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EXHIBIT 10.1
Execution
Copy
TRANSITION AGREEMENT
THIS TRANSITION AGREEMENT
(“Agreement”) is entered into as of the
30th day of April, 2008 by and among (i) BROADPOINT
SECURITIES GROUP, INC. (f/k/a FIRST ALBANY COMPANIES INC.)
(“ Broadpoint ”), a New York corporation,
(ii) FA TECHNOLOGY VENTURES CORPORATION (“
MgmtCo ”), a Delaware corporation (iii) FA
TECHNOLOGY HOLDING, LLC (“ NewCo ”), a
Delaware limited liability company, and (iv) GEORGE C.
McNAMEE, GREGORY A. HULECKI, KENNETH A. MABBS, GIRI C.
SEKHAR, JOHN A. COCOCCIA and CLAIRE WADLINGTON (collectively,
the “ FATV Principals ”) with regard to a
proposed restructuring of the investment management
arrangements relating to FA Technology Ventures , L.P.
(“ Fund II ”), an existing venture capital
fund managed by MgmtCo, and the formation of FA Technology
Ventures III, L.P. (together with any parallel investment
vehicle, “ Fund III ”), a new venture
capital fund to be sponsored and managed by NewCo and its
subsidiaries (collectively, the “ Transactions
”).
1.
Organization of NewCo . NewCo has been duly
formed and is wholly-owned by certain of the FATV
Principals. Broadpoint will not have an ownership
interest in NewCo.
2.
Structuring Fund III . NewCo has presented
Broadpoint with a draft Confidential Private Placement
Memorandum of Fund III (the “ PPM ”),
which PPM includes the proposed terms of Fund III (including
the amount of the management fee, the carried interest and
related clawback obligations and certain other customary
rights and obligations of the investors in Fund III and other
pertinent details). Broadpoint has reviewed and
approved the PPM. It is contemplated that,
although Fund III will in many respects be structured in a
manner similar to Fund II, Broadpoint and its subsidiaries
will not guarantee any of the obligations of NewCo, the
general partner of Fund III (“ GP III ”)
(except for its pro-rata share of any clawback obligation as
set forth in paragraph 7) or any of their affiliates under
the Fund III documents. There will also be no
offset against the management fees payable by Fund III to
NewCo or its subsidiaries for any investment banking,
advisory, commitment, consulting, director or similar fees
paid by Fund III portfolio companies to Broadpoint or its
subsidiaries or other restrictions or disincentives for such
portfolio companies to engage Broadpoint and its subsidiaries
for investment banking or financial advisory
services.
3.
Broadpoint Investment Commitment . Subject
to the execution and delivery of mutually acceptable
definitive agreements governing Fund III (the “ Fund
III Agreements ”) and definitive agreements of GP
III (the “ GP III Agreements ” and
collectively with the Fund III Agreements, the “
Definitive Fund Agreements ”), Broadpoint, as
part of the Definitive Fund Agreements, will make a capital
commitment of $10 million to Fund III at the first closing of
Fund III (the “ Broadpoint Commitment ”),
as long as the total commitments to Fund III (excluding the
Broadpoint Commitment) exceed $50 million (the “Funding
Threshold”) and if the Funding Threshold is not met at
the First Closing of Fund III then such $10 million
commitment shall be made at the closing of Fund III at which
the Funding Threshold is met; provided, however, if the
Funding Threshold is not met by June 30, 2009,
Broadpoint’s obligation to make the Broadpoint
Commitment shall terminate. Once the Definitive
Fund III Agreements have been executed by Broadpoint in
respect of the Broadpoint Commitment, NewCo and its
subsidiaries may disclose such commitment in their
fundraising efforts for Fund III and, prior to such time (so
long as Broadpoint’s obligations hereunder have not
been terminated), NewCo and its subsidiaries may also
disclose to potential investors in Fund III that Broadpoint
and NewCo have entered into this Agreement contemplating such
a commitment. Broadpoint acknowledges that the
terms of Fund III are expected to be substantially similar to
those set forth in the PPM and Broadpoint acknowledges that
such terms are acceptable. The parties acknowledge
that the terms of Fund III may be subject to negotiation with
investors and agree that (i) Broadpoint will be entitled to
“most favored nation” treatment with regard to
its rights and obligations as an investor in Fund III
compared to other investors (subject to customary exclusions
previously approved by Broadpoint) and (ii) Broadpoint will
have the right to terminate its obligation to make the
Commitment if such negotiations result in changes to the
terms of Fund III that Broadpoint determines in good faith to
be materially adverse to its interests.
4.
Fundraising . NewCo and its subsidiaries
will be permitted to use all performance information from
Fund II and venture capital investments made through
Broadpoint prior to Fund II (the “ FATV I
Portfolio ”) and due diligence materials and other
books and records associated with such investments (subject
to any applicable confidentiality restrictions) in preparing
the PPM and other due diligence and offering materials for
Fund III and any successor fund sponsored by
NewCo. It is also contemplated that Broadpoint
will assist NewCo and its subsidiaries in fundraising for
Fund III. Contemporaneously herewith, NewCo shall,
and Broadpoint shall cause Broadpoint Capital, Inc. or
another broker-dealer subsidiary of Broadpoint (the “
Broadpoint B/D ”) to, execute and deliver a
Placement Agent Agreement substantially in the form attached
as Exhibit A hereto (the “ Placement Agent
Agreement ”) pursuant to which, among other things,
Broadpoint B/D will develop a target list of potential
investors in Fund III with whom Broadpoint or its affiliates
have a relationship (the “ Target List ”),
which will be subject to NewCo’s approval, and may
otherwise assist NewCo in the fundraising for Fund
III. NewCo and its subsidiaries and
representatives shall comply with all applicable securities
and other laws in the fundraising activities for Fund III and
in the management and operation of Fund III, GP III and NewCo
and Broadpoint and Broadpoint B/D shall comply with all
applicable securities and other laws in their fundraising
activities for Fund III.
5.
Modifications to Certain Fund II Arrangements
.
(a) Concurrent
with the first closing of Fund III (the “ Trigger
Date ”), MgmtCo will assign all of its rights and
interest in the Investment Advisory Agreement between it and
FATV GP LLC in respect of Fund II (the “ Fund II
Investment Advisory Agreement ”) to NewCo and NewCo
will assume all of MgmtCo’s obligations and liabilities
thereunder and will indemnify Broadpoint and its affiliates
(including MgmtCo) against all claims and liabilities
relating to such agreement arising in respect of matters
occurring after the Trigger Date. Such assignment
and assumption will be effected by execution of the Consent,
Assignment and Assumption Agreement attached hereto as
Exhibit B which NewCo and MgmtCo agree to execute on
the Trigger Date and which NewCo agrees to use its reasonable
best efforts to cause FATV GP LLC to execute as soon as
practicable thereafter. Any management fees
prepaid to Broadpoint pursuant to the Fund II Investment
Advisory Agreement will be pro-rated on a daily basis and any
portion thereof relating to a period after the Trigger Date
will be remitted to NewCo as soon as practicable after the
Trigger Date.
(b) NewCo will
use reasonable efforts to terminate any existing restrictions
or disincentives on portfolio companies of Fund II from
engaging Broadpoint and its subsidiaries in a financial
advisory or any other capacity. Broadpoint
acknowledges that there can be no assurance of success in
terminating any such restrictions.
6.
Termination of the E
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