Exhibit 10.3

 

Tax Receivable Agreement

for Non-PE Holders

 

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TAX RECEIVABLE AGREEMENT

 

by and among

 

FOCUS FINANCIAL PARTNERS INC.,

 

CERTAIN OTHER PERSONS NAMED HEREIN

 

and

 

THE AGENT

 

DATED AS OF JULY 30, 2018

 

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TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of July 30, 2018, is
hereby entered into by and among Focus Financial Partners Inc., a Delaware
corporation (the “Corporate Taxpayer”), the TRA Holders and the Agent.

 

RECITALS

 

WHEREAS, the Corporate Taxpayer is the managing member of Focus Financial
Partners, LLC, a Delaware limited liability company (“Focus LLC”), an entity
classified as a partnership for U.S. federal income tax purposes, and holds
limited liability company interests in Focus LLC;

 

WHEREAS, Focus LLC and each of its direct and indirect Subsidiaries that is
treated as a partnership for U.S. federal income tax purposes will have in
effect an election under Section 754 of the Internal Revenue Code of 1986, as
amended (the “Code”), for the Taxable Year that includes the IPO and for each
Taxable Year in which an Exchange (as defined herein) occurs;

 

WHEREAS, the TRA Holders currently hold Common Units and/or Incentive Units and
may transfer all or a portion of such Units (after conversion of any Incentive
Units into Common Units): (i) for cash in connection with the IPO, in a
transaction that is or is deemed to be a sale of such Common Units to the
Corporate Taxpayer for U.S. federal income tax purposes (an “IPO Sale”), (ii) to
the Corporate Taxpayer for Class A Shares and/or Class B Shares (and, in some
cases, noncompensatory options and cash) in connection with the IPO (an “IPO
Contribution”), or (iii) pursuant to the Exchange Right or the Call Right, as
applicable, in a transaction that is or is deemed to be a sale of such Common
Units to the Corporate Taxpayer for U.S. federal income tax purposes (each such
transfer under any of clause (i) through (iii), an “Exchange”), and as a result
of such Exchanges, the Corporate Taxpayer is expected to obtain or be entitled
to certain Tax benefits as further described herein;

 

WHEREAS, the Corporate Taxpayer is also entering into a tax receivable agreement
with certain affiliates of Stone Point Capital LLC, Kohlberg Kravis Roberts &
Co. L.P., and Centerbridge Partners, L.P. (the “PE TRA”);

 

WHEREAS, this Agreement is intended to set forth the agreement among the parties
hereto regarding the sharing of the Tax benefits realized by the Corporate
Taxpayer as a result of Exchanges;

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1                                  Definitions. As used in this
Agreement, the terms set forth in this Article I shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined).

 

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“Accrued Amount” has the meaning set forth in Section 3.1(b) of this Agreement.

 

“Actual Tax Liability” means, with respect to any Taxable Year, the actual
liability for U.S. federal income Taxes of (a) the Corporate Taxpayer, and
(b) without duplication, Focus LLC and any of its Subsidiaries that are treated
as a partnership for U.S. federal income tax purposes, but only with respect to
Taxes imposed on Focus LLC and such Subsidiaries that are allocable to the
Corporate Taxpayer; provided that the actual liability for U.S. federal income
Taxes of the Corporate Taxpayer shall be calculated assuming deductions of (and
other impacts of) state and local income and franchise Taxes are excluded.

 

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

 

“Agent” means Ruediger Adolf or such other Person designated as such pursuant to
Section 7.6(b).

 

“Agreed Rate” means a per annum rate of LIBOR plus 100 basis points.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Amended Schedule” has the meaning set forth in Section 2.3(b) of this
Agreement.

 

“Assumed State and Local Tax Rate” means six percent (6%) or such other rate as
the Corporate Taxpayer may in good faith determine to be appropriate taking into
account any changes, after the date hereof, to the Corporate Taxpayer’s
apportionment factors and/or the corporate income and franchise tax rates in any
state and local jurisdictions in which the Corporate Taxpayer files income and
franchise tax returns.

 

“Attributable” has the meaning set forth in Section 3.1(b) of this Agreement.

 

“Basis Adjustment” means any adjustment to the Tax basis of a Reference Asset as
a result of an Exchange and the payments made pursuant to this Agreement with
respect to such Exchange (as calculated under Section 2.1 of this Agreement),
including, but not limited to: (a) under Sections 734(b) and 743(b) of the Code
(in situations where, following an Exchange, Focus LLC remains classified as a
partnership for U.S. federal income tax purposes); (b) under Sections 732(b),
734(b) and 1012 of the Code (in situations where, as a result of one or more
Exchanges, Focus LLC becomes an entity that is disregarded as separate from its
owner for U.S. federal income tax purposes); and (c) under Section 362(a) of the
Code to the extent the Tax basis of a Reference Asset is increased as a result
of gain recognized on such Exchange.  For the avoidance of doubt, the amount of
any Basis Adjustment resulting from an Exchange of Units shall be determined
without regard to any Section 743(b) adjustment attributable to such Units prior
to such Exchange; and, further, 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.

 

“Board” means the board of directors of the Corporate Taxpayer.

 

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“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.

 

“Call Right” means the “Call Right” as defined in the Focus LLC Agreement and
any other purchase of Units by the Corporate Taxpayer pursuant to Section 3.7 of
the Focus LLC Agreement.

 

“Change of Control” means the occurrence of any of the following events or
series of related events after the date hereof:

 

(a)         any Person or group of Persons acting together which would
constitute a “group” for purposes of Section 13(d) of the Exchange Act, or any
successor provisions thereto, is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporate Taxpayer representing more than 50%
of the combined voting power of the Corporate Taxpayer’s then outstanding voting
securities;

 

(b)         there is consummated a merger or consolidation of the Corporate
Taxpayer with any other corporation or other entity, and, immediately after the
consummation of such merger or consolidation, the voting securities of the
Corporate Taxpayer immediately prior to such merger or consolidation do not
continue to represent or are not converted into more than 50% of the combined
voting power of the then-outstanding voting securities of the Person resulting
from such merger or consolidation or, if the surviving company is a Subsidiary,
the ultimate parent thereof; or

 

(c)          the equity holders of the Corporate Taxpayer approve a plan of
complete liquidation or dissolution of the Corporate Taxpayer or there is
consummated an agreement or series of related agreements for the sale or other
disposition, directly or indirectly, by the Corporate Taxpayer of all or
substantially all of the Corporate Taxpayer’s assets, other than such sale or
other disposition by the Corporate Taxpayer of all or substantially all of the
Corporate Taxpayer’s assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by equity holders of the
Corporate Taxpayer in substantially the same proportions as their ownership of
the Corporate Taxpayer immediately prior to such sale.

 

Notwithstanding the foregoing, except with respect to clause (b) above, a
“Change of Control” shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions immediately
following which the record holders of the voting power of the Corporate Taxpayer
immediately prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in, and own substantially all of
the voting power of, an entity which owns, either directly or through a
Subsidiary, all or substantially all of the assets of the Corporate Taxpayer
immediately following such transaction or series of transactions.

 

“Class A Shares” means shares of Class A common stock of the Corporate Taxpayer.

 

“Class B Shares” means shares of Class B common stock of the Corporate Taxpayer.

 

“Code” has the meaning set forth in the Recitals of this Agreement.

 

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“Common Units” has the meaning set forth in the Focus LLC 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.

 

“Corporate Taxpayer” has the meaning set forth in the preamble to this
Agreement.

 

“Corporate Taxpayer Return” means the U.S. federal income Tax Return of the
Corporate Taxpayer (including any consolidated group of which the Corporate
Taxpayer is a member, as further described in Section 7.12(a) of this Agreement)
filed with respect to any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative
amount (but not less than zero) of Realized Tax Benefits for all Taxable Years
of the Corporate Taxpayer, 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 Payment Schedule or Amended Schedule, if
any, in existence at the time of such determination.

 

“Default Rate” means a per annum rate of LIBOR plus 500 basis points.

 

“Determination” has the meaning ascribed to such term in Section 1313(a) of the
Code or any other event (including the execution of IRS Form 870-AD) that
finally and conclusively establishes the amount of any liability for Tax.

 

“Dispute” has the meaning set forth in Section 7.9(a) of this Agreement.

 

“Disputing Party” has the meaning set forth in Section 7.10 of this Agreement.

 

“Early Termination” has the meaning set forth in Section 4.1 of this Agreement.

 

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

 

“Early Termination Effective Date” has the meaning set forth in Section 4.4 of
this Agreement.

 

“Early Termination Notice” has the meaning set forth in Section 4.4 of this
Agreement.

 

“Early Termination Payment” has the meaning set forth in Section 4.5(b) of this
Agreement.

 

“Early Termination Rate” means a per annum rate of LIBOR plus 150 basis points.

 

“Early Termination Schedule” has the meaning set forth in Section 4.4 of this
Agreement.

 

“Exchange” has the meaning set forth in the Recitals of this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, as the same may be amended from time to time
(or any corresponding provisions of succeeding law).

 

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“Exchange Date” means each date on which an Exchange occurs.

 

“Exchange Notice” has the meaning given to the term “Exchange Notice” in the
Focus LLC Agreement.

 

“Exchange Right” means the exchange right set forth in Section 3.6 of the Focus
LLC Agreement, including any such exchange right exercised pursuant to
Section 3.9 of the Focus LLC Agreement.

 

“Exchange Schedule” has the meaning set forth in Section 2.1 of this Agreement.

 

“Expert” means Ernst & Young, LLP or such nationally recognized expert in the
particular area of disagreement as is mutually acceptable to the Corporate
Taxpayer, the Agent and, in the event any holders of rights under any other Tax
Receivable Agreement are involved in such disagreement, each “Agent” as defined
under such other Tax Receivable Agreement.

 

“Focus LLC” has the meaning set forth in the Recitals of this Agreement.

 

“Focus LLC Agreement” means the Fourth Amended and Restated Limited Liability
Company Agreement of Focus LLC, as amended from time to time.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the
liability for U.S. federal income Taxes of (a) the Corporate Taxpayer, and
(b) without duplication, Focus LLC and any of its Subsidiaries that are treated
as a partnership for U.S. federal income tax purposes, but only with respect to
Taxes imposed on Focus LLC and such Subsidiaries that are allocable to the
Corporate Taxpayer (using the same methods, elections, conventions, U.S. federal
income tax rate and similar practices used on the relevant Corporate Taxpayer
Return), but without taking into account (x) any Basis Adjustments, (y) any
deduction attributable to Imputed Interest for the Taxable Year, and (z) any
Other-TRA Benefits.  For the avoidance of doubt, Hypothetical Tax Liability
shall be determined without taking into account the carryover or carryback of
any U.S. federal income Tax item (or portions thereof) that is attributable to
any Basis Adjustments, Imputed Interest, or any Other-TRA Benefits. 
Furthermore, the Hypothetical Tax Liability shall be calculated assuming
deductions of (and other impacts of) state and local income and franchise Taxes
are excluded.

 

“Imputed Interest” means any interest imputed under Section 1272, 1274 or 483 or
other provision of the Code with respect to the Corporate Taxpayer’s payment
obligations under this Agreement.

 

“Incentive Units” has the meaning set forth in the Focus LLC Agreement.

 

“IPO” means the initial public offering of shares by the Corporate Taxpayer.

 

“IPO Contribution” has the meaning set forth in the Recitals of this Agreement.

 

“IPO Date” means the closing date of the IPO.

 

“IPO Sale” has the meaning set forth in the Recitals of this Agreement.

 

“IRS” means the U.S. Internal Revenue Service.

 

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“LIBOR” means during any period, an interest rate per annum equal to the
one-year LIBOR rate reported, on the date two (2) calendar days prior to the
first day of such period, on the Telerate Page 3750 (or if such screen shall
cease to be publicly available, as reported on Reuters Screen page “LIBOR01” or
by any other publicly available source of such market rate) for London interbank
offered rates for United States dollar deposits for such period.

 

“Majority TRA Holders” means, at the time of any determination, TRA Holders who
would be entitled to receive more than fifty percent (50%) of the aggregate
amount of the Early Termination Payments payable to all TRA Holders hereunder
(determined using such calculations of Early Termination Payments reasonably
estimated by the Corporate Taxpayer in consultation with the Agent) if the
Corporate Taxpayer had exercised its right of early termination on such date.

 

“Market Value” means the closing price of the Class A Shares on the applicable
Exchange Date on the national securities exchange or interdealer quotation
system on which such Class A Shares are then traded or listed, as reported by
Bloomberg L.P.; provided, that if the closing price is not reported by Bloomberg
L.P. for the applicable Exchange Date, then the Market Value means the closing
price of the Class A Shares on the Business Day immediately preceding such
Exchange Date on the national securities exchange or interdealer quotation
system on which such Class A Shares are then traded or listed, as reported by
Bloomberg L.P.; provided further that if the Class A Shares are not then listed
on a national securities exchange or interdealer quotation system, “Market
Value” means the cash consideration paid for Class A Shares, or the fair market
value of the other property delivered for Class A Shares, as determined by the
Board in good faith.

 

“Material Objection Notice” has the meaning set forth in Section 4.4 of this
Agreement.

 

“Net Tax Benefit” has the meaning set forth in Section 3.1(b) of this Agreement.

 

“Objection Notice” has the meaning set forth in Section 2.3(a) of this
Agreement.

 

“Other-TRA Benefits” means any tax benefits resulting from increases in Tax
basis or other Tax attributes with respect to which the Corporate Taxpayer or
any of its Subsidiaries is obligated to make payments under the PE TRA or any
Post-IPO TRA.

 

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

 

“PE TRA” has the meaning set forth in the Recitals of this Agreement.

 

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

 

“Post-IPO TRA” means any tax receivable agreement (or comparable agreement)
entered into by the Corporate Taxpayer or any of its Subsidiaries pursuant to
which the Corporate Taxpayer is obligated to pay over amounts with respect to
tax benefits resulting from any tax attributes to which the Corporate Taxpayer
becomes entitled as a result of a transaction (other than any Exchanges) after
the date of this Agreement.

 

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“Realized Tax Benefit” means, for a Taxable Year, the sum of (a) the excess, if
any, of the Hypothetical Tax Liability over the Actual Tax Liability and (b) the
State and Local Tax Benefit.  If all or a portion of the Actual Tax Liability
for the Taxable Year arises as a result of an audit by the IRS of any Taxable
Year, such liability and the corresponding Hypothetical Tax Liability shall not
be included in determining the Realized Tax Benefit unless and until there has
been a Determination with respect to such Actual Tax Liability.

 

“Realized Tax Detriment” means, for a Taxable Year, the sum of (a) the excess,
if any, of the Actual Tax Liability over the Hypothetical Tax Liability and
(b) the State and Local Tax Detriment.  If all or a portion of the Actual Tax
Liability for the Taxable Year arises as a result of an audit by the IRS of any
Taxable Year, such liability and the corresponding Hypothetical Tax Liability
shall not be included in determining the Realized Tax Detriment unless and until
there has been a Determination with respect to such Actual Tax Liability.

 

“Reconciliation Dispute” has the meaning set forth in Section 7.10 of this
Agreement.

 

“Reconciliation Procedures” means the procedures described in Section 7.10 of
this Agreement.

 

“Reference Asset” means, with respect to any Exchange, an asset (other than cash
or a cash equivalent) that is held by Focus LLC, or any of its direct or
indirect Subsidiaries that is treated as a partnership or disregarded entity for
U.S. federal income tax purposes (but only to the extent such Subsidiaries are
not held through any entity treated as a corporation for U.S. federal income tax
purposes), at the time of such Exchange.  A Reference Asset also includes any
asset that is “substituted basis property” under Section 7701(a)(42) of the Code
with respect to a Reference Asset.

 

“Schedule” means any of the following: (a) an Exchange Schedule, (b) a Tax
Benefit Payment Schedule, or (c) the Early Termination Schedule.

 

“Senior Obligations” has the meaning set forth in Section 5.1 of this Agreement.

 

“State and Local Tax Benefit” means, for a Taxable Year, the excess, if any, of
the Hypothetical Tax Liability over the Actual Tax Liability; provided that, for
purposes of determining the State and Local Tax Benefit, each of the
Hypothetical Tax Liability and the Actual Tax Liability shall be calculated
using the Assumed State and Local Tax Rate instead of the rate applicable for
U.S. federal income tax purposes.

 

“State and Local Tax Detriment” means, for a Taxable Year, the excess, if any,
of the Actual Tax Liability over the Hypothetical Tax Liability; provided that,
for purposes of determining the State and Local Tax Detriment, each of the
Actual Tax Liability and the Hypothetical Tax Liability shall be calculated
using the Assumed State and Local Tax Rate instead of the rate applicable for
U.S. federal income tax purposes.

 

“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 power or other
similar interests or the sole general partner interest or managing member or
similar interest of such Person.

 

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“Tax Benefit Payment” has the meaning set forth in Section 3.1(b) of this
Agreement.

 

“Tax Benefit Payment Schedule” has the meaning set forth in Section 2.2 of this
Agreement.

 

“Tax Proceeding” has the meaning set forth in Section 6.1 of this Agreement.

 

“Tax Receivable Agreements” means this Agreement, the PE TRA and any Post-IPO
TRA.

 

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.

 

“Taxable Year” means a taxable year of the Corporate Taxpayer as defined in
Section 441(b) of the Code (which, for the avoidance of doubt, may include a
period of less than twelve (12) months for which a Tax Return is made), ending
on or after the IPO Date.

 

“Taxes” means any and all U.S. federal, state and local taxes, assessments or
similar charges that are based on or measured with respect to net income or
profits (including any franchise taxes based on or measured with respect to net
income or profits), and any interest related to such Tax.

 

“Taxing Authority” means the IRS and any other 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.

 

“TRA Holder” means each of those Persons set forth on Schedule A and their
respective successors and permitted assigns pursuant to Section 7.6(a)(i).

 

“Transferor” has the meaning set forth in Section 7.12(b) of this Agreement.

 

“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 Year.

 

“Units” means Common Units and Incentive Units.

 

“Valuation Assumptions” means, as of an Early Termination Date, the assumptions
that

 

(a)                                 in each Taxable Year ending on or after such
Early Termination Date, the Corporate Taxpayer will have taxable income
sufficient to fully utilize the deductions arising from all Basis Adjustments
and Imputed Interest during such Taxable Year or future Taxable Years
(including, for the avoidance of doubt, Basis Adjustments and Imputed Interest
that would result from future Tax Benefit Payments that would be paid in
accordance with the Valuation Assumptions, further assuming such future Tax
Benefit Payments would be paid on the due date, without extensions, for filing
the Corporate Taxpayer Return for the applicable Taxable Year) in which such
deductions would become available;

 

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(b)                                 any loss or credit carryovers generated by
deductions or losses arising from any Basis Adjustment or Imputed Interest
(including such Basis Adjustment and Imputed Interest generated as a result of
payments under this Agreement) that are available in the Taxable Year that
includes the Early Termination Date will be utilized by the Corporate Taxpayer
ratably in each Taxable Year over the five Taxable Years beginning with the
Taxable Year that includes the Early Termination Date;

 

(c)                                  the U.S. federal, state and local income
and franchise tax rates that will be in effect for each Taxable Year ending on
or after such Early Termination Date will be those specified for each such
Taxable Year by the Code and other law as in effect on the Early Termination
Date, except to the extent any change to such tax rates for such Taxable Year
have already been enacted into law;

 

(d)                                 any Reference Asset that is not subject to
amortization, depreciation or other cost recovery deduction to which any Basis
Adjustment is attributable will be disposed of in a fully taxable transaction
for U.S. federal income tax purposes on the fifth anniversary of the Early
Termination Date for an amount sufficient to fully utilize the Basis Adjustment
with respect to such Reference Asset; provided, that in the event of a Change of
Control which includes a taxable sale of such Reference Asset (including the
sale of all of the equity interests in an entity classified as a partnership or
disregarded entity that directly or indirectly owns such Reference Asset), such
Reference Asset shall be deemed disposed of at the time of the Change of
Control; and

 

(e)          if, at the Early Termination Date, there are Units (other than
those held by the Corporate Taxpayer or its Subsidiaries) that have not been
transferred in an Exchange, then all such Units shall be deemed to be
transferred pursuant to the Exchange Right effective on the Early Termination
Date.

 

Section 1.2                                  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 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.

 

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ARTICLE II
DETERMINATION OF CERTAIN REALIZED TAX BENEFITS

 

Section 2.1                                  Exchange Schedules.  Within ninety
(90) calendar days after the filing of the Corporate Taxpayer Return for each
Taxable Year in which any Exchange has been effected by a TRA Holder, the
Corporate Taxpayer shall deliver to the Agent a schedule (the “Exchange
Schedule”) that shows, in reasonable detail necessary to perform the
calculations required by this Agreement, including with respect to each
applicable TRA Holder, (a) the Basis Adjustments as a result of the Exchanges
effected by such TRA Holder in such Taxable Year and (b) the period (or periods)
over which such Basis Adjustments are amortizable and/or depreciable.

 

Section 2.2                                  Tax Benefit Payment Schedules.

 

(a)                               Within ninety (90) calendar days after the
filing of the Corporate Taxpayer Return for any Taxable Year in which there is a
Realized Tax Benefit or Realized Tax Detriment, the Corporate Taxpayer shall
provide to the Agent: (i) a schedule showing, in reasonable detail, (A) the
calculation of the Realized Tax Benefit or Realized Tax Detriment for such
Taxable Year, (B) the portion of the Net Tax Benefit, if any, that is
Attributable to each TRA Holder, (C) the Accrued Amount with respect to any such
Net Tax Benefit that is Attributable to such TRA Holder, (D) the Tax Benefit
Payment due to each such TRA Holder, and (E) the portion of such Tax Benefit
Payment that the Corporate Taxpayer intends to treat as Imputed Interest (a “Tax
Benefit Payment Schedule”), (ii) a reasonably detailed calculation of the
Hypothetical Tax Liability, (iii) a reasonably detailed calculation of the
Actual Tax Liability, (iv) a copy of the Corporate Taxpayer Return for such
Taxable Year, and (v) any other work papers reasonably requested by the Agent. 
In addition, the Corporate Taxpayer shall allow the Agent reasonable access at
no cost to the appropriate representatives of the Corporate  Taxpayer in
connection with a review of such Tax Benefit Payment Schedule; provided that, in
the event of a dispute governed by Section 7.9 or Section 7.10, any such costs
shall be borne as set forth in such sections.  The Tax Benefit Payment Schedule
will become final as provided in Section 2.3(a) and may be amended as provided
in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

 

(b)                               For purposes of calculating the Realized Tax
Benefit or Realized Tax Detriment for any Taxable Year, carryovers or carrybacks
of any U.S. federal income Tax item attributable to the Basis
Adjustments, Imputed Interest, and any Other-TRA Benefits shall be considered to
be subject to the rules of the Code and the Treasury Regulations, as applicable,
governing the use, limitation and expiration of carryovers or carrybacks of the
relevant type.  If a carryover or carryback of any U.S. federal income Tax item
includes a portion that is attributable to the Basis Adjustment, Imputed
Interest, or any Other-TRA Benefits and another portion that is not so
attributable, such respective portions shall be considered to be used in
accordance with the “with and without” methodology.  The parties agree that
(i) any payment under this Agreement (to the extent permitted by law and other
than amounts accounted for as Imputed Interest) will be treated as a subsequent
upward adjustment to the purchase price of the relevant Common Units and will
have the effect of creating additional Basis Adjustments to Reference Assets for
the Corporate Taxpayer in the year of payment, and (ii) as a result, such
additional Basis Adjustments will be incorporated into the current year
calculation and into future year calculations, as appropriate.

 

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Section 2.3                                  Procedure; Amendments.

 

(a)                               An applicable Schedule or amendment thereto
shall become final and binding on all parties thirty (30) calendar days from the
first date on which the Agent has received the applicable Schedule or amendment
thereto unless (i) the Agent, within thirty (30) calendar days after receiving
an applicable Schedule or amendment thereto, provides the Corporate Taxpayer
with notice of a material objection to such Schedule (“Objection Notice”) made
in good faith or (ii) the Agent provides a written waiver of such right of any
Objection Notice within the period described in clause (i) above, in which case
such Schedule or amendment thereto becomes binding on the date a waiver from the
Agent has been received by the Corporate Taxpayer.  If the Corporate Taxpayer
and the Agent, for any reason, are unable to successfully resolve the issues
raised in an Objection Notice within thirty (30) calendar days after receipt by
the Corporate Taxpayer of such Objection Notice, the Corporate Taxpayer and the
Agent shall employ the Reconciliation Procedures under Section 7.10 or
Resolution of Disputes procedures under Section 7.9, as applicable.

 

(b)                               The applicable Schedule for any Taxable Year
may be amended from time to time by the Corporate Taxpayer (i) in connection
with a Determination affecting such Schedule, (ii) to correct 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 Agent, (iii) to comply with the Expert’s determination under the
Reconciliation Procedures, (iv) to reflect a 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
change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable
Year attributable to an amended Corporate Taxpayer Return filed for such Taxable
Year or (vi) to adjust an Exchange Schedule to take into account payments made
pursuant to this Agreement (any such Schedule, an “Amended Schedule”).  The
Corporate Taxpayer shall provide an Amended Schedule to the Agent within sixty
(60) calendar days of the occurrence of an event referenced in clauses
(i) through (vi) of the preceding sentence and shall, at the reasonable request
of the Agent, provide any other work papers relating to such Amended Schedule. 
For the avoidance of doubt, in the event a Schedule is amended after such
Schedule becomes final pursuant to Section 2.3(a), the Amended Schedule shall
not be taken into account in calculating any Tax Benefit Payment in the Taxable
Year to which the amendment relates but instead shall be taken into account in
calculating the Cumulative Net Realized Tax Benefit for the Taxable Year in
which the amendment actually occurs.

 

Section 2.4                                  Section 754 Election. In its
capacity as the sole managing member of Focus LLC, the Corporate Taxpayer will
ensure that, on and after the date hereof and continuing throughout the term of
this Agreement, Focus LLC and all of its eligible Subsidiaries will have in
effect an election pursuant to Section 754 of the Code (and under any similar
provisions of applicable U.S. state or local law).

 

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ARTICLE III
TAX BENEFIT PAYMENTS

 

Section 3.1                                  Payments.

 

(a)                               Within five (5) Business Days after a Tax
Benefit Payment Schedule delivered to the Agent becomes final in accordance with
Section 2.3(a), the Corporate Taxpayer shall pay to each TRA Holder the Tax
Benefit Payment in respect of such TRA Holder determined pursuant to
Section 3.1(b) for such Taxable Year.  Each such payment shall be made by check,
by wire transfer of immediately available funds to the bank account previously
designated by such TRA Holder to the Corporate Taxpayer, or as otherwise agreed
by the Corporate Taxpayer and such TRA Holder.  For the avoidance of doubt, no
Tax Benefit Payment shall be made in respect of estimated Tax payments,
including, without limitation, U.S. federal or state estimated income Tax
payments.

 

(b)                               A “Tax Benefit Payment” in respect of a TRA
Holder for a Taxable Year means an amount, not less than zero, equal to the sum
of the portion of the Net Tax Benefit Attributable to such TRA Holder and the
Accrued Amount with respect thereto. The “Net Tax Benefit” for a Taxable Year
shall be an amount equal to the excess, if any, of 85% of the Cumulative Net
Realized Tax Benefit as of the end of such Taxable Year over the sum of (i) the
total amount of payments previously made under this Section 3.1 (excluding
payments attributable to Accrued Amounts) and (ii) the total amount of Tax
Benefit Payments previously made under the corresponding provision of the PE TRA
and any Post-IPO TRA; provided, for the avoidance of doubt, that no TRA Holder
shall be required to return any portion of any previously made Tax Benefit
Payment. Subject to Section 3.3, the portion of the Net Tax Benefit for a
Taxable Year that is “Attributable” to a TRA Holder is the portion of such Net
Tax Benefit that is derived from (y) any Basis Adjustment that is attributable
to the Common Units acquired or deemed acquired by the Corporate Taxpayer in an
Exchange undertaken by or with respect to such TRA Holder or (z) any Imputed
Interest with respect to Tax Benefit Payments made to such TRA Holder.  The
“Accrued Amount” with respect to any portion of a Net Tax Benefit shall equal an
amount determined in the same manner as interest on such portion of the Net Tax
Benefit for a Taxable Year calculated at the Agreed Rate from the due date
(without extensions) for filing the Corporate Taxpayer Return for such Taxable
Year until the Payment Date.  For the avoidance of doubt, for Tax purposes, the
Accrued Amount on the portion of a Net Tax Benefit relating to an Exchange shall
not be treated as interest but shall instead be treated as additional
consideration for the acquisition of Common Units in an Exchange unless
otherwise required by law.

 

(c)                                Notwithstanding any provision of this
Agreement to the contrary, unless a TRA Holder elects for the provisions of this
Section 3.1(c) not to apply to any Exchange by notifying the Corporate Taxpayer
in writing on or before the due date for providing the Exchange Notice with
respect to such Exchange (or, with respect to an IPO Sale or IPO Contribution,
on or before the IPO Date), the aggregate Tax Benefit Payments to be made to
such TRA Holder with respect to any Exchange shall be limited to (i) 50%, or
such other percentage such TRA Holder elects to apply by notifying the Corporate
Taxpayer in writing on or before the due date for providing the Exchange Notice
with respect to such Exchange (or, with respect to an IPO Sale or IPO
Contribution, on or before the IPO Date), of (ii) the amount equal to the sum of
(A) any cash, excluding any Tax Benefit Payments, and the fair market value of
any noncompensatory options

 

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received by such TRA Holder in such Exchange and (B) the aggregate Market Value
of the Class A Shares received by such TRA Holder in such Exchange, provided,
for the avoidance of doubt, that such amount shall not include any Imputed
Interest with respect to such Exchange. An election made by a TRA Holder
pursuant to this Section 3.1(c) may not be revoked.

 

(d)                               The Corporate Taxpayer and the TRA Holders
hereby acknowledge that, as of the date of this Agreement and as of the date of
any future Exchange that may be subject to this Agreement, the aggregate value
of the Tax Benefit Payments cannot reasonably be ascertained for United States
federal income tax or other applicable Tax purposes.

 

Section 3.2                                  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 the Tax Receivable
Agreements.  It is also intended that the provisions of the Tax Receivable
Agreements will result in 85% of the Cumulative Net Realized Tax Benefit, and
the Accrued Amount thereon, being paid to the Persons to whom payments are due
pursuant to the Tax Receivable Agreements.  The provisions of this Agreement
shall be construed in the appropriate manner to achieve these fundamental
results.

 

Section 3.3                                  Pro Rata Payments; Coordination of
Benefits with Other Tax Receivable Agreements.

 

(a)                               Notwithstanding anything in Section 3.1 to the
contrary, to the extent that the aggregate amount of the Corporate Taxpayer’s
tax benefit subject to the Tax Receivable Agreements is limited in a particular
Taxable Year because the Corporate Taxpayer does not have sufficient taxable
income to fully utilize available deductions and other attributes, the following
rules shall apply:

 

(i)                                     The limitation on the tax benefit for
the Corporate Taxpayer shall be allocated as follows: (A) first among any
Post-IPO TRAs (and among all Persons eligible for payments thereunder in the
manner set forth in such Post-IPO TRAs) and (B) to the extent of any remaining
limitation on the tax benefit for the Corporate Taxpayer after the application
of clause (A), to this Agreement and the PE TRA (and among all Persons eligible
for payments hereunder or under the PE TRA as set forth in Section 3.3(a)(ii)). 
For the avoidance of doubt, for purposes of this Section 3.3(a)(i), it is
intended that in calculating the Corporate Taxpayer’s tax benefit subject to the
Tax Receivable Agreements, any available taxable income of the Corporate
Taxpayer be first allocated to this Agreement and the PE TRA and any remaining
available taxable income will then be allocated to any Post-IPO TRA.

 

(ii)                                  If any part of the limitation on the tax
benefit is allocated to this Agreement and the PE TRA pursuant to
Section 3.3(a)(i)(B), such allocated limitation shall be further allocated among
all TRA Holders hereunder and all “TRA Holders” under the PE TRA in proportion
to the respective portion of the Net Tax Benefit that would have been
Attributable to each such TRA Holder in such Taxable Year under this Agreement
and the PE TRA if the Corporate Taxpayer had sufficient taxable income in such
Taxable Year so that there was no such limitation; provided that if any portion
of the Net Tax Benefit for such Taxable Year results from the carryback of a
loss or other Tax

 

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item to such Taxable Year from a later Taxable Year (for the avoidance of doubt,
carrybacks of losses and other Tax items from more than one later Taxable Year
shall be used in the order prescribed in the applicable rules of the Code and
the Treasury Regulations), no part of the limitation shall be allocated to the
tax benefits set forth on the Schedule prior to its amendment to reflect the
carryback and any limitation shall instead be applied to the tax benefits
carried back and such limitation shall be further allocated among all such TRA
Holders in proportion to the respective portion of the Net Tax Benefit that
would have been Attributable to each such TRA Holder in the Taxable Year in
which such carried back losses or other Tax items arose under this Agreement and
the PE TRA if the Corporate Taxpayer had sufficient taxable income in such
Taxable Year so that there was no such limitation.

 

(iii)                               If any part of the limitation on the tax
benefit is allocated to a TRA Holder, such allocated limitation shall first be
applied to any deductions arising from Imputed Interest Attributable to such TRA
Holder, and then, to the extent of any remaining limitation on the tax benefit
allocated to such TRA Holder, to any deductions arising from Basis Adjustments
Attributable to such TRA Holder.

 

(iv)                              To the extent any part of the limitation on
the tax benefit subject to the Tax Receivable Agreements is allocated in a
manner that differs from the order prescribed in the applicable rules of the
Code and the Treasury Regulations regarding the utilization, or deemed
utilization, of such tax benefit, appropriate adjustments, consistent with the
principles of this Section 3.3(a), shall be made in future Taxable Years to take
into account such differing allocation.

 

(b)                               After taking into account Section 3.3(a), if
for any reason the Corporate Taxpayer does not fully satisfy its payment
obligations to make all Tax Benefit Payments due under the Tax Receivable
Agreements in respect of a particular Taxable Year, then, (i) the Corporate
Taxpayer will pay the same proportion of each Tax Benefit Payment due to each
Person to whom a payment is due under each of the Tax Receivable Agreements in
respect of such Taxable Year, without favoring one obligation over the other,
and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year
until all Tax Benefit Payments under all of the Tax Receivable Agreements in
respect of prior Taxable Years have been made in full.

 

(c)                                To the extent the Corporate Taxpayer makes a
payment to a TRA Holder in respect of a particular Taxable Year under
Section 3.1(a) of this Agreement (taking into account Section 3.3(a) and
Section 3.3(b), but excluding payments attributable to Accrued Amounts) in an
amount in excess of the amount of such payment that should have been made to
such TRA Holder in respect of such Taxable Year, then (i) such TRA Holder shall
not receive further payments under Section 3.1(a) until such TRA Holder has
foregone an amount of payments equal to such excess and (ii) the Corporate
Taxpayer will pay the amount of such TRA Holder’s foregone payments to the other
Persons to whom a payment is due under the Tax Receivable Agreements in a manner
such that each such Person to whom a payment is due under the Tax Receivable
Agreements, to the maximum extent possible, receives aggregate payments under
Section 3.1(a) or the comparable section of the other Tax Receivable
Agreement(s), as applicable (in each case, taking into account
Section 3.3(a) and Section 3.3(b) or the comparable sections of the other Tax
Receivable Agreement(s), but excluding payments attributable to Accrued

 

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Amounts) in the amount it would have received if there had been no excess
payment to such TRA Holder.

 

(d)                               The parties hereto agree that the parties to
the PE TRA and any Post-IPO TRA are expressly made third party beneficiaries of
the provisions of this Section 3.3.

 

ARTICLE IV
TERMINATION

 

Section 4.1                                  Early Termination at Election of
the Corporate Taxpayer.  The Corporate Taxpayer may terminate this Agreement at
any time by paying (a) to each TRA Holder the Early Termination Payment due to
such TRA Holder pursuant to Section 4.5(b) and (b) to each “TRA Holder” under
the PE TRA the “Early Termination Payment” due to such TRA Holder under the PE
TRA (such termination, an “Early Termination”); provided that the Corporate
Taxpayer may withdraw any notice of exercise of its termination rights under
this Section 4.1 prior to the time at which any Early Termination Payment has
been paid.  Upon payment of each Early Termination Payment to each TRA Holder by
the Corporate Taxpayer, the Corporate Taxpayer shall not have any further
payment obligations under this Agreement, other than for any Tax Benefit Payment
previously due and payable but unpaid as of the Early Termination Notice and,
except to the extent included in the Early Termination Payment, any Tax Benefit
Payment due for any Taxable Year ending prior to, with or including the Early
Termination Date.  Upon payment in full of all amounts provided for in this
Section 4.1, this Agreement shall terminate, provided that Article VI, Sections
7.1 through 7.10 (inclusive), and Section 7.13 shall remain in full force and
effect to the extent applicable.

 

Section 4.2                                  Early Termination upon Change of
Control.  In the event of a Change of Control, all payment obligations hereunder
shall be accelerated and such obligations shall be calculated as if an Early
Termination Notice had been delivered on the closing date of the Change of
Control and shall include, but not be limited to the following: (a) payment of
the Early Termination Payment calculated as if an Early Termination Notice had
been delivered on the effective date of a Change of Control, (b) payment of any
Tax Benefit Payment previously due and payable but unpaid as of the Early
Termination Notice, and (c) except to the extent included in the Early
Termination Payment or if included as a payment under clause (b) of this
Section 4.2, payment of any Tax Benefit Payment due for any Taxable Year ending
prior to, with or including the effective date of a Change of Control.  In the
event of a Change of Control, the Early Termination Payment shall be calculated
utilizing the Valuation Assumptions and by substituting in each case the terms
“the closing date of a Change of Control” for an “Early Termination Date.”

 

Section 4.3                                  Breach of Agreement.

 

(a)                               In the event that the Corporate Taxpayer
breaches any of its material obligations under this Agreement or the PE TRA,
whether as a result of failure to make any payment within three (3) months of
the date when due, as a result of failure to honor any other material obligation
required hereunder or by operation of law as a result of the rejection of this
Agreement or the PE TRA in a case commenced under the United States Bankruptcy
Code or otherwise, then if the Majority TRA Holders so elect, such breach shall
be treated as an Early

 

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Termination hereunder.  Upon such election, all payment obligations hereunder
shall be automatically accelerated and shall become due and payable in
accordance with Section 4.5(a), 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) payment of the Early Termination
Payment calculated as if an Early Termination Notice had been delivered on the
date of a breach, (ii) payment of any Tax Benefit Payment previously due and
payable but unpaid as of the date of the breach, and (iii) except to the extent
included in the Early Termination Payment or if included as a payment under
clause (ii) of this Section 4.3(a), any Tax Benefit Payment due for any Taxable
Year ending prior to, with or including the date of the breach.  Notwithstanding
the foregoing, in the event that the Corporate Taxpayer breaches this Agreement,
if the Majority TRA Holders do not elect to treat such breach as an Early
Termination pursuant to this Section 4.3(a), the TRA Holders shall be entitled
to seek specific performance of the terms hereof.

 

(b)                               The parties agree that the failure of the
Corporate Taxpayer to make any payment due pursuant to this Agreement within
three (3) 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 (3) months of the date such payment is due.  Notwithstanding
anything in this Agreement to the contrary, except in the case of an Early
Termination Payment or any payment treated as an Early Termination Payment, it
shall not be a breach of this Agreement if the Corporate Taxpayer fails to make
any Tax Benefit Payment when due to the extent that the Corporate Taxpayer has
insufficient funds available to make, or to the extent that the Corporate
Taxpayer is contractually constrained from making, such payment in the Corporate
Taxpayer’s sole discretion, exercised in good faith; provided that the interest
provisions of Section 5.2 shall apply to such late payment (unless the Corporate
Taxpayer does not have sufficient cash to make such payment as a result of
limitations imposed by any credit agreement to which Focus LLC or any Subsidiary
of Focus LLC is a party, in which case Section 5.2 shall apply, but the Default
Rate shall be replaced by the Agreed Rate); provided further that it shall be a
breach of this Agreement, and the provisions of Section 4.3(a) shall apply as of
the original due date of the Tax Benefit Payment, if the Corporate Taxpayer
makes any distribution of cash or other property to its equity holders while any
Tax Benefit Payment is due and payable but unpaid.

 

Section 4.4                                  Early Termination Notice.  If the
Corporate Taxpayer chooses to exercise its right of early termination under
Section 4.1 above, the Corporate Taxpayer shall deliver to the Agent notice of
such intention to exercise such right (the “Early Termination Notice”).  Upon
delivery of the Early Termination Notice or the occurrence of an event described
in Section 4.2 or Section 4.3(a), the Corporate Taxpayer shall deliver (a) a
schedule showing in reasonable detail the calculation of the Early Termination
Payment (the “Early Termination Schedule”) and (b) any other work papers related
to the calculation of the Early Termination Payment reasonably requested by the
Agent.  In addition, the Corporate Taxpayer shall allow the Agent reasonable
access at no cost to the appropriate representatives of the Corporate Taxpayer
in connection with a review of such Early Termination Schedule; provided that,
in the event of a dispute governed by Section 7.9 or Section 7.10, any such
costs shall be borne as set forth in such sections.  The Early Termination
Schedule shall become final and binding on all parties thirty (30) calendar days
from the first date on which the Agent has received such Schedule or amendment
thereto

 

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unless (x) the Agent, within thirty (30) calendar days after receiving the Early
Termination Schedule, provides the Corporate Taxpayer with notice of a material
objection to such Schedule made in good faith (“Material Objection Notice”) or
(y) the Agent provides a written waiver of such right of a Material Objection
Notice within the period described in clause (x) above, in which case such
Schedule becomes binding on the date waivers from the Agent has been received by
the Corporate Taxpayer (the “Early Termination Effective Date”).  If the
Corporate Taxpayer and the Agent, for any reason, are unable to successfully
resolve the issues raised in such notice within thirty (30) calendar days after
receipt by the Corporate Taxpayer of the Material Objection Notice, the
Corporate Taxpayer and the Agent shall employ the Reconciliation Procedures
under Section 7.10 or Resolution of Disputes procedures under Section 7.9, as
applicable.

 

Section 4.5                                  Payment upon Early Termination.

 

(a)                               Subject to its right to withdraw any notice of
Early Termination pursuant to Section 4.1, within three (3) Business Days after
the Early Termination Effective Date, the Corporate Taxpayer shall pay to each
TRA Holder its Early Termination Payment.  Each such payment shall be made by
check, by wire transfer of immediately available funds to a bank account or
accounts designated by the TRA Holder, or as otherwise agreed by the Corporate
Taxpayer and the TRA Holder.

 

(b)                               A TRA Holder’s “Early Termination Payment” as
of the Early Termination Date shall equal, with respect to such TRA Holder, the
present value, discounted at the Early Termination Rate as of the Early
Termination Date, of all Tax Benefit Payments that would be required to be paid
by the Corporate Taxpayer to such TRA Holder beginning from the Early
Termination Date and assuming that the Valuation Assumptions are applied.

 

ARTICLE V
SUBORDINATION AND LATE PAYMENTS

 

Section 5.1                                  Subordination.  Notwithstanding any
other provision of this Agreement to the contrary, any payment due under this
Agreement 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 Corporate
Taxpayer (such obligations, “Senior Obligations”) and shall rank pari passu with
all current or future unsecured obligations of the Corporate Taxpayer that are
not Senior Obligations.  For the avoidance of doubt, notwithstanding the above,
the determination of whether it is a breach of this Agreement if the Corporate
Taxpayer fails to make any Tax Benefit Payment or other payment under this
Agreement when due is governed by Section 4.3(b). To the extent that any payment
due under this Agreement is not permitted to be made at the time such payment is
due as a result of this Section 5.1 and the terms of the agreements governing
Senior Obligations, such payment obligation nevertheless shall accrue for the
benefit of the TRA Holders, and the Corporate Taxpayer shall make such payments
at the first opportunity that such payments are permitted to be made in
accordance with the terms of the Senior Obligations.

 

Section 5.2                                  Late Payments by the Corporate
Taxpayer.  The amount of all or any portion of any Tax Benefit Payment, Early
Termination Payment or any other payment under

 

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this Agreement not made to any TRA Holder when due under the terms of this
Agreement, whether as a result of Section 5.1 and the terms of the Senior
Obligations or otherwise, shall be payable together with any interest thereon,
computed at the Default Rate (or, if so provided in Section 4.3(b), at the
Agreed Rate) and commencing from the date on which such Tax Benefit Payment,
Early Termination Payment or any other payment under this Agreement was due and
payable.

 

ARTICLE VI
NO DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.1                                  Participation in the Corporate
Taxpayer’s and Focus LLC’s Tax Matters.  Except as otherwise provided herein or
in the Focus LLC Agreement, the Corporate Taxpayer shall have full
responsibility for, and sole discretion over, all Tax matters concerning the
Corporate Taxpayer and Focus LLC, including without limitation preparing, filing
or amending any Tax Return and defending, contesting or settling any issue
pertaining to Taxes. Notwithstanding the foregoing, the Corporate Taxpayer
(a) shall notify the Agent of, and keep the Agent reasonably informed with
respect to, the portion of any audit, examination, or any other administrative
or judicial proceeding (a “Tax Proceeding”) of the Corporate Taxpayer or Focus
LLC by a Taxing Authority the outcome of which is reasonably expected to affect
the rights and obligations of the TRA Holders under this Agreement, and
(b) shall provide the Agent with reasonable opportunity to provide information
and other input to the Corporate Taxpayer, Focus LLC and their respective
advisors concerning the conduct of any such portion of a Tax Proceeding;
provided, however, that nothing in this Section 6.1 shall be construed as
requiring or preventing either of the Corporate Taxpayer and Focus LLC from
taking or refraining to take any action that is inconsistent with, or otherwise
provided for under, any provision of the Focus LLC Agreement.

 

Section 6.2                                  Consistency.  Unless there is a
Determination or written opinion, reasonably acceptable to the Corporate
Taxpayer and Focus LLC, of legal counsel or a nationally recognized tax advisor
to the contrary, the Corporate Taxpayer and each of the TRA Holders agree to
report, and to cause their respective Subsidiaries to report, for all purposes
(including U.S. federal, state and local Tax purposes), all Tax-related items
(including, without limitation, the Basis Adjustments and each Tax Benefit
Payment) in a manner consistent with the description of any Tax characterization
herein (including as set forth in Section 2.2(b) and Section 3.1(a) and any
Schedule required to be provided by or on behalf of the Corporate Taxpayer under
this Agreement, as finally determined pursuant to Section 2.3).  If the
Corporate Taxpayer and any TRA Holder, for any reason, are unable to
successfully resolve any disagreement concerning such treatment within thirty
(30) calendar days, the Corporate Taxpayer and such TRA Holder shall employ the
Reconciliation Procedures under Section 7.10 or Resolution of Disputes
procedures under Section 7.9, as applicable.

 

Section 6.3                                  Cooperation.  Each TRA Holder shall
(a) furnish to the Corporate Taxpayer in a timely manner such information,
documents and other materials as the Corporate Taxpayer 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
Tax Proceeding, (b) make itself reasonably available to the Corporate Taxpayer
and its representatives to provide explanations of documents and materials and
such other

 

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information as the Corporate Taxpayer 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.  The Corporate
Taxpayer shall reimburse each TRA Holder for any reasonable third-party costs
and expenses incurred pursuant to this Section 6.3.

 

Section 6.4                                  Tax Proceedings. The Corporate
Taxpayer shall use reasonable efforts (for the avoidance of doubt, taking into
account the interests and entitlements of all TRA Holders, the Corporate
Taxpayer and Focus LLC) to defend the Tax treatment contemplated by this
Agreement and any Schedule in any audit, contest or similar proceeding with any
Taxing Authority.

 

ARTICLE VII
MISCELLANEOUS

 

Section 7.1                                  Notices.  All notices, requests,
claims, demands and other communications hereunder shall be in writing and shall
be deemed duly given and received (a) on the date of delivery if delivered
personally, or by facsimile upon confirmation of transmission by the sender’s
fax machine if sent on a Business Day (or otherwise on the next Business Day) or
(b) on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service.  All notices hereunder shall be delivered
as set forth below, or pursuant to such other instructions as may be designated
in writing by the party to receive such notice:

 

If to the Corporate Taxpayer, to:

 

Focus Financial Partners Inc.

825 Third Avenue, 27th Floor

New York, NY 10022
Attention:  Chief Financial Officer

 

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

 

Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor

New York, NY 10103-0040
Telephone: (212) 237-0000
Attention: Robert Seber

 

If to the Agent, to:

 

Focus Financial Partners Inc.
825 Third Avenue, 27th Floor
New York, NY 10022
Attention: Ruediger Adolf

 

If to a TRA Holder, other than an Agent, that is or was a partner in Focus LLC,
to:

 

The address set forth in the records of Focus LLC.

 

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Any party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.

 

Section 7.2                                  Counterparts.  This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart. Delivery
of an executed signature page to this Agreement by facsimile transmission or
otherwise (including an electronically executed signature page) shall be as
effective as delivery of a manually signed counterpart of this Agreement.

 

Section 7.3                                  Entire Agreement; No Third Party
Beneficiaries.  This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.  This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
respective successors and permitted assigns, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, except as expressly provided in Section 3.3.

 

Section 7.4                                  Governing Law.  This Agreement and
the rights and obligations of the parties hereunder shall be governed by, and
construed in accordance with, the law of the State of New York, without regard
to the conflicts of laws principles thereof that would mandate the application
of the laws of another jurisdiction.

 

Section 7.5                                  Severability.  If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any law or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect 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 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.

 

Section 7.6                                  Successors; Assignment.

 

(a)                               No TRA Holder may assign this Agreement to any
Person without the prior written consent of the Corporate Taxpayer; provided,
however, that:

 

(i)                                     to the extent Units are transferred in
accordance with the terms of the Focus LLC Agreement (except pursuant to the
Exchange Right or the Call Right), the transferring TRA Holder shall assign to
the transferee of such Units the transferring TRA Holder’s rights under this
Agreement with respect to such transferred Units, and such transferee shall
execute and deliver a joinder to this Agreement, in form and substance
reasonably satisfactory to the Corporate Taxpayer, agreeing to become a “TRA
Holder” for all purposes of this Agreement, and

 

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(ii)                                  the right to receive any and all payments
payable or that may become payable to a TRA Holder pursuant to this Agreement
that, once an Exchange has occurred, arise with respect to the Units transferred
in such Exchange, may be assigned to any Person or Persons without the prior
written consent of the Corporate Taxpayer 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 reasonably
satisfactory to the Corporate Taxpayer, agreeing to be bound by Section 7.13.

 

For the avoidance of doubt, the parties acknowledge that an assignment of rights
pursuant to this Section 7.6(a) is not expected to affect the U.S. federal
income (or applicable state and local) Tax characterization by the Corporate
Taxpayer of payments made under this Agreement.

 

(b)                               The Person designated as the Agent for the TRA
Holders may not be changed without the prior written consent of the Corporate
Taxpayer and the Majority TRA Holders.

 

(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, assigns, heirs, executors, administrators and legal
representatives.  The Corporate Taxpayer shall 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 Corporate Taxpayer, by
written agreement, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Corporate Taxpayer would be
required to perform if no such succession had taken place.

 

Section 7.7                                  Amendments; Waivers.  No provision
of this Agreement may be amended in a manner that materially affects the
substantive rights of any TRA Holder hereunder unless such amendment is approved
in writing by each of the Corporate Taxpayer and the Majority TRA Holders;
provided, however, that no such amendment shall be effective if such amendment
would have a materially disproportionate effect on the payments certain TRA
Holders will or may receive under this Agreement unless a majority of such
disproportionately affected TRA Holders (as determined in the same manner as the
Majority TRA Holders would be determined if such disproportionately affected TRA
Holders were the only TRA Holders) consent in writing to such amendment.

 

Section 7.8                                  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.

 

Section 7.9                                  Resolution of Disputes.

 

(a)                               Any and all disputes which are not governed by
Section 7.10, 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 7.9 and Section 7.10) (each a
“Dispute”) shall be governed by this Section 7.9.  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
be finally settled by arbitration conducted by a single

 

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arbitrator in accordance with the then-existing rules of arbitration of the
American Arbitration Association. If the parties to the Dispute fail to agree on
the selection of an arbitrator within ten (10) calendar days of the receipt of
the request for arbitration, the American Arbitration Association shall make the
appointment. The arbitrator shall be a lawyer admitted to the practice of law in
a U.S. state, or a nationally recognized expert in the relevant subject matter,
and shall conduct the proceedings in the English language.  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.  The parties
involved in any Dispute shall each bear their own costs and expenses of such
Dispute unless, in the event of an arbitration, otherwise determined by the
arbitrator in accordance with the then-existing rules of arbitration of the
American Arbitration Association.

 

(b)                               Notwithstanding the provisions of
Section 7.9(a), the Corporate Taxpayer 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 7.9(b), the Agent and each TRA Holder (i) expressly consents to the
application of Section 7.9(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 Corporate Taxpayer as agent of
such party 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 party in writing of any such service of process, shall be
deemed in every respect effective service of process upon such party in any such
action or proceeding.

 

(c)                                EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF COURTS LOCATED IN NEW YORK FOR THE PURPOSE OF ANY JUDICIAL
PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS
SECTION 7.9 OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR
CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS
AGREEMENT.  Such ancillary judicial proceedings include any suit, action or
proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award.  The parties
acknowledge that the forum designated by this Section 7.9(c) have a reasonable
relation to this Agreement, and to the parties’ relationship with one another.

 

(d)                               The parties hereby waive, to the fullest
extent permitted by applicable law, any objection which they now or hereafter
may have to personal jurisdiction or to the laying of venue of any such
ancillary suit, action or proceeding brought in any court referred to in
Section 7.9(c) and such parties agree not to plead or claim the same.

 

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Section 7.10                           Reconciliation.  In the event that the
Agent or any TRA Holder (as applicable, the “Disputing Party”) and the Corporate
Taxpayer are unable to resolve a disagreement with respect to the calculations
required to produce the schedules described in Section 2.3, Section 4.4 and
Section 6.2 (but not, for the avoidance doubt, with respect to any legal
interpretation with respect to such provisions or schedules) within the relevant
period designated in this Agreement (“Reconciliation Dispute”), the
Reconciliation Dispute shall be submitted for determination to the Expert.  The
Expert shall be a partner or principal in a nationally recognized accounting or
law firm, and unless the Corporate Taxpayer and the Disputing Party agree
otherwise, the Expert shall not, and the firm that employs the Expert shall not,
have any material relationship with the Corporate Taxpayer or the Disputing
Party or other actual or potential conflict of interest.  If the parties are
unable to agree on an Expert within fifteen (15) calendar days of receipt by the
respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be
appointed by the American Arbitration Association.  The Expert shall resolve
(a) any matter relating to the Exchange Schedule or an amendment thereto or the
Early Termination Schedule or an amendment thereto within thirty (30) calendar
days, (b) any matter relating to a Tax Benefit Payment Schedule or an amendment
thereto within fifteen (15) calendar days, and (c) any matter related to
treatment of any tax-related item as contemplated in Section 6.2 within fifteen
(15) calendar days, or, in each case, as soon thereafter as is reasonably
practicable after such 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, any portion of such payment that is not under dispute shall be paid on the
date prescribed by this Agreement and such Tax Return may be filed as prepared
by the Corporate Taxpayer, subject to adjustment or amendment upon resolution. 
The costs and expenses relating to the engagement of such Expert or amending any
Tax Return shall be borne by the Corporate Taxpayer except as provided in the
next sentence.  The Corporate Taxpayer and the Disputing Party shall each bear
its own costs and expenses of such proceeding, unless (i) the Expert adopts such
Disputing Party’s position, in which case the Corporate Taxpayer shall reimburse
such Disputing Party for any reasonable out-of-pocket costs and expenses in such
proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in
which case such Disputing Party shall reimburse the Corporate Taxpayer for any
reasonable out-of-pocket costs and expenses in such proceeding.  Any dispute as
to whether a dispute is a Reconciliation Dispute within the meaning of this
Section 7.10 shall be decided by the Expert.  The Expert shall finally determine
any Reconciliation Dispute and the determinations of the Expert pursuant to this
Section 7.10 shall be binding on the Corporate Taxpayer and its Subsidiaries and
the Disputing Party and may be entered and enforced in any court having
jurisdiction.

 

Section 7.11                           Withholding.  The Corporate Taxpayer
shall be entitled to deduct and withhold from any payment payable pursuant to
this Agreement such amounts as the Corporate Taxpayer is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of U.S. federal, state, local or non-U.S. tax law.  To the extent that
amounts are so withheld and paid over to the appropriate Taxing Authority by the
Corporate Taxpayer, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the relevant TRA Holder.  Upon a TRA
Holder’s request, the Corporate Taxpayer shall provide evidence of any such
payment to such TRA Holder.  Each TRA Holder shall furnish to the Corporate
Taxpayer in a timely manner such statements, certifications or other information
reasonably requested by the Corporate Taxpayer for purposes of determining the

 

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extent to which any payments hereunder are subject to withholding or deduction.
The Corporate Taxpayer and the TRA Holders shall reasonably cooperate to reduce
or eliminate any withholding or deduction from any payment made pursuant to this
Agreement.

 

Section 7.12                           Status of Corporate Taxpayer as a Member
of a Consolidated Group; Transfers of Corporate Assets.

 

(a)                               If the Corporate Taxpayer is or 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,
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 the Corporate Taxpayer (or any other entity
that is obligated to make a Tax Benefit Payment or Early Termination Payment
hereunder), Focus LLC or any of Focus LLC’s direct or indirect Subsidiaries that
is treated as a partnership or disregarded entity for U.S. federal income tax
purposes (but only to the extent such Subsidiaries are not held through any
entity treated as a corporation for U.S. federal income tax purposes) (a
“Transferor”) transfers one or more Reference Assets to a corporation (or a
Person classified as a corporation for U.S. federal income tax purposes) with
which the Transferor does not file a consolidated Tax Return pursuant to
Section 1501 of the Code, the Transferor, for purposes of calculating the amount
of any Tax Benefit Payment or Early Termination 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 Reference
Assets in a fully taxable transaction on the date of such contribution.  The
consideration deemed to be received by the Transferor shall be equal to the fair
market value of the transferred Reference Assets, plus, without duplication,
(i) the amount of debt to which any such Reference Asset is subject, in the case
of a transfer of an encumbered Reference Asset or (ii) the amount of debt
allocated to any such Reference Asset, in the case of a contribution of a
partnership interest. For purposes of this Section 7.12(b), a transfer of a
partnership interest shall be treated as a transfer of the Transferor’s share of
each of the assets and liabilities of that partnership.

 

Section 7.13                           Confidentiality.

 

(a)                               The Agent and each of its assignees and each
TRA Holder and each of such TRA Holder’s assignees acknowledges and agrees that
the information of the Corporate Taxpayer is confidential and, except in the
course of performing any duties as necessary for the Corporate Taxpayer 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 Corporate Taxpayer and its Affiliates and successors,
concerning Focus LLC and its Affiliates and successors or the TRA Holders,
learned by the Agent or any TRA Holder heretofore or hereafter.  This Section
7.13 shall not apply to (i) any information that has been made publicly
available by the Corporate Taxpayer or any of its Affiliates, becomes public
knowledge (except as a result of an act of an Agent or a TRA Holder in violation
of this Agreement) or is generally known to the business community and (ii) the
disclosure of information (A) as may be proper in the course of

 

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performing the Agent’s or a TRA Holder’s obligations, or monitoring or enforcing
a TRA Holder’s rights, under this Agreement, (B) as part of a TRA Holder’s
normal reporting, rating or review procedure (including normal credit rating and
pricing process), or in connection with a TRA Holder’s or such TRA Holder’s
Affiliates’ normal fund raising, financing, marketing, informational or
reporting activities, or to a TRA Holder’s (or any of its Affiliates’) or its
direct or indirect owners or Affiliates, auditors, accountants, employees,
attorneys or other agents, (C) to any bona fide prospective assignee of a TRA
Holder’s rights under this Agreement, or prospective merger or other business
combination partner of a TRA Holder, provided that such assignee or merger
partner agrees to be bound by the provisions of this Section 7.13, (D) as is
required to be disclosed by order of a court of competent jurisdiction,
administrative body or governmental body, or by subpoena, summons or legal
process, or by law, rule or regulation; provided that any TRA Holder required to
make any such disclosure to the extent legally permissible shall provide the
Corporate Taxpayer prompt notice of such disclosure, or to regulatory
authorities or similar examiners conducting regulatory reviews or examinations
(without any such notice to the Corporate Taxpayer), or (E) to the extent
necessary for a TRA Holder or its direct or indirect owners to prepare and file
its Tax Returns, to respond to any inquiries regarding such Tax Returns from any
Taxing Authority or to prosecute or defend any Tax Proceeding with respect to
such Tax Returns.  Notwithstanding anything to the contrary herein, the Agent
(and each employee, representative or other agent of such Agent or its
assignees, as applicable) and each TRA Holder and each of its assignees (and
each employee, representative or other agent of such TRA Holder or its
assignees, as applicable) may disclose to any and all Persons, without
limitation of any kind, the Tax treatment and Tax structure of the Corporate
Taxpayer, Focus LLC, the Agent, the TRA Holders 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 Agent or any TRA Holder relating to such
Tax treatment and Tax structure.

 

(b)                               If an Agent or an assignee or a TRA Holder or
an assignee commits a breach, or threatens to commit a breach, of any of the
provisions of this Section 7.13, the Corporate Taxpayer shall have the right and
remedy to have the provisions of this Section 7.13 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
Corporate Taxpayer or any of its Subsidiaries or the TRA Holders and the
accounts and funds managed by the Corporate Taxpayer 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 7.14                           No More Favorable Terms.  None of the
Corporate Taxpayer nor any of its Subsidiaries shall enter into any additional
agreement providing rights similar to this Agreement to any Person (including
any agreement pursuant to which the Corporate Taxpayer is obligated to pay
amounts with respect to tax benefits resulting from any increases in Tax basis
or other tax attributes to which the Corporate Taxpayer becomes entitled as a
result of a transaction) if such agreement provides terms  that are more
favorable to the counterparty under such agreement than those provided to the
TRA Holders under this Agreement; provided, however, that the Corporate Taxpayer
(or any of its Subsidiaries) may enter into such an agreement if this Agreement
is amended to make such more favorable terms available to the TRA Holders.

 

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Section 7.15                           Parity with PE TRA. Notwithstanding
anything in this Agreement to the contrary, (a) no amendment may be made to the
PE TRA unless a substantially similar amendment is offered by the Corporate
Taxpayer to be made to this Agreement, (b) any and all copies of amendments and
waivers to the PE TRA must be provided to the Agent, and (c) all documentation
delivered by the Corporate Taxpayer to the Agent hereunder and each “Agent”
under the PE TRA must be substantially the same.

 

Section 7.16                           Certain Terminations by a TRA Holder.
Notwithstanding anything herein to the contrary, if, in connection with an
actual or proposed change in law, a TRA Holder reasonably believes that the
existence of this Agreement (a) could cause income (other than income arising
from receipt of a payment under this Agreement) recognized by such TRA Holder
upon any Exchange that as of the date of this Agreement would be treated as
capital gain to instead to be treated as ordinary income rather than capital
gain (or otherwise taxed at ordinary income rates) for U.S. federal income tax
purposes or (b) would have other material adverse tax consequences to such TRA
Holder and/or its direct or indirect owners, then, in either case, at the
election of such TRA Holder and to the extent specified by such TRA Holder, this
Agreement (i)  shall not apply to an Exchange by such TRA Holder occurring after
a date specified by it or (ii) shall otherwise be amended in a manner determined
by such TRA Holder to waive any benefits to which such TRA Holder would
otherwise be entitled under this Agreement, provided that such amendment shall
not result in an increase in or acceleration of payments under this Agreement at
any time as compared to the amounts and times of payments that would have been
due in the absence of such amendment.  Further, notwithstanding anything herein
to the contrary, any TRA Holder may, at any time, elect for this Agreement to
cease to have further effect in its entirety with respect to such TRA Holder,
and the Corporate Taxpayer shall cease to have any further obligations in
respect of such TRA Holder, in each case from and after the date specified by
such TRA Holder.

 

Section 7.17                           Independent Nature of Members’ Rights and
Obligations. The obligations of each TRA Holder hereunder are several and not
joint with the obligations of any other TRA Holder, and no TRA Holder shall be
responsible in any way for the performance of the obligations of any other TRA
Holder hereunder. The decision of each TRA Holder to enter into this Agreement
has been made by such TRA Holder independently of any other TRA Holder. Nothing
contained herein, and no action taken by any TRA Holder pursuant hereto, shall
be deemed to constitute the TRA Holders as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the TRA
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated hereby and the Corporate Taxpayer
acknowledges that the TRA Holders are not acting in concert or as a group, and
the Corporate Taxpayer will not assert any such claim, with respect to such
obligations or the transactions contemplated hereby.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Corporate Taxpayer, the TRA Holders, and the Agent have
duly executed this Agreement as of the date first written above.

 

 

CORPORATE TAXPAYER:

 

 

 

FOCUS FINANCIAL PARTNERS INC.

 

 

 

By:

/s/ Ruediger Adolf

 

 

Name:

Ruediger Adolf

 

 

Title:

Chief Executive Officer

 

SIGNATURE PAGE TO

TAX RECEIVABLE AGREEMENT

 

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AGENT:

 

 

 

RUEDIGER ADOLF

 

 

 

/s/ Ruediger Adolf

 

Ruediger Adolf

 

[The signatures of the TRA Holders are attached in Schedule A.]

 

SIGNATURE PAGE TO

TAX RECEIVABLE AGREEMENT

 

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SCHEDULE A

 

THE TRA HOLDERS PARTY TO TAX RECEIVABLE AGREEMENT

 

TRA Holder

Signature

 

SCHEDULE A TO

TAX RECEIVABLE AGREEMENT

 

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