that date in
composite transactions for the principal national securities exchange registered
pursuant to Section 6(g) of the Exchange Act, on which the Class A Shares are
listed, (iii) if the Class A Shares are not so listed on a national securities
exchange, the last quoted bid price for the Class A Shares on that date in the
over-the-counter market as reported by Pink Sheets LLC or a similar
organization, or (iv) if the Class A Shares are not so quoted by Pink Sheets LLC
or a similar organization such value as the Board, in its sole discretion, shall
determine in good faith.

“Material Objection Notice” has the meaning set forth in Section 4.02.

“Member” means M&N Group Holdings, LLC, Manning & Napier Capital Company, LLC
and any other Person that becomes a Member pursuant to Section 7.06.

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax
basis that such asset would have had at such time if no Basis Adjustment had
been made.

“Notice” is defined in Section 7.01.

“Objection Notice” is defined in Section 2.04(a).

“Opt Out Notice” is defined in Section 3.04(a).

“Panel” is defined in Section 7.08(a).

“Partnership Subsidiary” is defined in the Recitals of this Agreement.

“Payment Conditions” is defined in Section 3.01(c).

 

5

--------------------------------------------------------------------------------

“Payment Date” means any date on which a payment is required to be made pursuant
to this Agreement.

“Permitted Transferee” shall mean any of the Permitted Transferees (as defined
in the LLC Agreement).

“Person” means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization,
governmental entity or other entity.

“Pre-Exchange Transfer” means any transfer (including upon the death of a
Member) of one or more Units (i) that occurs prior to an Exchange of such Units
and (ii) to which Section 743(b) of the Code applies.

“Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively,
the net excess, if any, of the Hypothetical Tax Liability over the actual
liability for Taxes of the Corporation (or a Partnership Subsidiary, but only
with respect to income realized by the Partnership Subsidiary the Tax liability
for which is allocable to the Corporation for such Taxable Year using the same
methods, elections, conventions and similar practices used on the relevant
Corporation Return), determined, for the avoidance of doubt, using the “with or
without” methodology. If in connection with an audit of any Taxable year of the
Corporation (or a Partnership Subsidiary, but only with respect to income
realized by the Partnership Subsidiary the Tax liability for which is allocable
to the Corporation for such Taxable Year using the same methods, elections,
conventions and similar practices used on the relevant Corporation Return) the
relevant Taxing Authority asserts, in writing, that it proposes to increase the
Tax liability of the Corporation, then for purposes of determining the Realized
Tax Benefit for the year in which such assertion is made, the amount of such
increase shall be included (tentatively) as an actual Tax liability to the
extent it relates to the denial of any tax benefit arising from a Basis
Adjustment. The amounts taken into account in determining the Realized Tax
Benefit for subsequent tax periods similarly shall be calculated as though the
Corporation and any Partnership Subsidiary filed its tax returns on the basis
that such asserted tax positions were correct. If there is a Determination with
respect to the Taxable Year to which such assertion relates or any subsequent
taxable year, for all purposes under this Agreement, the Net Tax Benefit for
such years shall be recalculated to properly reflect the difference, if any,
between the amount of liability fixed by such Determination and liability taken
into account in calculating the Realized Tax Benefit for the year. For the
avoidance of doubt, if such recalculation results in an increased Net Tax
Benefit for any year, the Interest Amount of any corresponding Tax Benefit
Payment shall accrue from date specified in Section 3.01(b) for such Tax Benefit
Payment.

“Realized Tax Detriment” means, for a Taxable Year and for all Taxes
collectively, the net excess, if any, of the actual liability for Taxes of the
Corporation (or a Partnership Subsidiary, but only with respect to income
realized by the Partnership Subsidiary the Tax liability for which is allocable
to the Corporation for such Taxable Year using the same methods, elections,
conventions and similar practices used on the relevant Corporation Return) over
the Hypothetical Tax Liability for such Taxable Year determined, for the
avoidance of doubt, using the “with or without” methodology. If in connection
with an audit of any Taxable year of the Corporation (or a Partnership
Subsidiary, but only with respect to income realized by the

 

6

--------------------------------------------------------------------------------

Partnership Subsidiary the Tax liability for which is allocable to the
Corporation for such Taxable Year using the same methods, elections, conventions
and similar practices used on the relevant Corporation Return) the relevant
Taxing Authority asserts, in writing, that it proposes to increase the Tax
liability of the Corporation, the for purposes of determining the Realized Tax
Detriment for the year in which such assertion is made, the amount of such
increase shall be included (tentatively) as an actual Tax liability to the
extent it relates to the denial of any tax benefit arising from a Basis
Adjustment. The amounts taken into account in determining the Realized Tax
Detriment for subsequent tax periods similarly shall be calculated as though the
Corporation and any Partnership Subsidiary filed its tax returns on the basis
that such asserted tax positions were correct. If there is a Determination with
respect to the Taxable Year to which such assertion relates or any subsequent
taxable year, for all purposes under this Agreement, the Net Tax Detriment for
such years shall be recalculated to properly reflect the difference, if any,
between the amount of liability fixed by such Determination and liability taken
into account in calculating the Realized Tax Detriment for the year. For the
avoidance of doubt, if such recalculation results in an increased Net Tax
Benefit for any year, the Interest Amount of any corresponding Tax Benefit
Payment shall accrue from date specified in Section 3.01(b) for such Tax Benefit
Payment.

“Reconciliation Dispute” has the meaning set forth in Section 7.09.

“Reconciliation Procedures” means those procedures set forth in Section 7.09.

“Responding Party” is defined in Section 7.08(a).

“Schedule” means any Exchange Basis Schedule or Tax Benefit Schedule and the
Early Termination Schedule.

“Scheduled Termination Date” is defined in Section 4.04.

“Senior Obligations” is defined in Section 5.01.

“Subsidiaries” means, with respect to any Person, as of any date of
determination, any other Person as to which such Person, owns, directly or
indirectly, or otherwise controls more than 50% of the voting shares or other
similar interests or the sole general partner interest or managing member or
similar interest of such Person.

“Tax or Taxes” means any and all U.S. federal, state, local and foreign tax,
assessments or similar charges that are based on or measured with respect to net
income or profits, whether as an exclusive or on an alternative basis, and any
interest or penalties related to such tax.

“Tax Benefit Payment” is defined in Section 3.01(b).

“Tax Benefit Schedule” is defined in Section 2.03.

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules), including
any information return, claim for refund, amended return and declaration of
estimated Tax.

 

7

--------------------------------------------------------------------------------

“Tax Ruling” means a binding ruling by a Taxing Authority with respect to Taxes.

“Taxable Year” means a Taxable year of the Corporation as defined in
Section 441(b) of the Code or comparable section of state, local or foreign Tax
law, as applicable (and, therefore, for the avoidance of doubt, may include a
period of less than 12 months for which a Tax Return is prepared), in which
there is a Basis Adjustment or increased depreciation, amortization or interest
deductions attributable to an Exchange.

“Taxing Authority” means any domestic, foreign, federal, national, state, county
or municipal or other local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any Taxing
authority or any other authority exercising Tax regulatory authority.

“Treasury Regulations” means the final, temporary and proposed regulations under
the Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant Taxable period.

“Units” is defined in the Recitals of this Agreement.

“Valuation Assumptions” means, as of an Early Termination Date, or following a
Change of Control, as applicable, the assumptions that (i) in each Taxable Year
ending on or after such Early Termination Date or the Change of Control, as
applicable, the Corporation will have sufficient Taxable income to fully offset
the deductions and losses in such Taxable Year attributable to any Basis
Adjustment, increased depreciation or amortization deductions attributable to an
Exchange, and Imputed Interest, (ii) the U.S. federal income Tax rates and
state, local and foreign income Tax rates that will be in effect for each such
Taxable Year will be those specified for each such Taxable Year by the Code and
other law as in effect on the Early Termination Date or the Change of Control,
as applicable, (iii) any loss carryovers generated by any Basis Adjustment or
Imputed Interest and available as of the date of the Early Termination Schedule
will be used by the Corporation on a pro rata basis from the date of the Early
Termination Schedule through the scheduled expiration date of such loss
carryovers, and (iv) if, at the Early Termination Date or the Change of Control,
there are Units that have not been Exchanged, then each such Unit shall be
deemed to be Exchanged for the Market Value of the Class A Shares and the amount
of cash that would be transferred if the Exchange occurred on the Early
Termination Date or the Change of Control, as applicable.

Section 1.02. Other Definitional and Interpretative Provisions. The words
“hereof’, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to Articles, Sections, Exhibits and
Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement
unless otherwise specified. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein. Any capitalized terms used in any Exhibit or
Schedule but not otherwise defined therein, shall have the meaning as defined in
this Agreement. Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation”, whether or not they are in fact
followed by those

 

8

--------------------------------------------------------------------------------

words or words of like import. “Writing”, “written” and comparable terms refer
to printing, typing and other means of reproducing words (including electronic
media) in a visible form. References to any agreement or contract are to that
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms thereof. References to any Person include the
successors and permitted assigns of that Person. References from or through any
date mean, unless otherwise specified, from and including or through and
including, respectively.

ARTICLE 2

DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT

Section 2.01. Basis Adjustment.

(a) Exchange Assets. For purposes of this Agreement, as a result of an Exchange,
MNG (and each direct and indirect subsidiary of MNG that is treated as a
partnership for U.S. federal income tax purposes) shall be entitled to a Basis
Adjustment for each Exchange Asset with respect to the Corporation, the amount
of which Basis Adjustment will be the excess (whether positive or negative) of
(i) the sum of (x) the Market Value of the Class A Shares, cash or the amount of
any other consideration transferred to the Applicable Member pursuant to the
Exchange as payment for the exchanged Units, to the extent attributable to such
Exchange Assets, (y) the amount of the payments to be made pursuant to this
Agreement with respect to such Exchange, to the extent attributable to such
Exchange Assets, and (z) the amount of debt and other liabilities allocated to
the Units acquired pursuant to such Exchange, to the extent attributable to such
Exchange Assets; over (ii) the Corporation’s share of MNG’s (or such subsidiary
partnership’s) basis in such Exchange Assets immediately after the Exchange,
attributable to the Units exchanged, determined as if (x) MNG (or such
subsidiary partnership) remained in existence as an entity for Tax purposes and
(y) MNG (or such subsidiary partnership) had not made the election provided by
Section 754 of the Code.

(b) Imputed Interest. For the avoidance of doubt, payments made under this
Agreement shall not be treated as resulting in a Basis Adjustment to the extent
such payments are treated as Imputed Interest.

Section 2.02. Exchange Basis Schedule. Within 45 calendar days after the filing
of the U.S. federal income Tax return of the Corporation for each Taxable Year,
the Corporation shall deliver to each Member a schedule (the “Exchange Basis
Schedule”) that shows, in reasonable detail, for purposes of federal income
Taxes, (a) the actual unadjusted Tax basis of the Exchange Assets as of each
applicable Exchange Date, (b) the Basis Adjustment with respect to the Exchange
Assets as a result of the Exchanges effected in such Taxable Year, calculated in
the aggregate, (c) the period or periods, if any, over which the Exchange Assets
are amortizable and/or depreciable, (d) the period or periods, if any, over
which each Basis Adjustment is amortizable and/or depreciable, and (e) the
amount of the payments to be made pursuant to this Agreement with respect to the
Exchanges in such Taxable Year, determined in the Corporation’s reasonable
discretion.

Section 2.03. Tax Benefit Schedule. Within 45 calendar days after the filing of
the U.S. federal income Tax return of the Corporation for any Taxable Year in
which there is a Realized

 

9

--------------------------------------------------------------------------------

Tax Benefit or Realized Tax Detriment, the Corporation shall provide to each
Member a schedule showing, in reasonable detail, the calculation of the Realized
Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit
Schedule”). The Tax Benefit Schedule will become final as provided in
Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject to
the procedures set forth in Section 2.04(b)).

Section 2.04. Procedures, Amendments.

(a) Procedure. Every time the Corporation delivers to the Applicable Member an
applicable Schedule under this Agreement, including any Amended Schedule
delivered pursuant to Section 2.04(b), but excluding any Early Termination
Schedule or amended Early Termination Schedule, the Corporation shall also
(i) deliver to the Applicable Member schedules and work papers providing
reasonable detail regarding the preparation of such Schedule and (ii) allow the
Applicable Member reasonable access, at no cost to the Applicable Member, to the
appropriate representatives at the Corporation and the Advisory Firm in
connection with a review of such Schedule. The applicable Schedule shall become
final and binding on all parties unless the Applicable Member, within 30
calendar days after receiving an Exchange Basis Schedule or amendment thereto or
a Tax Benefit Schedule or amendment thereto, provides the Corporation with
notice of a material objection to such Schedule (“Objection Notice”) made in
good faith. If the parties, for any reason, are unable to successfully resolve
the issues raised in such notice within 30 calendar days of receipt by the
Corporation of an Objection Notice with respect to such Exchange Basis Schedule
or Tax Benefit Schedule, the Corporation and the Applicable Member shall employ
the reconciliation procedures as described in Section 7.09 (the “Reconciliation
Procedures”).

(b) Amended Schedule. The applicable Schedule for any Taxable Year may be
amended from time to time by the Corporation (i) in connection with a
Determination affecting such Schedule, (ii) to correct material inaccuracies in
the Schedule identified as a result of the receipt of additional factual
information relating to a Taxable Year after the date the Schedule was provided
to the Applicable Member, (iii) to comply with the Expert’s determination under
the Reconciliation Procedures, (iv) to reflect a material change in the Realized
Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a
carryback or carryforward of a loss or other Tax item to such Taxable Year,
(v) to reflect a material change in the Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year attributable to an amended Tax Return filed for
such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into
account payments made pursuant to this Agreement (such Schedule, an “Amended
Schedule”).

ARTICLE 3

TAX BENEFIT PAYMENTS

Section 3.01. Payments.

(a) Within ten business days of a Tax Benefit Schedule that was delivered to an
Applicable Member becoming final in accordance with Section 2.04(a), the
Corporation shall pay to the Applicable Member for such Taxable Year the
portion, if any, of the Tax Benefit Payment with respect thereto determined
pursuant to Section 3.01(b) with respect to which the

 

10

--------------------------------------------------------------------------------

Payment Conditions have been satisfied. Each such Tax Benefit Payment shall be
made by wire transfer of immediately available funds to a bank account of the
Applicable Member previously designated by such Member to the Corporation. For
the avoidance of doubt, no Tax Benefit Payment shall be made in respect of
estimated Tax payments, including U.S. federal income Tax payments.
Notwithstanding anything to the contrary herein, the Corporation shall not be
obligated to pay any portion of a Tax Benefit Payment, and the payment of such
amount shall not be considered due for any purpose under this Agreement, unless
and until the Payment Conditions have been satisfied with respect to such
portion (any portion with respect to which the Payment Conditions have not been
satisfied, a “Deferrable Portion”).

(b) A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of
the sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit”
for each Taxable Year shall be an amount equal to the excess, if any, of the
Cumulative Realized Tax Benefit as of the end of such Taxable Year over the
total amount of payments previously made under this Section 3.01, excluding
payments attributable to the Interest Amount; provided, however, that for the
avoidance of doubt, no Member shall be required to return any portion of any
previously received Tax Benefit Payment under any circumstances. The “Interest
Amount” for a given Taxable Year shall equal the interest on the Net Tax Benefit
for such Taxable Year calculated at the Agreed Rate from the due date (without
regard to extensions) for filing the Corporation Return with respect to Taxes
for the most recently ended Taxable Year until the Payment Date of the portion
of the Net Tax Benefit to which such Interest Amount relates. For the avoidance
of doubt, and without duplication, the Interest Amount with respect to a
Deferrable Portion of a Tax Benefit Payment shall accrue from the due date of
the relevant Tax Return until such Deferrable Portion is paid to the Applicable
Member. The Net Tax Benefit and the Interest Amount shall be determined
separately with respect to each separate Exchange. Notwithstanding the
foregoing, for each Taxable Year ending on or after the date of a Change of
Control, all Tax Benefit Payments, whether paid with respect to Units that were
Exchanged (i) prior to the date of such Change of Control or (ii) on or after
the date of such Change of Control, shall be calculated by utilizing the
assumptions in clauses (i) and (iii) of the definition of Valuation Assumptions.

(c) The “Payment Conditions” shall be satisfied with respect to any portion of a
Tax Benefit Payment upon the earliest to occur of:

(i) the receipt by the Corporation of a Tax Ruling that, in the reasonable
judgment of the Corporation, after consultation with the Advisory Firm and the
Corporation’s auditors, confirms that the Realized Tax Benefit to which the
portion of such Tax Benefit Payment relates is available for the applicable
Taxable Year;

(ii) the receipt by the Corporation of (a) a written opinion issued by the
Advisory Firm identifying any Exchange Assets that are amortizable without
regard to the anti-churning rules of Section 1.197-2(h) of the Treasury
Regulations, together with (if the opinion relates to less than all of the
Exchange Assets) (b) a valuation report prepared by a nationally recognized
appraiser or valuation expert setting forth the fair market value, as of the
date of the relevant Exchange, of the Exchange Assets identified in such
opinion, but only if the opinion and report are satisfactory in form and
substance to the Corporation’s auditors and/or tax preparers, as applicable, to
conclude that the

 

11

--------------------------------------------------------------------------------

Realized Tax Benefit to which the portion of such Tax Benefit Payment relates is
available for the applicable Taxable Year without the filing of a Schedule UTP
(with respect to such Realized Tax Benefit) with the Corporation’s Tax Returns
and without taking any tax reserve for financial statement purposes (with
respect to such Realized Tax Benefit); or

(iii) a final Determination with respect to the Corporation’s liability for
Taxes for the relevant Taxable Year that conclusively determines the amount of
Realized Tax Benefit.

Notwithstanding anything to the contrary contained herein, Exchange Assets that
are not, in the reasonable judgment of the Corporation, after consultation with
the Advisory Firm and the Corporation’s auditors, section 197 intangible within
the meaning of section 197(d)(1) of the Code, shall be treated as satisfying the
requirement of Section 3.01(c)(ii)(a).

The Corporation shall make reasonable efforts to determine whether the Payment
Conditions are satisfied with respect to an amount of any Tax Benefit Payment
before delivering the Tax Benefit Schedule for a Taxable Year, and in any event
as soon as reasonably practicable thereafter.

Section 3.02. No Duplicative Payments. It is intended that the provisions of
this Agreement will not result in duplicative payment of any amount (including
interest) required under this Agreement. It is also intended that the provisions
of this Agreement will result in 85% of the Corporation’s Cumulative Realized
Tax Benefit, and the Interest Amount thereon, being paid to the Members pursuant
to this Agreement upon and subject to the satisfaction of the Payment
Conditions.

Section 3.03. Pro Rata Payments. For the avoidance of doubt, to the extent that
(i) the Corporation’s deductions with respect to any Basis Adjustment are
limited in a particular Taxable Year or (ii) the Corporation lacks sufficient
funds to satisfy or is prevented under any credit agreement or other arrangement
from satisfying its obligations to make all Tax Benefit Payments due in a
particular Taxable Year, the limitation on the deduction, or the Tax Benefit
Payments that may be made, as the case may be, shall be taken into account or
made for the Applicable Member in the same proportion as Tax Benefit Payments
would have been made absent the limitations in clauses (i) and (ii) of this
Section 3.03, as applicable.

ARTICLE 4

TERMINATION

Section 4.01. Early Termination and Breach of Agreement.

(a) The Corporation may terminate this Agreement with respect to all of the
Units held (or previously held and Exchanged) by all Members at any time by
paying to the Members the Early Termination Payment; provided, however, that
this Agreement shall terminate only upon the receipt of the Early Termination
Payment by all Members, and provided, further, that the Corporation may withdraw
any notice to execute its termination rights under this Section 4.01(a) prior to
the time at which any Early Termination Payment has been paid. Upon payment of
the Early Termination Payments by the Corporation, neither the Members nor the

 

12

--------------------------------------------------------------------------------

Corporation shall have any further payment obligations under this Agreement,
other than for any (i) Tax Benefit Payment agreed by the Corporation acting in
good faith and the Applicable Member to be due and payable but unpaid as of the
Early Termination Notice and (ii) Tax Benefit Payment due for the Taxable Year
ending with or including the date of the Early Termination Notice (except to the
extent that the amount described in clause (ii) is included in the Early
Termination Payment). For the avoidance of doubt, if an Exchange occurs after
the Corporation makes the Early Termination Payments with respect to all
Members, the Corporation shall have no obligations under this Agreement with
respect to such Exchange, and its only obligations under this Agreement in such
case shall be its obligations to all Members under Section 4.03(a).

(b) In the event that the Corporation breaches any of its material obligations
under this Agreement, whether as a result of failure to make any payment when
due, failure to honor any other material obligation required hereunder or by
operation of law as a result of the rejection of this Agreement in a case
commenced under the Bankruptcy Code, Title 11, U.S.C., or otherwise, then all
obligations hereunder shall be accelerated and such obligations shall be
calculated as if an Early Termination Notice had been delivered on the date of
such breach and shall include, but shall not be limited to, (i) the Early
Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of a breach, (ii) any Tax Benefit Payment agreed by the
Corporation acting in good faith and any Applicable Member to be due and payable
but unpaid as of the date of a breach, and (iii) any Tax Benefit Payment due for
the Taxable Year ending with or including the date of a breach. Notwithstanding
the foregoing, in the event that the Corporation breaches this Agreement, the
Members shall be entitled to elect to receive the amounts set forth in clauses
(i), (ii) and (iii) above or to seek specific performance of the terms hereof.
The parties agree that the failure to make any payment due pursuant to this
Agreement within three months of the date such payment is due shall be deemed to
be a breach of a material obligation under this Agreement for all purposes of
this Agreement, and that it shall not be considered to be a breach of a material
obligation under this Agreement to make a payment due pursuant to this Agreement
within three months of the date such payment is due.

(c) The Corporation, MNG and each of the Members hereby acknowledge that, as of
the date of this Agreement, the aggregate value of the Tax Benefit Payments
cannot reasonably be ascertained for U.S. federal income Tax or other applicable
Tax purposes.

Section 4.02. Early Termination Notice. If the Corporation chooses to exercise
its right of early termination under Section 4.01 above, or upon the occurrence
of a Change of Control, the Corporation shall deliver to each present or former
Member a notice of such intention to exercise such right (“Early Termination
Notice”) and a schedule (the “Early Termination Schedule”) specifying the
Corporation’s intention to exercise such right and showing in reasonable detail
the calculation of the Early Termination Payment including that portion of the
Early Termination Payment that has satisfied the Payment Conditions and that
portion of the Early Termination Payment that has not, as of the Early
Termination Date, satisfied a Payment Condition. The Early Termination Schedule
shall become final and binding on all parties unless an Applicable Member,
within 30 calendar days after receiving the Early Termination Schedule, provides
the Corporation with notice of a material objection to such Schedule made in
good faith (“Material Objection Notice”). If the parties, for any reason, are
unable to successfully resolve the issues raised in such notice within 30
calendar days after receipt by the Corporation of the

 

13

--------------------------------------------------------------------------------

Material Objection Notice, the Corporation and the relevant Member shall employ
the Reconciliation Procedures as described in Section 7.09 of this Agreement.

Section 4.03. Payment upon Early Termination.

(a) Within 30 calendar days of the Early Termination Conditions being satisfied
with respect to an Early Termination Payment (or a portion thereof), the
Corporation shall pay to each Applicable Member an amount equal to the Early
Termination Payment (or the portion thereof for which the Early Termination
Conditions have been satisfied), plus interest calculated at the Agreed Rate
from the due Early Termination Date until the Payment Date of such Early
Termination Payment. Such payment shall be made by wire transfer of immediately
available funds to a bank account designated by the Applicable Member. For the
avoidance of doubt, after the initial Early Termination Payment, the Corporation
will be required to make additional payments to the Member with respect to the
Deferrable Portion of the Early Termination Payment if and when a Payment
Conditions has been satisfied with respect to such Deferrable Portion. In
addition, the Corporation shall pay the Member an amount equal to the Realized
Tax Benefit resulting from the sale of a non amortizable asset. Such payment
shall be due 30 calendar days after such sale has closed.

(b) The “Early Termination Payment” as of the date of the delivery of an Early
Termination Schedule shall equal with respect to the Applicable Member the
present value, discounted at the Early Termination Rate as of such date, of all
Tax Benefit Payments that would be required to be paid by the Corporation to the
Applicable Member beginning from the Early Termination Date and assuming that
the Valuation Assumptions are applied.

Section 4.04. Scheduled Termination. No Tax Benefit Payment shall accrue, or
shall become due or payable with respect to any Exchange after the sixtieth
anniversary (the “Scheduled Termination Date”) of the effective date of such
Exchange. For avoidance of doubt, this Agreement shall continue to be in effect
in periods after the Scheduled Termination Date with respect to Tax Benefit
Payments that arise on or before such date, or any adjustment thereto, and shall
terminate upon such time as when all Tax Benefit Payment due and payable
hereunder have been paid and the Determinations have been with respect to all
such payments.

ARTICLE 5

SUBORDINATION AND LATE PAYMENTS

Section 5.01. Subordination. Notwithstanding any other provision of this
Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment
required to be made by the Corporation to the Members under this Agreement (an
“Exchange Payment”) shall rank subordinate and junior in right of payment to any
principal, interest or other amounts due and payable in respect of any
obligations in respect of indebtedness for borrowed money of the Corporation and
its Subsidiaries (“Senior Obligations”) and shall rank pari passu with all
current or future unsecured obligations of the Corporation that are not Senior
Obligations.

Section 5.02. Late Payments by the Corporation. The amount of all or any portion
of any Exchange Payment not made to any Member when due (without regard to
Section 5.01) under the terms of this Agreement shall be payable together with
any interest thereon, computed

 

14

--------------------------------------------------------------------------------

at the Default Rate and commencing from the date on which such Exchange Payment
was due and payable.

ARTICLE 6

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01. Member Participation in the Corporation and MNG’s Tax Matters.
Except as otherwise provided herein, the Corporation shall have full
responsibility for, and sole discretion over, all Tax matters concerning the
Corporation and MNG, including the preparation, filing or amending of any Tax
Return and defending, contesting or settling any issue pertaining to Taxes.
Notwithstanding the foregoing, the Corporation shall notify each relevant Member
of, and keep such Member reasonably informed with respect to the portion of any
audit of the Corporation and MNG by a Taxing Authority the outcome of which is
reasonably expected to affect such Member’s rights and obligations under this
Agreement, and shall provide to such Member reasonable opportunity to provide
information and other input to the Corporation, MNG and their respective
advisors concerning the conduct of any such portion of such audit; provided,
however, that the Corporation and MNG shall not be required to take any action
that is inconsistent with any provision of the LLC Agreement.

Section 6.02. Consistency. The Corporation and the Applicable Member agree to
report and cause to be reported for all purposes, including U.S. federal, state,
local and foreign Tax purposes and financial reporting purposes, all Tax-related
items (including the Basis Adjustment and each Tax Benefit Payment) in a manner
consistent with that specified by the Corporation in any Schedule required to be
provided by or on behalf of the Corporation under this Agreement. In this
regard, the Corporation and the Applicable Member agree to report any gain of
the Member resulting from an Exchange as capital gain unless the Corporation is
advised otherwise by an Advisory Firm. Any Dispute concerning such advice shall
be subject to the terms of Section 7.09. In the event that an Advisory Firm is
replaced, such replacement Advisory Firm shall be required to perform its
services under this Agreement using procedures and methodologies consistent with
the previous Advisory Firm, unless (a) otherwise required by law or (b) the
Corporation and the Applicable Member agree to the use of other procedures and
methodologies.

Section 6.03. Cooperation. The Applicable Member shall (a) furnish to the
Corporation in a timely manner such information, documents and other materials,
or make such representations, as the Corporation may reasonably request for
purposes of making any determination or computation necessary or appropriate
under this Agreement, preparing any Tax Return or contesting or defending any
audit, examination or controversy with any Taxing Authority, (b) make itself
available to the Corporation and its representatives to provide explanations of
documents and materials and such other information as the Corporation or its
representatives may reasonably request in connection with any of the matters
described in clause (a) above, and (c) reasonably cooperate in connection with
any such matter described in clause (a) above. The Corporation shall reimburse
the Applicable Member for any reasonable third-party costs and expenses incurred
pursuant to this Section 6.03.

 

15

--------------------------------------------------------------------------------

ARTICLE 7

MISCELLANEOUS

Section 7.01. Notices. Any notice, request, claim, demand, approval, consent,
waiver or other communication required or permitted to be given to any party in
connection with this Agreement (each, a “Notice”) shall be in writing and shall
be (a) delivered in person, (b) sent by facsimile transmission (with the
original thereof also contemporaneously given by another method specified in
this Section 7.01), (c) sent by a nationally-recognized overnight courier
service, or (d) sent by certified or registered mail postage prepaid, return
receipt requested), at the following locations (or at such other location for a
party as shall be specified to the other parties by like Notice). Any Notice
shall only be duly given and effective upon receipt (or refusal of receipt).

If to the Corporation, to:

Manning & Napier, Inc.

290 Woodcliff Drive

Fairport, New York 14450

with a copy to:

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attention: Harold Levine, Esq.

                  Irwin Kishner, Esq.

if to MNG, to:

Manning & Napier Group, LLC

290 Woodcliff Drive

Fairport, New York 14450

with a copy to:

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attention: Harold Levine, Esq.

                  Irwin Kishner, Esq.

if to M &N Group Holdings, LLC, to:

M &N Group Holdings, LLC

290 Woodcliff Drive

Fairport, New York 14450

with a copy to:

 

16

--------------------------------------------------------------------------------

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attention: Harold Levine, Esq.

                  Irwin Kishner, Esq.

if to Manning & Napier Capital Company, LLC, to:

Manning & Napier Capital Company, LLC

290 Woodcliff Drive

Fairport, New York 14450

with a copy to:

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attention: Harold Levine, Esq.

                  Irwin Kishner, Esq.

Section 7.02. Counterparts. This Agreement may be executed (including by
facsimile transmission) with counterpart signature pages or in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall, taken together, be deemed to be one and the same instrument.

Section 7.03. Entire Agreement; No Third-Party Beneficiaries. This Agreement
constitutes the entire agreement among the parties hereto and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, Nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person other than
the parties hereto and their respective heirs, successors, legal representatives
and permitted assigns, any rights or remedies hereunder.

Section 7.04. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with, the laws of the State of New York, without regard
to the conflict of laws principles thereof that would mandate the application of
the laws of another jurisdiction.

Section 7.05. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, all other terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

 

17

--------------------------------------------------------------------------------

Section 7.06. Successors; Assignment; Amendments; and Waivers.

(a) No Member may assign this Agreement to any person without the prior written
consent of the Corporation; provided, however, that (i) to the extent Units are
transferred in accordance with the terms of the LLC Agreement, the transferring
Member shall have the option to assign to the transferee of such Units the
transferring Member’s rights under this Agreement with respect to such
transferred Units, as long as such transferee has executed and delivered, or, in
connection with such transfer, executes and delivers, a joinder to this
Agreement, in form and substance substantially similar to Exhibit A to this
Agreement, agreeing to become a “Member” for all purposes of this Agreement,
except as otherwise provided in such joinder, and (ii) once an Exchange has
occurred, any and all payments that may become payable to a Member pursuant to
this Agreement with respect to the Exchanged Units may be assigned to any Person
or Persons as long as any such Person has executed and delivered, or, in
connection with such assignment, executes and delivers, a joinder to this
Agreement, in form and substance substantially similar to Exhibit A to this
Agreement, agreeing to be bound by Section 7.12 and acknowledging specifically
the terms of Section 7.06(b). For the avoidance of doubt, if a Member transfers
Units but does not assign to the transferee of such Units such Member’s rights
under this Agreement with respect to such transferred Units, such Member shall
continue to be entitled to receive the Tax Benefit Payments arising in respect
of a subsequent Exchange of such Units.

(b) No provision of this Agreement may be amended unless such amendment is
approved in writing by each of the Corporation and MNG and by Members who would
be entitled to receive at least fifty one percent (51%) of the Early Termination
Payments payable to all Members hereunder if the Corporation had exercised its
right of early termination on the date of the most recent Exchange prior to such
amendment (excluding, for purposes of this sentence, all payments made to any
Principal pursuant to this Agreement since the date of such most recent
Exchange); provided, however, that no such amendment shall be effective if such
amendment would have a disproportionate effect on the payments certain Members
will or may receive under this Agreement unless all such Members
disproportionately effected consent in writing to such amendment. No provision
of this Agreement may be waived unless such waiver is in writing and signed by
the party against whom the waiver is to be effective.

(c) Except as otherwise specifically provided herein, all of the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the parties hereto and their respective
successors, permitted assigns, heirs, executors, administrators and legal
representatives. The Corporation shall require and cause any direct or indirect
successor (whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, by written
agreement, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if no such succession had taken place.

Section 7.07. Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

 

18

--------------------------------------------------------------------------------

Section 7.08. Resolution of Disputes.

(a) Any and all claims, disputes and other disagreements arising hereunder
(each, a “Dispute”) which are not governed by Section 7.09, including any
ancillary claims of any party, arising out of, relating to or in connection with
the validity, negotiation, execution, interpretation, performance or non-
performance of this Agreement (including the validity, scope and enforceability
of this Section 7.08 and Section 7.09) shall be governed by this Section 7.08.
The parties hereto shall attempt in good faith to resolve all Disputes by
negotiation. If a Dispute between the parties hereto cannot be resolved in such
manner, such Dispute shall, at the request of any party, after providing written
notice to the other party or parties to the Dispute, be submitted to arbitration
in New York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The proceeding shall be confidential.
The party initially asserting the Dispute (the “Initiating Party”) shall notify
the other party (the “Responding Party”) of the name and address of the
arbitrator chosen by the Initiating Party and shall specifically describe the
Dispute in issue to be submitted to arbitration. Within 30 days of receipt of
such notification, the Responding Party shall notify the Initiating Party of its
answer to the Dispute, any counterclaim which it wishes to assert in the
arbitration and the name and address of the arbitrator chosen by the Responding
Party. If the Responding Party does not appoint an arbitrator during such 30-day
period, appointment of the second arbitrator shall be made by the American
Arbitration Association upon request of the Initiating Party. The two
arbitrators so chosen or appointed shall choose a third arbitrator, who shall
serve as president of the panel of arbitrators (the “Panel”) thus composed. If
the two arbitrators so chosen or appointed fail to agree upon the choice of a
third arbitrator within 30 days from the appointment of the second arbitrator,
the third arbitrator will be appointed by the American Arbitration Association
upon the request of the arbitrators or either of the parties. In all cases, the
arbitrators must be persons who have substantial experience in tax matters. The
arbitrators will act by majority decisions. Any decision of the arbitrators
shall (i) be rendered in writing and shall bear the signatures of at least two
arbitrators, and (ii) identify the members of the Panel, and the time and place
of the award granted. Absent fraud or manifest error, any such decision of the
Panel shall be final, conclusive and binding on the parties to the arbitration
and enforceable by a court of competent jurisdiction. The expenses of the
arbitration shall be borne equally by the parties to the arbitration; provided,
however, that each party shall pay for and bear the costs of its own experts,
evidence and legal counsel, unless the arbitrator rules otherwise in the
arbitration. The parties shall complete all discovery within 30 days after the
Panel is composed, shall complete the presentation of evidence to the Panel
within 15 days after the completion of discovery, and a final decision with
respect to the matter submitted to arbitration shall be rendered within 15 days
after the completion of presentation of evidence. The parties hereto shall cause
to be kept a record of the proceedings of any matter submitted to arbitration
hereunder. Performance under this Agreement shall continue if reasonably
possible during any arbitration proceedings. In addition to monetary damages,
the arbitrator shall be empowered to award equitable relief, including an
injunction and specific performance of any obligation under this Agreement. The
arbitrator is not empowered to award damages in excess of compensatory damages,
and each party hereby irrevocably waives any right to recover punitive,
exemplary or similar damages with respect to any Dispute. The award shall be the
sole and exclusive remedy between the parties regarding any claims,
counterclaims, issues, or accounting presented to the arbitral tribunal.
Judgment upon any award may be entered and enforced in any court having
jurisdiction over a party or any of its assets.

 

19

--------------------------------------------------------------------------------

(b) Notwithstanding the provisions of Section 7.08(a), the Corporation may bring
an action or special proceeding in any court of competent jurisdiction for the
purpose of compelling a party to arbitrate, seeking temporary or preliminary
relief in aid of an arbitration hereunder, and/or enforcing an arbitration award
and, for the purposes of this Section 7.08(b), each Member (i) expressly
consents to the application of Section 7.08(c) to any such action or proceeding,
(ii) agrees that proof shall not be required that monetary damages for breach of
the provisions of this Agreement would be difficult to calculate and that
remedies at law would be inadequate, and (iii) irrevocably appoints the
Corporation as such Member’s agent for service of process in connection with any
such action or proceeding and agrees that service of process upon such agent,
who shall promptly advise such Member in writing of any such service of process,
shall be deemed in every respect effective service of process upon the Member in
any such action or proceeding.

(c) The parties hereto agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby that is brought in
accordance with Section 7.08(b) shall be brought and maintained exclusively in
the United States District Court for the Southern District of New York or the
Supreme Court of the State of New York located in the County of New York. Each
of the parties irrevocably consents to submit to the personal jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding. Process in any such suit, action or proceeding in
such courts may be served, and shall be effective, on any party anywhere in the
world, whether within or without the jurisdiction of any such court, by any of
the methods specified for the giving of Notices pursuant to Section 7.01. Each
of the parties irrevocably waives, to the fullest extent permitted by law, any
objection or defense that it may now or hereafter have based on venue,
inconvenience of forum, the lack of personal jurisdiction and the adequacy of
service of process (as long as the party was provided Notice in accordance with
the methods specified in Section 7.01) in any suit action or proceeding brought
in such courts. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY
PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 7.09. Reconciliation. In the event that the Corporation and the relevant
Member are unable to resolve a disagreement with respect to the matters governed
by Sections 2.04, 4.02 and 6.02 within the relevant period designated in this
Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be
submitted for determination to a nationally recognized expert (the “Expert”) in
the particular area of disagreement mutually acceptable to both parties. The
Expert shall be a partner in a nationally recognized accounting firm or a law
firm (other than the Advisory Firm), and the Expert shall not, and the firm that
employs the Expert shall not, have any material relationship with either the
Corporation or the relevant Member or other actual or potential conflict of
interest. If the parties are unable to agree on an Expert within 15 days of
receipt by the respondent(s) of written notice of a Reconciliation Dispute, the
Expert shall be appointed by the International Chamber of Commerce Centre for
Expertise. The Expert shall resolve any matter relating to the Exchange Basis
Schedule or an amendment thereto or the Early Termination Schedule or an
amendment thereto within 30 calendar days and shall resolve any matter relating
to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as

 

20

--------------------------------------------------------------------------------

soon thereafter as is reasonably practicable, in each case after the matter has
been submitted to the Expert for resolution. Notwithstanding the preceding
sentence, if the matter is not resolved before any payment that is the subject
of a disagreement would be due (in the absence of such disagreement) or any Tax
Return reflecting the subject of a disagreement is due, the undisputed amount
shall be paid on such date and such Tax Return may be filed as prepared by the
Corporation, subject to adjustment or amendment upon resolution. In the event
that this reconciliation provision is utilized, the fees of the Expert shall be
paid in proportion to the manner in which the dispute is resolved, such that,
for example, if the entire dispute is resolved in favor of the Corporation, the
relevant Member shall pay all of the fees, or if the items in dispute are
resolved 50% in favor of the Corporation and 50% in favor of the relevant
Member, each of the Corporation and the relevant Member shall pay 50% of the
fees of the Expert. Any Dispute as to whether a Dispute is a Reconciliation
Dispute within the meaning of this Section 7.09 shall be decided by the Expert.
The Expert shall finally determine any Reconciliation Dispute and the
determinations of the Expert pursuant to this Section 7.09 shall be binding on
the Corporation and the relevant Member and may be entered and enforced in any
court having jurisdiction.

Section 7.10. Withholding. The Corporation shall be entitled to deduct and
withhold from any payment payable pursuant to this Agreement such amounts as the
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local or foreign Tax law.
To the extent that amounts are so withheld and paid over to the appropriate
Taxing Authority by the Corporation, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Applicable Member.

Section 7.11. Admission of the Corporation into a Consolidated Group; Transfers
of Corporate Assets.

(a) If the Corporation becomes a member of an affiliated or consolidated group
of corporations that files a consolidated income Tax return pursuant to Sections
1501, et seq. of the Code or any corresponding provisions of state, local or
foreign law, then: (i) the provisions of this Agreement shall be applied with
respect to the group as a whole; and (ii) Tax Benefit Payments, Early
Termination Payments and other applicable items hereunder shall be computed with
reference to the consolidated Taxable income of the group as a whole.

(b) If any entity that is obligated to make an Exchange Payment hereunder
transfers one or more assets to a corporation with which such entity does not
file a consolidated Tax return pursuant to Section 1501 of the Code, such
entity, for purposes of calculating the amount of any Exchange Payment (e.g.,
calculating the gross income of the entity and determining the Realized Tax
Benefit of such entity) due hereunder, shall be treated as having disposed of
such asset in a fully Taxable transaction on the date of such contribution. The
consideration deemed to be received by such entity shall be equal to the fair
market value of the contributed asset, plus (i) the amount of debt to which such
asset is subject, in the case of a contribution of an encumbered asset or
(ii) the amount of debt allocated to such asset, in the case of a contribution
of a partnership interest.

 

21

--------------------------------------------------------------------------------

Section 7.12. Confidentiality.

(a) Each Member and assignee acknowledges and agrees that the information of the
Corporation and of its Affiliates is confidential and, except in the course of
performing any duties as necessary for the Corporation and its Affiliates, as
required by law or legal process or to enforce the terms of this Agreement, such
person shall keep and retain in the strictest confidence and not disclose to any
Person any confidential matters, acquired pursuant to this Agreement, of the
Corporation and its Affiliates and successors, concerning MNG and its Affiliates
and successors or the other Members, learned by the Member heretofore or
hereafter. This Section 7.12(a) shall not apply to (i) any information that has
been made publicly available by the Corporation or any of its Affiliates,
becomes public knowledge (except as a result of an act of such Member in
violation of this Agreement) or is generally known to the business community and
(ii) the disclosure of information to the extent necessary for a Member to
prepare and file his or her Tax returns, to respond to any inquiries regarding
the same from any Taxing authority or to prosecute or defend any action,
proceeding or audit by any Taxing authority with respect to such returns.
Notwithstanding anything to the contrary herein, each Member and assignee (and
each employee, representative or other agent of such Member or assignee, as
applicable) may disclose to any and all Persons, without limitation of any kind,
the Tax treatment and Tax structure of the Corporation, MNG, the Members and
their Affiliates, and any of their transactions, and all materials of any kind
(including opinions or other Tax analyses) that are provided to the Members
relating to such Tax treatment and Tax structure.

(b) If a Member or assignee commits a breach, or threatens to commit a breach,
of any of the provisions of Section 7.12(a), the Corporation shall have the
right and remedy to have the provisions of Section 7.12(a) specifically enforced
by injunctive relief or otherwise by any court of competent jurisdiction without
the need to post any bond or other security, it being acknowledged and agreed
that any such breach or threatened breach shall cause irreparable injury to the
Corporation or any of its Subsidiaries or the other Members and the accounts and
funds managed by the Corporation and that money damages alone shall not provide
an adequate remedy to such Persons. Such rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available at law
or in equity.

Section 7.13. No Joint Venture. Parties hereto intend that the relationships
created hereunder and under the Exchange Agreement be solely that of transferor
and transferee of the Class A Units as determined herein. Nothing herein or
therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between or among the parties nor to grant the
exchanging Members any interest in the exchanged Class A Units other than that
of a transferor.

Section 7.14. Partnerships. The Corporation hereby agrees that, to the extent it
acquires a general partnership interest, managing member interest or similar
interest in any Person after the date hereof, it shall cause such Person to
execute and deliver a joinder to this Agreement and such Person shall be treated
as a “Partnership Subsidiary” for all purposes of this Agreement.

[Signature page follows.]

 

22

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Corporation, MNG and each Member have duly executed this
Agreement as of the date first written above.

 

Manning & Napier, Inc. By:   /s/ Richard B. Yates   Name: Richard B. Yates  
Title: Corporate Secretary

 

Manning & Napier Group, LLC By:   /s/ Richard B. Yates   Name: Richard B. Yates
  Title: Authorized Signatory

 

M&N Group Holdings, LLC By:   /s/ William Manning   Name: William Manning  
Title: Managing Member

 

Manning & Napier Capital Company, LLC By:   /s/ Richard B. Yates   Name: Richard
B. Yates   Title: Authorized Signatory

 

  /s/ James Mikolaichik   James Mikolaichik

 

  /s/ Patrick Cunningham   Patrick Cunningham

 

23

--------------------------------------------------------------------------------

EXHIBIT A

JOINDER

This JOINDER (this “Joinder”) to the Tax Receivable Agreement (as defined
below), dated as of November 23, 2011, by and among Manning & Napier, Inc, a
Delaware corporation (the”Corporation”), Manning & Napier Group, LLC, a Delaware
limited liability company (“MNG”), M & N Group Holdings, LLC or Manning & Napier
Capital Company, LLC, a Delaware limited liability company (the “Transferor”)],
and [            ] (“Permitted Transferee”).

WHEREAS, on            the Permitted Transferee acquired (the “Acquisition”)
Units in MNG and, together with all other Units hereinafter acquired by the
Permitted Transferee from Transferor and its Permitted Transferees (as defined
in the Tax Receivable Agreement dated as of November     , 2011 (as the same may
be amended from time to time, the “Tax Receivable Agreement”), among the
Corporation, MNG and the other parties thereto), the “Acquired Interests”) from
Transferor and

WHEREAS, Transferor, in connection with the Acquisition, has required Permitted
Transferee to execute and deliver this Joinder pursuant to Section 7.06 of the
Tax Receivable Agreement;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound, Permitted Transferee hereby agrees as follows:

Section 1.1. Definitions. To the extent capitalized words used in this Joinder
are not defined in this Joinder, such words shall have the respective meanings
set forth in the Tax Receivable Agreement.

Section 1.2. Joinder. Permitted Transferee hereby acknowledges and agrees to
become a “Member” (as defined in the Tax Receivable Agreement) for all purposes
of the Tax Receivable Agreement, including but not limited to, being bound by
Sections 2.04, 4.02, 6.01, 6.02 and 7.12 of the Tax Receivable Agreement, with
respect to the Acquired Interests, and any other Acquired Interests Permitted
Transferee acquires hereafter. Permitted Transferee hereby acknowledges the
terms of Section 7.06(b) of the Tax Receivable Agreement.

Section 1.3. Notice. Any notice, request, consent, claim, demand, approval,
waiver or other communication hereunder to Permitted Transferee shall be
delivered or sent to Permitted Transferee at the address set forth on the
signature page hereto in accordance with Section 7.01 of the Tax Receivable
Agreement.

Section 1.4. Governing Law. THIS JOINDER SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD MANDATE THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.

 

24

--------------------------------------------------------------------------------

[Signature page follows.]

 

25

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by
Permitted Transferee as of the date first above written.

 

[PERMITTED TRANSFEREE]     Name:   Address:   Address for Notices:

 

26