Document:

Exhibit 10.12

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE SECURITIES ACQUIRED HEREUNDER MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION FROM REGISTRATION REQUIREMENTS THEREUNDER.

 

CLASS D COMMON STOCK SUBSCRIPTION AGREEMENT

 

THIS CLASS D COMMON STOCK SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into as of [·], 2014, by and between Virtu Financial, Inc., a Delaware corporation (the “Company”), and Virtu Holdings LLC, a Delaware limited liability company (the “Subscriber”).

 

WHEREAS, in connection with the initial public offering of the shares of the Company’s Class A common stock, par value $0.00001 per share (the “Class A Common Stock”), and the reorganization transactions contemplated by that certain Reorganization Agreement, dated as of the date hereof, by and among the Company, Virtu Financial LLC, a Delaware limited liability company (“Virtu Financial”), the Subscriber and certain other parties listed therein (the “Reorganization Agreement”), pursuant to which, among other things, all of the existing equity interests in Virtu Financial, including those held by the Subscriber, have been reclassified into Virtu Financial’s non-voting common interest units (“Virtu Financial Units”), based on a hypothetical liquidation of Virtu Financial and the initial public offering price per share of the Class A Common Stock;

 

WHEREAS, as a condition to receiving the Virtu Financial Units in the reclassification described above, the Subscriber has entered into this Agreement to subscribe for and purchase that number of shares of the Company’s Class D common stock, par value $0.00001 per share (the “Class D Common Stock”), specified on Schedule I hereto.

 

The parties hereto, intending to be legally bound, hereby agree, for good and valuable consideration, the receipt of which is hereby acknowledged, as follows:

 

1.                                      Subscription for Class D Common Stock.  Subject to the terms and conditions set forth in this Agreement and any unit vesting agreement entered into between the Subscriber and the Company, the Subscriber hereby subscribes for and agrees to purchase, and the Company hereby agrees to sell and issue to the Subscriber, that number of shares of Class D Common Stock specified on Schedule I hereto, in exchange for the payment of the purchase price of $0.00001 per share (the “Purchase Price”).  Within thirty (30) days following the execution and delivery hereof, and as a condition subsequent to the consummation of the transactions contemplated hereby, the Subscriber will tender to the Company, in cash, check or wire transfer, the Purchase Price.

 

2.                                      Shares.  The Company represents and warrants that the shares of Class D Common Stock subscribed for hereunder (the “Shares”) have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable.

 

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3.                                      Representations and Warranties of the Company.  The Company hereby represents and warrants:

 

(a)                                 That the Company is a corporation duly incorporated or formed and is existing in good standing under the laws of the State of Delaware;

 

(b)                                 that the Company has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby; and

 

(c)                                  that this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

 

4.                                      Representations and Warranties of the Subscriber.  The Subscriber hereby represents and warrants:

 

(a)                                 that the Subscriber is an “accredited investor” (as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”);

 

(b)                                 that the Subscriber or the Subscriber’s representative has had access to the same kind of information concerning the Company that is required by Schedule A of the Act, to the extent that the Company possesses such information;

 

(c)                                  that the Subscriber has received a copy of the Company’s Registration Statement on Form S-1, dated [·], 2014, and such other information as the Subscriber may have requested from the Company;

 

(d)                                 that the Subscriber has such knowledge and experience in financial and business matters that it is capable of utilizing the information that is available to it concerning the Company to evaluate the risks of investment in the Company including the risk that it could lose its entire investment in the Company;

 

(e)                                  that the Subscriber understands that the Shares have not been registered under the Act, the securities laws of any state or the securities laws of any other jurisdiction, and that the Shares must be held indefinitely, are subject to restrictions on sale and Transfer (as defined below) and any sale or Transfer permitted under the terms of this Agreement must be registered under the Act and such other securities laws unless an exemption from registration under the Act and such other securities laws covering the sale or Transfer of the Shares is available;

 

(f)                                   that the Shares are being purchased by the Subscriber for the Subscriber’s own sole benefit and account for investment and not with a view to, or for resale in connection with, a public offering or distribution thereof;

 

(g)                                  that the Subscriber understands that the certificate or certificates representing the Shares (if certificated) may be impressed with a legend stating that the Shares are subject to restrictions on sale and Transfer and have not been registered under the Act or any state

 

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securities laws and setting out or referring to the restrictions on the Transferability and resale of the Shares; and

 

(h)                                 that the Subscriber understands that stop Transfer instructions in respect of the Shares may be issued to any Transfer agent, Transfer clerk or other agent at any time acting for the Company.

 

5.                                      Transfer Restrictions.  The Subscriber hereby agrees that, unless otherwise agreed to by the Company in writing (with the approval of the board of directors of the Company), it shall not Transfer any of the Shares except for Transfers that are otherwise made in accordance with the Second Amended and Restated Limited Liability Company Agreement of Virtu Financial (the “LLC Agreement”) (it being understood that, pursuant to the LLC Agreement, the Shares shall only be Transferred with the corresponding Virtu Financial Units that constitute a Paired Interest (as defined in the LLC Agreement) with such Shares).  As used herein, “Transfer” shall have the meaning set forth in the LLC Agreement.

 

6.                                      Unit Certificate Restrictive Legends.  Certificated Units evidencing the Shares, to the extent such certificates are issued, may bear such restrictive legends as the Company and/or the Company’s counsel may deem necessary or advisable under applicable law or pursuant to this Agreement, including, without limitation, the following legends:

 

“THE TRANSFER OF SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE CLASS D COMMON STOCK SUBSCRIPTION AGREEMENT, DATED AS OF [·], 2014, BETWEEN VIRTU FINANCIAL, INC. AND THE SUBSCRIBER, AS IT MAY BE AMENDED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME, AND NO TRANSFER OF THESE SECURITIES WILL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.  THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE SECURITIES ACQUIRED HEREUNDER MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND OTHER APPLICABLE LAWS PURSUANT TO REGISTRATION OR EXEMPTION FROM REGISTRATION REQUIREMENTS THEREUNDER.”

 

7.                                      Notices.  All notices required or permitted hereunder shall be in writing deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his or her or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other.

 

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8.                                      Successors and Assigns.  The rights, duties and obligations under this Agreement may not be assigned by the Subscriber or the Company except that this Agreement shall be assignable by the Company to any successor entity, including an entity acquiring all, or substantially all, of the assets of the Company.  The provisions of this Agreement shall be binding on any such assignee.

 

9.                                      Entire Agreement; Amendments and Waivers.

 

(a)                                 Amendments.  This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties.  There are no agreements, understandings, specific restrictions, warranties, or representations relating to said subject matter between the parties other than those set forth herein or herein provided for.  This Agreement may only be amended in writing by mutual agreement between the parties.

 

(b)                                 Waivers.  The failure of a party to insist upon strict performance of any provision of this Agreement in any one or more instances shall not be construed as a waiver or relinquishment of the right to insist upon strict compliance with such provision in the future.

 

10.                               WAIVER OF JURY TRIAL.  THE COMPANY AND SUBSCRIBER EACH WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THE AGREEMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH, IN THE FUTURE, MAY BE DELIVERED IN CONNECTION THEREWITH, AND EACH AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  THE COMPANY AND SUBSCRIBER EACH REPRESENTS THAT NO OFFICER, REPRESENTATIVE, OR ATTORNEY OF THE SUBSCRIBER OR COMPANY, RESPECTIVELY, OR ANY AFFILIATE HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SUBSCRIBER OR COMPANY, RESPECTIVELY, WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.

 

11.                               Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other governmental authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties 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 fullest extent possible.

 

12.                               Number; Titles.  As employed in this Agreement, the singular form shall include, if appropriate, the plural.  The headings employed in this Agreement are solely for the convenience and reference of the parties and are not intended to be descriptive of the entire contents of any

 

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paragraph and shall not limit or otherwise affect any of terms, provisions, or construction thereof.

 

13.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

14.                               Jurisdiction.

 

(a)                                 The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its affiliates or against any party or any of its affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 7 shall be deemed effective service of process on such party.

 

(b)                                 EACH OF THE COMPANY AND THE SUBSCRIBER HEREBY IRREVOCABLY DESIGNATES THE CORPORATION TRUST COMPANY (IN SUCH CAPACITY, THE “PROCESS AGENT”), WITH AN OFFICE AT CORPORATION TRUST CENTER, 1209 ORANGE STREET, WILMINGTON, NEW CASTLE COUNTY, DELAWARE 19801, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT; PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO EACH OTHER SUCH PARTY IN THE MANNER PROVIDED IN SECTION 7 OF THIS AGREEMENT.  EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT SUCH PARTY SHALL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN WILMINGTON, DELAWARE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW.  EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA.

 

15.                               Counterparts.  This Agreement may be executed in any number of counterparts, any of which may be executed and transmitted by facsimile (or electronic mail in pdf format), and each

 

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of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.

 

16.                               Further Representations and Acknowledgements of the Subscriber.  The Subscriber acknowledges having been afforded a reasonable opportunity to consult with the financial or legal advisors of the Subscriber’s choosing with respect to the Subscriber’s rights and responsibilities under this Agreement, and the Subscriber is advised to so consult.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement as of the date and year first written above.

 

 

	
THE COMPANY:
    	
VIRTU   FINANCIAL, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Class D Common Stock Subscription Agreement]

 

 

	
THE SUBSCRIBER:
    	
VIRTU HOLDINGS LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Class D Common Stock Subscription Agreement]

 

 

Schedule I

 

	
Name of the Subscriber
    	
 
    	
Shares of Class D Common Stock of the
   Company issued to the Subscriber
    
	
Virtu Holdings LLC
    	
 
    	
[·]Exhibit 10.13

 

AMENDED AND RESTATED VIRTU FINANCIAL LLC 
 MANAGEMENT INCENTIVE PLAN

 

	
Purpose
    	
 
    	
The   Amended and Restated Virtu Financial LLC Management Incentive Plan (the “MIP”)   is designed to give selected key employees of Virtu Financial LLC (the “Company”)   and its subsidiaries the right to acquire a direct or indirect ownership   interest in the Company and an incentive to help grow the business of the   Company.

 

The   MIP was originally effective as of July 8, 2011 and is hereby amended   and restated in its entirety as of                    , 2014.

 

Capitalized   terms used but not defined herein have the meanings given such terms in the   Second Amended and Restated Limited Liability Company Agreement of the   Company, as amended (the “LLC Agreement”).
    
	
 
    	
 
    	
 
    
	
Structure
    	
 
    	
Participants   in the MIP hold (i) non-voting common limited liability company   interests (the “Employee Holdco Common Units”) of Virtu Employee   Holdco LLC (the “Employee Holdco”), which holds directly the   corresponding non-voting common limited liability company interests in the   Company (“Common Units”) that were issued to Employee Holdco or (ii) Common   Units directly in the Company.  The   Employee Holdco Common Units described in clause (i) and the Common   Units described in clause (ii) shall collectively be referred to as “MIP   Units”.
    
	
 
    	
 
    	
 
    
	
Administration   
    	
 
    	
The   MIP will be administered by Vincent Viola, (the “Manager”), until such   time as he withdraws as the Manager of Employee Holdco or is removed by the   Company as provided in the Amended and Restated Limited Liability Company   Agreement of Employee Holdco, as amended (the “Employee Holdco LLC   Agreement”).  In the event Vincent   Viola is no longer Manager of Employee Holdco, the MIP shall be administered   by the Company or its designee and all references to the “Manager” shall be   deemed to be to the Company or such designee.    Subject to the terms of the LLC Agreement, the MIP and applicable law,   and in addition to other express powers and authorizations conferred to the   Manager by the MIP, the Manager shall have full power and authority to:

 

·                  designate   participants and determine the amount of awards under the MIP to be made to   any participant;

 

·                  determine the   terms and conditions of any awards made under the MIP;

 

·                  determine   whether, to what extent, and under what circumstances awards made under the   MIP may be canceled,
    

 

 

	
 
    	
 
    	
forfeited or suspended and the method or methods by which the awards   made under the MIP may be settled, canceled, forfeited or suspended;

 

·                  make   appropriate adjustments in order to minimize the accounting impact of the   awards made under the MIP;

 

·                  interpret,   administer, reconcile any inconsistency, correct any defect and/or supply any   omission in the MIP and any instrument or agreement relating to, or any   awards made under, the MIP;

 

·                  establish,   amend, suspend or waive such rules and regulations and appoint such   agents as it shall deem appropriate for the proper administration of the MIP;   and

 

·                  make any   other determination and take any other action that the Manager deems   necessary or desirable for the administration of the MIP.

 

Unless   otherwise expressly provided in the MIP or required under the LLC Agreement,   all designations, determinations, interpretations and other decisions under   or with respect to the MIP or any awards made under the MIP shall be within   the sole discretion of the Manager, may be made at any time and shall be   final, conclusive and binding upon all participants and any beneficiary of   awards made under the MIP.

 

The   Manager’s determinations on matters within its authority shall be conclusive   and binding upon the participants, the Company and all other persons.  The Manager’s determinations need not be   the same with respect to each participant (whether or not such participants   are similarly situated).  All expenses   associated with the administration of the MIP shall be borne by the Company.
    
	
 
    	
 
    	
 
    
	
Participation
    	
 
    	
The   Manager has selected the employees eligible to participate in the Plan.  
    
	
 
    	
 
    	
 
    
	
Restrictions on Transfer
    	
 
    	
Any   transfers of MIP Units shall be subject to the terms of (i) the Unit   Vesting, Equity Retention and Restrictive Covenant Agreement entered into by   each such participant (the “Employee Equity Letter”) entered into in   connection with the initial public offering of shares of Class A common   stock, par value $0.00001, of Virtu Financial Inc. (“Pubco”), (ii) the   LLC Agreement and (iii) in the case of Employee Holdco Common Units, the   Employee Holdco LLC Agreement.
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
MIP   Units awarded under the MIP are subject to the vesting conditions set forth   in each participant’s written notice of grant, as subsequently acknowledged   by each participant pursuant to his or her Employee Equity Letter. 
    

 

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Repurchase of MIP Units
    	
 
    	
MIP   Units shall be subject to the repurchase provisions set forth in the LLC   Agreement or Employee Holdco LLC Agreement, as applicable, including, in the   case of the Employee Holdco LLC Agreement, (i) the reduction of   consideration payable to the participant in such repurchase in the event of a   breach thereby of the restrictive covenants set forth therein and (ii) the   right of the Company or Employee Holdco to provide the Minimum Annual   Payment.
    
	
 
    	
 
    	
 
    
	
Distributions
    	
 
    	
MIP   Units shall be entitled to distributions as set forth in the LLC Agreement or   Employee Holdco LLC Agreement, as applicable.
    
	
 
    	
 
    	
 
    
	
Restrictive Covenants
    	
 
    	
Participants   holding MIP Units shall be subject to the restrictive covenants set forth in   the LLC Agreement or Employee Holdco LLC Agreement, as applicable, and   acknowledged in each participant’s Employee Equity Letter. The Company and   Employee Holdco shall be entitled to equitable relief (including injunctive   relief) in addition to any other remedies they may have against a participant   in connection with an actual or threatened breach of such restrictive   covenants. 
    
	
 
    	
 
    	
 
    
	
No Voting/
   Governance/
   Information Rights
    	
 
    	
Participants   holding MIP Units shall have no voting, governance or information rights in   respect of such MIP Units except as expressly provided in the LLC Agreement   or Employee Holdco LLC Agreement, as applicable.  
    
	
 
    	
 
    	
 
    
	
Representations
    	
 
    	
The   MIP Units were issued subject to the understanding that the participant   acquired the MIP Units for the participant’s own account for investment and   not with a view to a sale or distribution thereof, and that the participant   has received, read and had an opportunity to ask questions about the MIP, the   LLC Agreement and, in the case of holders of Employee Holdco Common Units,   the Employee Holdco LLC Agreement.  The   Manager may, in its sole discretion, require any participant to acknowledge   such representation and agree with the Company and/or Employee Holdco in   writing, in substance and form satisfactory thereto, to such effect and to   such other effect as it may deem necessary or appropriate in order to comply   with (i) applicable laws or (ii) covenants or representations made   in connection with any offering of securities by the Company, Employee   Holdco, Pubco or any of their respective affiliates.
    
	
 
    	
 
    	
 
    
	
Amendment   or Termination
    	
 
    	
The   MIP can be amended or terminated at the sole discretion of the Manager,   subject to the terms of the LLC Agreement and, with respect to any Employee   Holdco Common Units, the Employee Holdco LLC Agreement.  Termination of the MIP shall not affect any   MIP Units previously granted.  The   Manager shall not use its discretionary authority to cancel, forfeit or   suspend a participant’s MIP Units that have satisfied the time-based vesting   criteria set by the Manager in a written notice of grant; provided that the   foregoing shall not prevent the cancellation, forfeiture or suspension of   such MIP Units in accordance with a separate provision of the MIP (for   example, as provided in
    

 

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“Repurchase   of MIP Units “), the LLC Agreement or Employee Holdco LLC Agreement, or a   separate agreement then in effect between the participant and the Company,   Employee Holdco, Pubco or any of their respective affiliates.

 

The   LLC Agreement and the Employee Holdco LLC Agreement can be amended in accordance   therewith.
    
	
 
    	
 
    	
 
    
	
Written Agreement
    	
 
    	
Each   issuance and/or grant of MIP Units is embodied in a written agreement signed   by the participant to whom such MIP Units were issued and/or granted and   shall be subject to the terms and conditions set forth therein.
    
	
 
    	
 
    	
 
    
	
No Right to Employment
    	
 
    	
Nothing   in the MIP shall interfere with or limit in any way the right of the Company   or its subsidiaries to terminate any participant’s employment or engagement   at any time (with or without Cause), or confer upon any participant any right   to continue to be employed or engaged by the Company or its subsidiaries for   any period of time or to continue to receive such participant’s current (or   other) rate of compensation.  No person   shall have a right to be selected as a participant or, having been so   selected, to be selected again as a participant in the MIP.
    
	
 
    	
 
    	
 
    
	
Withholding Taxes
    	
 
    	
A   participant may be required to pay to Employee Holdco and/or the Company, and   Employee Holdco and/or the Company and its affiliates shall have the right   and are hereby authorized to withhold from any payment due or transfer made   under any MIP Units, under the MIP or from any other amount owing to a   participant (including in connection with any transfers), the amount (in   cash, securities or other property) of any applicable federal, state, or   local withholding taxes in respect of MIP Units or any payment or transfer   under a MIP Unit or the MIP and to take such other action as may be necessary   in the discretion of the Manager to satisfy all obligations for the payment   of such taxes.
    
	
 
    	
 
    	
 
    
	
Special Incentive Compensation
    	
 
    	
By   acceptance of its award hereunder, each participant shall be deemed to have   agreed that such award is special incentive compensation that will not be   taken into account, in any manner, as salary, compensation or bonus in   determining the amount of any payment under any pension, retirement, life   insurance, disability, severance or other employee benefit plan of the   Company or any of its affiliates.
    
	
 
    	
 
    	
 
    
	
Severability
    	
 
    	
If   any term, provision, covenant or restriction contained in the MIP is held by   a court of competent jurisdiction or other authority to be invalid, void,   unenforceable or against its regulatory policy, the remainder of the terms,   provisions, covenants and restrictions contained in the MIP shall remain in   full force and effect and shall in no way be affected, impaired or   invalidated, and the MIP shall be reformed, construed and enforced in such   jurisdiction as if such invalid, illegal or unenforceable term, provision,   covenant or restriction or any portion thereof had never been contained   herein.
    

 

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Interpretation
    	
 
    	
The   MIP is subject to the LLC Agreement, and the terms and provisions of the LLC   Agreement are hereby incorporated herein by reference. In addition, any   Employee Holdco Common Units are subject to the Employee Holdco LLC   Agreement, and the terms and provisions of the Employee Holdco LLC Agreement   are hereby incorporated herein by reference. Unless otherwise expressly provided,   in the event of a conflict between any term or provision contained herein and   a term or provision of the LLC Agreement, or, if applicable to Employee   Holdco Common Units, the Employee Holdco LLC Agreement, the applicable terms   and provisions of the LLC Agreement or the Employee Holdco LLC Agreement, as   applicable, shall govern and prevail.
    
	
 
    	
 
    	
 
    
	
Successors and Assigns
    	
 
    	
The   MIP and any award agreements hereunder shall be binding upon and inure to the   benefit of the Company and, with respect to any awards of Employee Holdco   Common Units, Employee Holdco, and their respective successors and assigns,   including any person which is a successor thereto, and each participant and   any subsequent permitted holders of the MIP Units granted hereunder and the   respective successors, heirs and assigns of each of them, so long as they   hold MIP Units.
    
	
 
    	
 
    	
 
    
	
Section 409A
    	
 
    	
The   Company intends that awards of MIP Units under the MIP shall be exempt from   the provisions of Section 409A of the Internal Revenue Code of 1986, as amended   (the “Code”); provided, however, to the extent that the   MIP or any part thereof is deemed to be a non-qualified deferred compensation   plan subject to Section 409A of the Code and the Treasury regulations   (including proposed regulations as applicable) and other guidance promulgated   thereunder, (a) the provisions of the MIP shall be interpreted in a   manner to the maximum extent possible to comply with Section 409A of the   Code in accordance with Section 409A of the Code and (b) the   Company may amend the MIP for purposes of complying with Section 409A   the Code promptly upon issuance of any Treasury regulations or guidance   thereunder.  Notwithstanding the foregoing, neither Employee Holdco, the Company,   Pubco nor any affiliate shall have any obligation to indemnify or otherwise   hold a participant (or any beneficiary) harmless from any or all taxes or   penalties that may arise under Section 409A of the Code.  
    
	
 
    	
 
    	
 
    
	
ERISA Considerations
    	
 
    	
The   MIP is intended to be an incentive bonus program and is not intended to   provide retirement income. The MIP is not subject to any of the provisions of   the Employee Retirement Income Security Act of 1974, as amended.
    
	
 
    	
 
    	
 
    
	
Governing Law; Waiver of Jury Trial
    	
 
    	
The   MIP shall be governed by, and construed and interpreted in accordance with,   the laws of the State of New York without reference to its principles of   conflict of laws.  Each participant, by   accepting an award under the MIP, agrees to waive all right to a trial by   jury in any action, proceeding or counterclaim arising out of or relating to   the MIP or the other agreements and instruments delivered hereunder or the
    

 

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transactions   contemplated hereby or thereby.
    

 

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APPENDIX A

 

	
“Cause”
    	
 
    	
Unless   otherwise determined by the Manager, “Cause” includes:

 

·                  A   participant’s conviction or plea of no contest to any crime or felony (or its   equivalent in a non-U.S. jurisdiction), or conviction or plea of no contest   to any other crime which makes the participant legally prohibited from   working for the Company.

 

·                  A   participant’s gross negligence or willful misconduct, or failure to   substantially perform his or her duties (other than due to physical or mental   illness or incapacity);

 

·                  A participant’s   material breach of any employment or similar agreement between the   participant and the Company;

 

·                  A   participant’s willful and intentional failure to follow specific reasonable   directions of the Company or its designees, or willful and intentional   violation of the Company’s written policies that the Manager reasonably   determines is detrimental to the best interests of the Company;

 

·                  A   participant’s fraud or misappropriation, embezzlement or material misuse of   funds or property belonging to the Company that materially and adversely   affects the business of the Company and its Affiliates;

 

·                  A   participant’s use of alcohol or drugs that materially interferes with the   performance of his or her duties and adversely affects the business of the   Company and its Affiliates;

 

·                  a   participant’s breach of a regulatory rule that adversely affects his or   her ability to perform his or her duties to the Company; or

 

·                  any action or   conduct of a participant that adversely affects or is reasonably likely to   materially and adversely affect the integrity and reputation of the Company   or its affiliates, their employees or their products;

 

provided,   however, that the participant shall be provided a 30-day period to cure any   of the events or occurrences
    

 

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described   in the immediately preceding bullets (other than the first bullet), to the   extent curable. The determination of whether or not Cause exists shall be   made by the Manager in its sole discretion, whose determination shall be   final, binding and conclusive on all participants and beneficiaries.
    

 

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