Moelis & Co (Form: 10-Q, Received: 11/07/2014 16:47:08)

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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-36418

Moelis & Company
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		46-4500216 (I.R.S. Employer Identification No.)
399 Park Avenue, 5th Floor, New York NY (Address of principal executive offices)		10022 (Zip Code)

(212) 883-3800
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). o Yes ý No

As of October 27, 2014, there were 15,159,781 shares of Class A common stock, par value $0.01 per share, and 36,149,180 shares of Class B common stock, par value $0.01 per share, outstanding.

Table of Contents

TABLE OF CONTENTS



Part I. Financial Information
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
Part II. Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51
Signatures		52

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated and Combined Financial Statements (Unaudited)

		Page

Condensed Consolidated and Combined Statements of Financial Condition as of September 30, 2014 and December 31, 2013			4
Condensed Consolidated and Combined Statements of Operations for the three and nine months ended September 30, 2014 and 2013			5
Condensed Consolidated and Combined Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013			6
Condensed Consolidated and Combined Statements of Cash Flows for the nine months ended September 30, 2014 and 2013			7
Condensed Consolidated and Combined Statements of Changes in Equity for the nine months ended September 30, 2014 and 2013			8
Notes to Condensed Consolidated and Combined Financial Statements			9

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Moelis & Company

Condensed Consolidated and Combined Statements of Financial Condition

(Unaudited)

(dollars in thousands, except per share amounts)

	September 30, 2014			December 31, 2013

Assets
Cash and cash equivalents	$	142,098		$	303,024
Restricted cash		912			792
Receivables:
Accounts receivable, net of allowance for doubtful accounts of $1,636 and $773 as of 2014 and 2013, respectively		22,951			28,784
Other receivables, net of allowance for doubtful accounts of $0 and $1,080 as of 2014 and 2013, respectively		7,819			6,559


Total receivables		30,770			35,343
Deferred compensation		4,404			3,495
Investments at fair value (cost basis $73,997 and $69,066 as of 2014 and 2013, respectively)		73,999			68,141
Equity method investments		16,634			12,481
Equipment and leasehold improvements, net		5,860			5,156
Deferred tax asset		69,379			1,315
Prepaid expenses and other assets		8,133			13,716


Total assets	$	352,189		$	443,463




Liabilities and Equity
Compensation payable		95,856			104,527
Accounts payable and accrued expenses		13,789			14,262
Amount due pursuant to tax receivable agreement		51,761			—
Deferred revenue		7,325			6,838
Other liabilities		8,770			8,466


Total liabilities		177,501			134,093




Commitments and Contingencies (See Note 13)
Parent company investment		—			308,444
Accumulated other comprehensive income (loss)		521			926
Class A common stock, par value $0.01 per share (1,000,000,000 shares authorized, 15,260,806 issued and outstanding at September 30, 2014; none authorized, issued or outstanding at December 31, 2013)		153			—
Class B common stock, par value $0.01 per share (1,000,000,000 shares authorized, 36,149,180 issued and outstanding at September 30, 2014; none authorized, issued or outstanding at December 31, 2013)		362			—
Additional paid-in-capital		94,367			—
Retained earnings (accumulated deficit)		(15,517	)		—


Total Moelis & Company equity		79,886			309,370
Noncontrolling interests		94,802			—


Total equity		174,688			309,370


Total liabilities and equity	$	352,189		$	443,463

See notes to the condensed consolidated and combined financial statements (unaudited).

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Moelis & Company

Condensed Consolidated and Combined Statements of Operations

(Unaudited)

(dollars in thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,

	2014		2013			2014			2013
Revenues	$	128,651	$	98,728		$	374,855		$	257,091
Expenses
Compensation and benefits		68,148		64,966			300,793			166,952
Occupancy		3,560		3,504			10,195			10,542
Professional fees		5,995		2,999			14,588			8,887
Communication, technology and information services		3,945		3,443			11,589			9,885
Travel and related expenses		8,083		3,358			19,433			12,110
Depreciation and amortization		542		571			1,636			1,743
Other expenses		2,605		5,370			14,220			10,513


Total expenses		92,878		84,211			372,454			220,632


Operating income (loss)		35,773		14,517			2,401			36,459
Other income and expenses		617		(1,101	)		622			(968	)
Income (loss) from equity method investments		1,105		1,739			(2,966	)		2,588


Income (loss) before income taxes		37,495		15,155			57			38,079
Provision for income taxes		4,710		705			5,790			1,782


Net income (loss)		32,785	$	14,450			(5,733	)	$	36,297




Net income (loss) attributable to noncontrolling interests		26,285					6,777


Net income (loss) attributable to Moelis & Company	$	6,500				$	(12,510	)




Weighted-average shares of Class A common stock outstanding
Basic		15,262,343					15,262,940




Diluted		16,205,254					15,262,940




Net income (loss) per share attributable to holders of shares of Class A common stock
Basic	$	0.43				$	(0.82	)




Diluted	$	0.40				$	(0.82	)




Dividends Declared per Share of Class A common stock	$	0.20				$	0.20

See notes to the condensed consolidated and combined financial statements (unaudited).

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Moelis & Company

Condensed Consolidated and Combined Statements of Comprehensive Income

(Unaudited)

(dollars in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,

	2014			2013		2014			2013
Net income (loss)	$	32,785		$	14,450	$	(5,733	)	$	36,297
Foreign currency translation adjustment, net of tax		(3,156	)		3,805		(1,442	)		356


Other comprehensive income (loss)		(3,156	)		3,805		(1,442	)		356


Comprehensive income (loss)		29,629		$	18,255		(7,175	)		36,653




Less: Comprehensive income (loss) attributable to noncontrolling interests		24,017					5,740


Comprehensive income (loss) attributable to Moelis & Company	$	5,612				$	(12,915	)

See notes to the condensed consolidated and combined financial statements (unaudited).

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Moelis & Company

Condensed Consolidated and Combined Statements of Cash Flows

(Unaudited)

(dollars in thousands)

	Nine Months Ended September 30,

	2014			2013
Cash flows from operating activities
Net income (loss)	$	(5,733	)	$	36,297
Adjustments to reconcile combined net income to net cash provided by (used in) operating activities:
Bad debt expense		1,496			1,211
Depreciation and amortization		1,636			1,743
(Income) loss from equity method investments		2,966			(2,588	)
Equity-based compensation		112,726			34,810
Other		2,949			2,373
Changes in assets and liabilities:
Accounts receivable		4,738			3,151
Other receivables		(3,234	)		(10,996	)
Prepaid expenses and other assets		1,018			(3,904	)
Deferred compensation		(1,181	)		1,152
Compensation payable		(7,998	)		(72,567	)
Accounts payable and accrued expenses		7,667			(163	)
Deferred revenue		484			(939	)
Dividends received		—			2,375
Other liabilities		294			2,270


Net cash provided by (used in) operating activities		117,828			(5,775	)


Cash flows from investing activities
Purchase of investments		(91,107	)		(148,059	)
Proceeds from sales of investments		83,237			200,143
Investment in equity method investments		(4,445	)		—
Note payments received from employees		831			383
Notes issued to employees		(119	)		—
Purchase of equipment and leasehold improvements		(2,381	)		(1,251	)
Change in restricted cash		(131	)		(4	)


Net cash provided by (used in) investing activities		(14,115	)		51,212


Cash flows from financing activities
Pre-offering distribution to partners		(195,017	)		—
Tax distributions to partners		(46,990	)		(39,472	)
IPO related proceeds (net of $10,316 of offering costs)		163,682			—
Dividend distributions to Parent for partners		—			(35,389	)
Distributions of IPO proceeds to partners		(139,429	)		—
Dividends and distributions		(10,894	)		—
Other cash contributions from (distributions to) Parent		(34,730	)		4,578
Cash proceeds from issuance of Class B common stock		500			—
Other		(938	)		—


Net cash provided by (used in) financing activities		(263,816	)		(70,283	)


Effect of exchange rate fluctuations on cash and cash equivalents		(823	)		75
Net increase (decrease) in cash and cash equivalents		(160,926	)		(24,771	)
Cash and cash equivalents, beginning of period		303,024			185,623


Cash and cash equivalents, end of period	$	142,098		$	160,852




Supplemental cash flow disclosure:
Cash paid during the period for:
Income taxes	$	2,877		$	1,422
Other non-cash activity
Initial establishment of deferred tax assets, net of amounts payable under tax receivable agreement	$	10,854		$	—
Capitalized IPO expenses paid in prior or subsequent period	$	1,575		$	—
Tax benefit related to settlement of appreciation units	$	4,308		$	—
Establishment of deferred tax asset related to reorganization	$	3,261		$	—
Increase in deferred tax asset related to IPO	$	1,302		$	—
Other non-cash distributions	$	1,724		$	—

See notes to the condensed consolidated and combined financial statements (unaudited).

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Moelis & Company

Condensed Consolidated and Combined Statements of Changes in Equity

(Unaudited)

(dollars in thousands, except per share amounts)

	Shares

	Shares													Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)
	Class A Common Stock			Class B Common Stock			Class A Common Stock		Class B Common Stock		Additional Paid-In Capital			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Parent Company Investment			Noncontrolling Interests			Total Equity
Balance as of January 1, 2014		—			—		$	—	$	—	$	—		$	—		$	926		$	308,444		$	—		$	309,370
Net income (loss)		—			—			—		—		—			—			—			29,768			—			29,768
Net cash distributions to Parent		—			—			—		—		—			—			—			(80,983	)		—			(80,983	)
Equity-based compensation		—			—			—		—		—			—			—			13,834			—			13,834
Equity-based contributions to joint venture and global advisory board		—			—			—		—		—			—			—			1,223			—			1,223
Pre-offering distribution to partners		—			—			—		—		—			—			—			(195,017	)		—			(195,017	)
Other non-cash distributions		—			—			—		—		—			—			—			(1,105	)		—			(1,105	)
Other comprehensive income		—			—			—		—		—			—			1			—			—			1
Establishment of deferred tax asset related to reorganization		—			—			—		—		3,261			—			—			—			—			3,261
Reorganization of equity structure		7,699,851			—			77		—		12,475			—			—			(76,164	)		63,612			—
Issuance of Class B common stock		—			36,158,698			—		362		138			—			—			—			—			500


Balance post-reorganization		7,699,851			36,158,698			77		362		15,874			—			927			—			63,612			80,852
Issuance of Class A common stock in connection with IPO		7,483,442			—			75		—		162,032			—			—			—			—			162,107
Net income (loss)		—			—			—		—		—			(12,510	)		—			—			(22,991	)		(35,501	)
Distributions of IPO proceeds to partners		—			—			—		—		(139,429	)		—			—			—			—			(139,429	)
Dividends and distributions		—			—			—		—		437			(3,007	)		—			—			(8,324	)		(10,894	)
Equity-based compensation		77,693			—			1		—		33,185			—			—			—			65,706			98,892
Equity-based contributions to joint venture and global advisory board		—			—			—		—		5,692			—			—			—			123			5,815
Initial establishment of deferred tax assets, net of amounts payable under tax receivable agreement		—			—			—		—		10,854			—			—			—			—			10,854
Increase in deferred tax asset related to IPO		—			—			—		—		1,302			—			—			—			—			1,302
Tax benefit related to settlement of appreciation units		—			—			—		—		4,308			—			—			—			—			4,308
Other comprehensive income		—			—			—		—		—			—			(406	)		—			(1,037	)		(1,443	)
Other		(180	)		(9,518	)		—		—		112			—			—			—			(2,287	)		(2,175	)


Balance as of September 30, 2014		15,260,806			36,149,180		$	153	$	362	$	94,367		$	(15,517	)	$	521		$	—		$	94,802		$	174,688




Balance as of January 1, 2013		—			—		$	—	$	—	$	—		$	—		$	163		$	259,945		$	—		$	260,108
Net income (loss)		—			—			—		—		—			—			—			36,297			—			36,297
Net cash distributions to Parent		—			—			—		—		—			—			—			(70,283	)		—			(70,283	)
Equity-based compensation		—			—			—		—		—			—			—			34,810			—			34,810
Equity-based contributions to joint venture and global advisory board		—			—			—		—		—			—			—			1,675			—			1,675
Other comprehensive income		—			—			—		—		—			—			356			—			—			356


Balance as of September 30, 2013		—			—		$	—	$	—	$	—		$	—		$	519		$	262,444		$	—		$	262,963

See notes to the condensed consolidated and combined financial statements (unaudited).

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements

(Unaudited)

(dollars in thousands)

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying condensed consolidated and combined financial statements include the accounts and operations of Moelis & Company beginning with its initial public offering ("IPO") in April of 2014, along with the historical carved out accounts and operations of the advisory business of Moelis & Company Holdings LP (the "Parent" or "Old Holdings") prior to Moelis & Company's IPO (Moelis & Company and the advisory business of the Parent are referred to as the "Company," "we," "our," or "us").

Prior to the Company's IPO, the Parent operated as a Delaware limited partnership that commenced operations on May 1, 2007. The general partner of the Parent was Moelis & Company Holdings GP LLC. The sole member of Moelis & Company Holdings GP LLC was Moelis & Company Manager LLC ("Manager"), which was wholly-owned by certain co-founding partners. In April of 2014, Old Holdings reorganized its business in connection with the IPO of 7,475,000 shares of Moelis & Company Class A common stock. Following the reorganization, the advisory business is now held under Moelis & Company Group LP ("Group LP"), a U.S. Delaware limited partnership, and Group LP is controlled by Moelis & Company. The net assets associated with the advisory operations were distributed to Group LP at their carrying amounts. The details of the reorganization and IPO are described further in Note 4 and in the combined financial statements of the Advisory Operations of Moelis & Company Holdings LP in Moelis & Company's Registration Statement filed with the U.S. Securities and Exchange Commission ("SEC") effective April 15, 2014 (the "Registration Statement"). The interim financial information provided in the accompanying condensed consolidated and combined financial statements represents the combined results of operations and financial condition prior to the Company's reorganization along with the consolidated results of operations and financial condition subsequent to the Company's reorganization and IPO.

The Company's activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, governments and financial sponsors, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters.

Basis of Presentation —The condensed consolidated and combined financial statements of Moelis & Company include its partnership interests in Group LP, its equity interest in the sole general partner of Group LP, Moelis & Company Group GP LLC ("Group GP"), and its interests in its subsidiaries. Moelis & Company will operate and control all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP. The Company operates through the following subsidiaries:

•: Moelis & Company LLC ("Moelis U.S."), a Delaware limited liability company, a registered broker-dealer with the SEC and a member of the Financial Industry Regulatory Authority ("FINRA").

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

1. ORGANIZATION AND BASIS OF PRESENTATION (Continued)

•

Moelis & Company International Holdings LLC ("Moelis International"), a Delaware limited liability company, owns the following entities:

•

Moelis & Company UK LLP ("Moelis UK"), a limited liability partnership registered under the laws of England and Wales. In addition to the United Kingdom, Moelis UK maintains operations through the following subsidiaries and branches:

•: Moelis & Company France SAS (French subsidiary)
•: Moelis & Company Europe Limited, Frankfurt am Main (German branch)
•: Moelis & Company UK LLP, DIFC (Dubai branch)

•

50% of Moelis Australia Holdings PTY Limited ("Moelis Australia Holdings", or the "Australian JV"), a joint venture with Magic Trust Trustee PTY Limited (the "Trust").

•

Moelis & Company Asia Limited ("Moelis Asia"), a limited company incorporated in Hong Kong licensed under the Hong Kong Securities and Futures Ordinance to provide financial advisory services. In addition to Hong Kong, Moelis Asia maintains operations in Beijing China through Moelis & Company Consulting (Beijing) Company Limited.

•

Moelis & Company India Private Limited, a private limited company incorporated in Mumbai, India.

•

Moelis & Company Assessoria Financeira Ltda. ("Moelis Brazil"), a limited liability company incorporated in São Paulo, Brazil.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting —The Company prepared the accompanying condensed consolidated and combined financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated and combined financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company's management, the accompanying unaudited condensed consolidated and combined financial statements contain all adjustments, consisting of normal recurring accruals, necessary to fairly present the accompanying unaudited condensed consolidated and combined financial statements. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the combined audited financial statements for the year ended December 31, 2013 included in the Company's Registration Statement.

Consolidation —The Company's policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company is the general partner, unless the presumption of control is overcome. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity's operating and financial

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company's subsidiaries have been eliminated in consolidation.

Use of Estimates —The preparation of condensed consolidated and combined financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

In preparing the condensed consolidated and combined financial statements, management makes estimates and assumptions regarding:

•: the adequacy of the allowance for doubtful accounts;
•: the realization of deferred taxes;
•: the measurement of equity-based compensation; and
•: other matters that affect the reported amounts and disclosures of contingencies in the financial statements.

Expense Allocations —Prior to the Company's IPO in April of 2014, certain expenses have been allocated from the Parent based on the most relevant measure, including relative usage or proportion of the Company's headcount to that of the Parent. Occupancy expenses have been allocated to the Company based on the proportion of the Company's headcount to that of the Parent, and communication, technology and information services expenses have been allocated to the Company based on a combination of relative usage and the proportion of the Company's headcount to that of the Parent. All other expenses were specifically identifiable to the Company. Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable, and the allocated amounts are representative of the amounts that would have been recorded in the condensed consolidated and combined financial statements had the Company operated independent of the Parent for the historical periods presented.

In connection with the Company's IPO, the Company committed to a services agreement with a related party, Moelis Asset Management LP, whereby the Company provides certain administrative services and office space to Moelis Asset Management LP for a fee. See Note 11 for further information.

Cash and Cash Equivalents —Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase.

As of September 30, 2014, the Company had cash equivalents of $63,987 (December 31, 2013: $260,825) invested primarily in U.S. Treasury Bills and government securities money market funds.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Additionally, as of September 30, 2014, the Company had cash of $78,111 (December 31, 2013: $42,199) maintained in U.S. and non-U.S. bank accounts, of which most U.S. bank account balances exceeded the FDIC coverage limit of $250.

Restricted Cash —The Company held cash of $912 and $792 as of September 30, 2014 and December 31, 2013, respectively, in restricted collateral accounts deposited primarily in connection with corporate credit card programs.

Receivables —The accompanying condensed consolidated and combined statements of financial condition present accounts receivable balances net of allowance for doubtful accounts based on the Company's assessment of the collectability of customer accounts.

The Company maintains an allowance for doubtful accounts that, in management's opinion, provides for an adequate reserve to cover losses that may be incurred. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable and recoverable expense balances, and the current economic conditions that may affect a customer's ability to pay such amounts owed to the Company.

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This is determined based on several factors including the age of the accounts receivable and the credit worthiness of the customer. This has the effect of reducing both the gross receivable and the allowance for doubtful accounts.

Deferred Compensation —Deferred compensation costs represent arrangements with certain employees whereby cash payments are subject to a required period of service subsequent to payment by the Company. These amounts are charged to expenses over the period that the employee is required to provide services in order to vest in the payment.

Financial Instruments at Fair Value —Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily-available actively quoted prices or for which fair value can be measured from actively-quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs:

Level 1 —Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Level 2 —Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies.

Level 3 —Pricing inputs are unobservable for the instruments and include situations where there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company's management.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the instrument.

For level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based on the best information available, may incorporate management's own assumptions and involves a significant degree of judgment.

Equity Method Investments —Equity method investments primarily consist of the Company's investment in Moelis Australia Holdings. The Company accounts for its investment in Moelis Australia Holdings under the equity method of accounting as the Company does not control the entity but jointly controls Moelis Australia Holdings with the Trust. In connection with this investment, the Company acquired a call option to purchase the remaining 50% interest in Moelis Australia Holdings. Also, in connection with the investment, the Company granted a put option enabling the key senior Australian executive to sell his remaining shares in Moelis Australia Holdings back to the Company upon certain defined exit events. The call and the put options are embedded in the equity method investment and have not been separated as embedded derivatives because they do not meet the definition of a derivative given that the investee's shares are not publicly traded. The investment reflects the Company's share of contributions made to, distributions received from, and the equity earnings and losses of, the joint venture. The Company reflects its share of gains and losses of the joint venture in income (loss) from equity method investments in the condensed consolidated and combined statements of operations.

Equipment and Leasehold Improvements —Office equipment and furniture and fixtures are stated at cost less accumulated depreciation, which is determined using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years, respectively. Leasehold improvements are stated at cost less accumulated amortization, which is determined using the straight-line method over the lesser of the term of the lease or the estimated useful life of the asset.

Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to expenses as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation or amortization are removed from the condensed consolidated and combined statements of financial condition and any gain or loss is reflected in the condensed consolidated and combined statements of operations.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company is treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. In the future, additional Group LP Class A partnership units may be exchanged for shares of Class A common stock in the Company. The initial purchase and these future exchanges are expected to result in an increase in the tax basis of Group LP's assets attributable to the Company's interest in Group LP. These increases in the tax basis of Group LP's assets attributable to the Company's interest in Group LP would not have been available but for this initial purchase and future exchanges. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax the Company would otherwise be required to pay in the future. As a result, the Company records a deferred tax asset for such increase in tax basis.

The Company has entered into a tax receivable agreement with its eligible Managing Directors that will provide for the payment by the Company to its eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes as a result of (a) the increases in tax basis attributable to exchanges by its eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by the Company as a result of this tax receivable agreement. The Company expects to benefit from the remaining 15% of cash savings, if any, in income tax that it realizes and record any such estimated tax benefits as an increase to additional paid-in-capital. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing the Company's actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had it not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. The Company has recorded the estimated tax benefits related to the increase in tax basis and imputed interest as a result of the initial purchase described above as a deferred tax asset in the condensed consolidated and combined statements of financial condition. The amount due to its eligible Managing Directors related to the tax receivable agreement as a result of the initial purchase described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The amounts recorded for the deferred tax asset and the liability for our obligations under the tax receivable agreement are estimates. Any adjustments to our estimates subsequent to their initial establishment will be included in net income (loss). Future exchanges of Class A partnership units in Group LP for Class A common shares in the Company will be accounted for in a similar manner.

Revenue and Expense Recognition —The Company recognizes revenues from providing advisory services when earned. Upfront fees are recognized over the estimated period that the related services are performed. Transaction-related fees are recognized when all services for a transaction have been provided, specified conditions have been met and the transaction closes. Underwriting revenues are recognized when the offering is deemed complete and is presented net of related expenses. Deferred

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

revenues are recorded for fees received that have not yet been earned. Expenses are recorded on the condensed consolidated and combined statements of operations, net of client reimbursements. Reimbursable expenses billed to clients totaled $2,793 and $1,957 for the three months ended September 30, 2014 and 2013 respectively, and $7,520 and $5,750 for the nine months ended September 30, 2014 and 2013, respectively.

Equity-based Compensation —The Company recognizes the cost of employee services received in exchange for an equity instrument award. The cost is based on its grant-date fair value amortized over the service period required by the award's vesting terms. Prior to the Company's IPO, the measurement of the grant-date fair value required the Company's Parent to make estimates about its future operating results and the appropriate risk-adjusted discount rates. The methods used to estimate the fair value of equity-based compensation generally included the market approach and the income approach, each of which involve a significant degree of judgment. Under the market approach, fair value is determined with reference to observable valuation measures for comparable companies (e.g., multiplying a key performance metric of the comparable company by a relevant valuation multiple—adjusted for differences between the Company's Parent and the referenced comparable). Under the income approach, fair value is determined by converting future amounts (e.g., cash flows or earnings) to a single present amount (discounted) using current expectations about those future amounts. Subsequent to the Company's IPO, the grant-date fair value of equity awards is based on quoted market prices at the time of grant. The Company recognizes such amounts in compensation and benefits expenses in the accompanying condensed consolidated and combined statements of operations and as an increase to equity in the accompanying condensed consolidated and combined statements of financial condition and changes in equity. See Note 9 for further discussion.

For the purposes of calculating diluted net income (loss) per share to holders of Class A common stock, unvested service-based awards are included in the diluted weighted average shares of Class A common stock outstanding using the treasury stock method. See Note 8 for further discussion.

Income Taxes —Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes as applicable. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal and state income tax on its allocable share of results of operations from Group LP.

The Company accounts for income taxes in accordance with ASC 740, " Accounting for Income Taxes " ("ASC 740"), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company's condensed consolidated and combined statements of financial condition as deferred tax assets and liabilities. Deferred tax assets are reduced

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. For the three and nine months ended September 30, 2014 and 2013, no unrecognized tax benefit was recorded. To the extent that the Company's assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties, if applicable, as a component of income tax expense. For the three and nine months ended September 30, 2014 and 2013, no such amounts were recorded.

Foreign Currency Translation —Assets and liabilities held in non-U.S. dollar denominated (functional) currencies are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary. Non-functional currency related transaction gains and losses are immediately recorded in the condensed consolidated and combined statements of operations.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2013, the FASB issued ASU No. 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities" ("ASU 2013-01"). ASU 2013-01 provides amendments to ASU 2011-11 by clarifying the scope of transactions that are subject to the disclosures of offsetting. The amendments in this update are effective retrospectively for periods beginning after January 1, 2013. The adoption of this update did not have an impact on the Company's condensed consolidated and combined financial statements.

In July 2013, the FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-11"). ASU 2013-11 provides amendments to ASC No. 740, "Income Taxes", which clarify the guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The amendments require that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. If a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

3. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2013, with early adoption permitted. The adoption of this update did not have a material impact on the Company's condensed consolidated and combined financial statements.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 requires a company to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for services provided. The amendment requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2016, with early adoption prohibited. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on its condensed consolidated and combined financial statements.

4. BUSINESS CHANGES AND DEVELOPMENTS

Moelis Brazil

In August 2014, the Company established Moelis Brazil, a new corporate entity located in São Paulo, Brazil for the purpose of providing investment banking advisory services to clients in Brazil and increasing the global reach of the Company. The Company owns a 94% interest in Moelis Brazil and the remaining 6% is owned by senior bankers of the newly formed entity. As the majority owner of Moelis Brazil, the Company consolidates its financial results.

Reorganization and Initial Public Offering

In April 2014, Old Holdings reorganized its business in connection with the IPO of Class A common stock by Moelis & Company, a newly-formed Delaware corporation. Following the reorganization, the advisory operations are owned by Group LP and Group LP is controlled by Moelis & Company. The new public shareholders are entitled to receive a portion of the economics of the operations through their direct ownership interests in shares of Class A common stock of Moelis & Company. The existing owners of Group LP will continue to receive the majority of the economics of the operations, as noncontrolling interest holders, primarily through direct and indirect ownership interests in Group LP partnership units. As a corporation, Moelis & Company is subject to United States federal and state corporate income taxes, which is resulting in a material increase in the applicable tax rates and current tax expense incurred post reorganization.

Group LP has one principal class of units, Class A partnership units. Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings units. Following the reorganization, each Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock. In addition, Group LP issued Class B partnership units to Moelis & Company. The Class B partnership units correspond with the economic rights of shares of Moelis & Company Class B common stock. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1), and the aggregate

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

4. BUSINESS CHANGES AND DEVELOPMENTS (Continued)

number of shares of Class B common stock may be converted to Class A common stock (up to a maximum of 20,000 shares). Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1.

Group LP Class A partnership unitholders have no voting rights by virtue of their ownership of Group LP Class A partnership units, except for the limited rights described in Group LP's Amended and Restated Agreement of Limited Partnership. Moelis & Company Partner Holdings LP holds all shares of Class B common stock, enabling it initially to exercise majority voting control over Moelis & Company. Among other items, Class B common stock contains a condition (the "Class B Condition") that calls for Mr. Moelis to maintain a defined minimum equity stake. So long as the Class B Condition is satisfied, each share of Class B common stock entitles its holder to ten votes for each share held of record on all matters submitted to a vote of stockholders. Shares of Class B common stock are generally not transferrable and, if transferred other than in the limited circumstances set forth in Moelis & Company's Amended and Restated Certificate of Incorporation, such shares shall automatically convert into a number of shares of Class A common stock, or dollar equivalent, set forth in Moelis & Company's Amended and Restated Certificate of Incorporation. Upon failure of the Class B Condition, each share of Class B common stock will have one vote for each share held. Each share of Class B common stock may, at the option of the holder, be converted into a number of shares of Class A common stock, or dollar set forth in Moelis & Company's Amended and Restated Certificate of Incorporation.

In connection with the reorganization and IPO described above, several transactions took place which impacted the Company's condensed consolidated and combined financial statements including the following:

•: A pre-offering distribution to the partners of Old Holdings of $195,017 reflected within financing activities in the condensed consolidated and combined statements of cash flows and in the condensed consolidated and combined statements of changes in equity;
•: The purchase by Moelis & Company of Class A partnership units directly from Group LP with the proceeds of the IPO. The proceeds received related to the issuance of Class A common stock in connection with the IPO is recorded net of underwriting discounts, commissions and offering expenses. Net cash received of $163,682 during the nine months ended September 30, 2014 is reflected within financing activities in the condensed consolidated and combined statements of cash flows. Net proceeds recorded in the condensed consolidated and combined statements of changes in equity of $162,107, takes into account any IPO related expenses paid during 2013 and any accruals remaining as of September 30, 2014;
•: The one-time cash distribution of $139,429 by Group LP to the partners of Old Holdings of a portion of the proceeds arising from the sale of Class A partnership units to Moelis & Company is reflected within financing activities in the condensed consolidated and combined statements of cash flows and in the condensed consolidated and combined statements of changes in equity;

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

4. BUSINESS CHANGES AND DEVELOPMENTS (Continued)

•

The tax impact associated with the one-time cash distribution is treated as an acquisition for U.S. federal income tax purposes of Class A partnership units in Group LP from certain partners of Old Holdings. This distribution resulted in a deferred tax asset of which approximately $60,896 of this deferred tax asset is attributable to exchanges by certain of the partners of Old Holdings who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $51,761) of the tax benefits associated with this portion of the deferred tax asset are payable to partners of Old Holdings over the next 15 years and is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital.

•

Expenses related to the reorganization and IPO recorded in the condensed consolidated and combined statements of operations for the nine months ended September 30, 2014 include the following:

•: $87,601 of compensation and benefits expense associated with the one-time non-cash acceleration of unvested equity held by Managing Directors;
•: $763 ($384 for the three months ended September 30, 2014) of compensation and benefits expense associated with the amortization of RSUs granted in connection with the IPO (excludes expense associated with RSUs granted at the time of the IPO in connection with 2013 equity incentive compensation); amortization expense of RSUs granted in connection with the IPO will be recognized over a five year vesting period;
•: $2,046 ($1,094 for the three months ended September 30, 2014) of compensation and benefits expense associated with the amortization of stock options granted in connection with the IPO; amortization expense of stock options granted in connection with the IPO will be recognized over a five year vesting period;
•: $4,014 of compensation and benefits expense associated with the issuance of cash (expense of $2,004) and fully vested shares of Class A common stock (expense of $2,010) in settlement of appreciation rights issued in prior years;
•: $1,240 of professional fees expense associated with the one-time non-cash acceleration of unvested equity held by non-employee members of Moelis & Company's Global Advisory Board; and
•: $4,916 of expenses associated with the one-time non-cash acceleration of unvested equity held by employees of the Australian JV. Half of the expenses associated with acceleration of equity held by employees of the Australian JV is included in other expenses and the other half is included in income (loss) from equity method investments.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

5. EQUITY METHOD INVESTMENTS

Investment in Joint Venture

On April 1, 2010, the Company entered into a 50-50 joint venture in Moelis Australia Holdings, investing a combination of cash and certain net assets of its wholly-owned subsidiary, Moelis Australia, in exchange for its interests. The remaining 50% is owned by an Australian trust established by and for the benefit of Moelis Australia senior executives.

On April 1, 2011, the Company contributed its equity to Moelis Australia Holdings, which in turn granted equity awards to its employees in return for providing future employment related services. These units generally vest over an eight year service period and are recorded as compensation expenses on Moelis Australia Holdings' financial statements. As the recipients are not employees of the Company, but rather employees of the Australian JV, the Company recognized the entire expense associated with these equity awards based on the fair value re-measured at each reporting period and amortized over the vesting period. In connection with the Company's reorganization and IPO, the unvested equity held by the employees of the Australian JV was accelerated in April of 2014. For the nine months ended September 30, 2014, the Company recognized $5,350 in additional equity, $2,675 in equity method investments and $2,675 in other expenses relating to these equity awards in the condensed consolidated and combined financial statements. For the nine months ended September 30, 2013, the Company recognized $1,112 in additional equity, $556 in equity method investments and $556 in other expenses relating to these equity awards in the condensed consolidated and combined financial statements.

During the nine months ended September 30, 2013, Moelis Australia Holdings paid dividends to the Company in the amount of $2,375. This dividend was treated as a return on investment in the condensed consolidated and combined financial statements.

During the nine months ended September 30, 2014, the Company made a cash contribution to Moelis Australia Holdings in the amount of $4,180. The Company treated this contribution as an increase in equity method investments in the condensed consolidated and combined financial statements.

Summary financial information related to Moelis Australia Holdings is as follows:

	September 30, 2014			December 31, 2013

Total assets	$	31,740		$	38,465
Total liabilities		(6,327	)		(15,760	)


Net equity	$	25,413		$	22,705

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

5. EQUITY METHOD INVESTMENTS (Continued)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,

	2014			2013			2014			2013
Total revenues	$	9,863		$	10,782		$	17,443		$	30,390
Total expenses		(7,653	)		(7,304	)		(23,375	)		(25,213	)


Net income (loss)	$	2,210		$	3,478		$	(5,932	)	$	5,177




Ownership percentage		50	%		50	%		50	%		50	%
Income (loss) from equity method investment	$	1,105		$	1,739		$	(2,966	)	$	2,588

Other Equity Method Investment

In June 2014, the Company made an investment of $265 into an entity controlled by a related party, Moelis Asset Management LP. The Company has determined that it should account for this investment as an equity method investment on the condensed consolidated and combined financial statements. For the three and nine months ended September 30, 2014, no income or loss was recorded on this investment.

6. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements, net consist of the following:

	September 30, 2014			December 31, 2013

Office equipment	$	8,445		$	7,498
Furniture and fixtures		2,050			1,730
Leasehold improvements		5,301			4,395


Total		15,796			13,623
Less accumulated depreciation and amortization		(9,936	)		(8,467	)


Equipment and leasehold improvements, net	$	5,860		$	5,156

Depreciation and amortization expenses for fixed assets totaled $542 and $540 for the three months ended September 30, 2014 and 2013, respectively, and $1,595 and $1,628 for the nine months ended September 30, 2014 and 2013, respectively.

7. FAIR VALUE MEASUREMENTS

The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs:

Level 1—Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

7. FAIR VALUE MEASUREMENTS (Continued)

holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price.

Level 2—Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies. The estimated fair values of government securities money markets, U.S. Treasury Bills and bank time deposits classified in Level 2 as of September 30, 2014 and 2013 are based on quoted prices for recent trading activity in identical or similar instruments. The Company generally invests in U.S. Treasury Bills with maturities of less than six months.

Level 3—Pricing inputs are unobservable for the instruments and include situations in which there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company's management. The valuation methodology used for the Company's investment classified as Level 3 as of December 31, 2013 was based upon a recent market transaction executed by the issuer.

See Note 2 for further information on the Company's fair value hierarchy.

The following tables summarize the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall as of September 30, 2014:

Financial assets:	Total		Level 1		Level 2		Level 3

Included in cash and cash equivalents
Government securities money market	$	63,987	$	—	$	63,987	$	—
Investments
U.S. treasury bills		73,999		—		73,999		—


Total financial assets	$	137,986	$	—	$	137,986	$	—

The following table summarizes the levels of the fair value hierarchy into which the Company's financial assets fall as of December 31, 2013:

Financial assets:	Total		Level 1		Level 2		Level 3

Included in cash and cash equivalents
Government securities money market	$	73,366	$	—	$	73,366	$	—
U.S. treasury bills		146,991		—		146,991		—
Bank time deposits		40,468		—		40,468		—
Investments
U.S. treasury bills		66,237		—		66,237		—
Common stock		1,904		—		—		1,904


Total financial assets	$	328,966	$	—	$	327,062	$	1,904

The Company's methodology for reclassifications impacting the fair value hierarchy is that transfers in/out of the respective category are reported at fair value as of the beginning of the period in which

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

7. FAIR VALUE MEASUREMENTS (Continued)

the reclassification occurred. The changes to the Company's investment classified as Level 3 are as follows for the nine months ended September 30, 2014.

	Common Stock

January 1, 2014	$	1,904
Non-cash settlement of customer receivable		1,000
Distribution to Parent		(2,904	)


September 30, 2014	$	—




Unrealized gains (losses) related to investment still held as of September 30, 2014	$	—

There were no transfers between Level 1, Level 2 or Level 3 during the nine months ended September 30, 2014 and 2013.

Investment Risk Factors and Concentration of Investments

The Company's financial instruments are subject to the following risk factors:

Market Risk

Market risk represents the loss that can be caused by a change in the fair value of a financial instrument.

Currency Risk

The Company is exposed to the risk that the exchange rate of the U.S. dollar relative to other currencies may have an adverse effect on the reported value of the Company's non-U.S. dollar denominated or based assets and liabilities.

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Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

8. NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS

The calculations of basic and diluted net income (loss) per share attributable to holders of shares of Class A common stock for the three and nine months ended September 30, 2014 are presented below.

(dollars in thousands, except per share amounts)	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014

Numerator:
Net income (loss) attributable to holders of shares of Class A common stock—basic	$	6,500		$	(12,510	)
Add (deduct) dilutive effect of:
Noncontrolling interests related to Class A partnership units			(a)			(a)


Net income (loss) attributable to holders of shares of Class A common stock—diluted	$	6,500		$	(12,510	)




Denominator:
Weighted average shares of Class A common stock outstanding—basic		15,262,343			15,262,940
Add (deduct) dilutive effect of:
Noncontrolling interests related to Class A partnership units			(a)			(a)
Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method		942,911				(b)


Weighted average shares of Class A common stock outstanding—diluted		16,205,254			15,262,940




Net income (loss) per share attributable to holders of shares of Class A common stock
Basic	$	0.43		$	(0.82	)




Diluted	$	0.40		$	(0.82	)

The allocation of income (loss) to Class A shareholders only began following the IPO closing on April 22, 2014.

We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation.

(a): Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable lock-up, vesting and transfer restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 55,199,112 for the three months ended September 30, 2014 and 54,256,798 for the nine months ended September 30, 2014 . In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) available to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests in consolidated entities associated with the Group LP Class A partnership

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Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

8. NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Continued)

units (including any tax impact). For the three and nine months ended September 30, 2014, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive.

(b): During the nine months ended September 30, 2014, the additional shares of Moelis & Company's Class A common stock assumed to be issued pursuant to unvested restricted stock, RSUs and stock options as calculated using the treasury stock method were antidilutive and therefore have been excluded from the calculation of diluted net income (loss) per share attributable to Moelis & Company. The additional shares that would have been included in this calculation if the effect were dilutive would have been 665,649 shares for the nine months ended September 30, 2014. Antidilution is the result of the Company producing a loss for the nine months ended September 30, 2014.

9. EQUITY-BASED COMPENSATION

Partnership Units

Prior to the Company's restructuring and IPO, the Parent's ownership structure was comprised of common partners (principally outside investors) holding units and employees holding units, which collectively represented the partnership interests in the Parent and evidence of the right to receive distributions and allocations of net profit and losses as defined in the Parent Limited Partnership Agreement. The common partners contributed capital to the Parent and are not subject to vesting. Units granted to Managing Directors upon joining the Company and as part of annual incentive compensation generally vested based on service over five to eight years. Certain non-Managing Director employees were granted units as part of their incentive arrangements and these units generally vest based on service ratably over four years. In connection with the Company's restructuring and IPO, substantially all of the partner equity subject to vesting had been accelerated. Units granted to non-Managing Director employees were not accelerated in connection with the Company's restructuring and IPO and continue to vest based on the original terms of the grant.

In connection with the reorganization and IPO, Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings. Following the reorganization, a Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock and represents the Company's noncontrolling interests. As of September 30, 2014, partners held 38,993,858 Group LP partnership units, 730,207 of which were unvested and will continue to vest over their service life.

For the three months ended September 30, 2014 and 2013, the Company recognized compensation expenses of $886 and $10,891, respectively in relation to vesting of units. For the nine months ended September 30, 2014 and 2013, the Company recognized compensation expenses of $100,835 and $34,810, respectively in relation to vesting of units. As of September 30, 2014, there was $10,434 of unrecognized compensation expense related to unvested Class A partnership units. The Company expects to recognize the unrecognized compensation expense at September 30, 2014, over a weighted-average period of 3.0 years, using the graded vesting method.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

9. EQUITY-BASED COMPENSATION (Continued)

2014 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the Moelis & Company 2014 Omnibus Incentive Plan (the "Plan") to provide additional incentives to selected officers, employees, Managing Directors, non-employee directors, independent contractors, partners and consultants. The Plan provides for the issuance of incentive stock options ("ISOs"), nonqualified stock options, stock appreciation rights ("SARs"), restricted stock, RSUs, stock bonuses, other stock-based awards and cash awards.

Restricted Stock and Restricted Stock Units (RSUs)

Pursuant to the Plan and in connection with the Company's IPO, annual compensation process and ongoing hiring process, the Company has issued 2,477,272 shares of restricted stock and RSUs in 2014 which generally vest over a service life of four to five years. For the three and nine months ended September 30, 2014, the Company recognized expenses of $4,509 and $7,835, respectively related to these awards.

The following table summarizes activity related to restricted stock and RSUs for the nine months ended September 30, 2014.

	Restricted Stock & RSUs

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested Balance at January 1, 2014		—		$	—
Granted		2,477,272			26.08
Forfeited		(56,642	)		25.00
Vested		(9,190	)		28.02


Unvested Balance at September 30, 2014		2,411,440		$	26.10

As of September 30, 2014, the total compensation expense related to unvested restricted stock and RSUs not yet recognized was $46,499. The Company assumes a forfeiture rate of 3% annually based on expected turnover and periodically reassesses this rate. The weighted-average period over which this compensation expense is expected to be recognized at September 30, 2014 is 3.2 years.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

9. EQUITY-BASED COMPENSATION (Continued)

Stock Options

Pursuant to the Plan and in connection with the IPO, the Company issued 3,501,881 stock options in 2014 which vest over a five-year period. The Company estimates the fair value of stock option awards using the Black-Scholes valuation model with the following assumptions:

	Nine Months Ended September 30, 2014

Expected life (in years)		6
Weighted-average risk free interest rate		1.91	%
Expected volatility		35	%
Dividend yield		2.72	%
Weighted-average fair value at grant date	$	6.70

The following table summarizes activity related to stock options for the nine months ended September 30, 2014.

	Stock Options Outstanding

	Number Outstanding			Weighted-Average Exercise Price Per Share
Outstanding at January 1, 2014		—		$	—
Grants		3,501,881			25.00
Exercises		—			25.00
Forfeiture or expirations		(130,975	)		25.00


Outstanding at September 30, 2014		3,370,906		$	25.00

For the three and nine months ended September 30, 2014, the Company recognized expenses of $1,094 and $2,046, respectively related to these stock options. As of September 30, 2014, the total compensation expense related to unvested stock options not yet recognized was $17,165. The Company assumes a forfeiture rate of 3% annually based on expected turnover and periodically reassesses this rate. This compensation expense is expected to be recognized over a weighted-average period of 4.1 years.

10. STOCKHOLDERS EQUITY

Class A Common Stock

In April 2014, the Company issued 15,263,653 shares of Class A common stock as follows:

•: 7,699,851 shares in connection with the reorganization;
•: 7,475,000 shares in connection with the IPO; and
•: 88,802 shares in connection with the settlement of appreciation rights issued in prior years.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

10. STOCKHOLDERS EQUITY (Continued)

As of September 30, 2014, 15,260,806 shares of Class A common stock were issued and outstanding.

Class B Common Stock

In conjunction with Moelis & Company's IPO of its Class A common stock, the Company issued 36,158,698 shares of Class B common stock. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1), and the aggregate number of shares of Class B common stock may be converted to Class A common stock (up to a maximum of 20,000 shares). Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1. As of September 30, 2014, 36,149,180 shares of Class B common stock were issued and outstanding.

Noncontrolling Interests

In connection with the Company's reorganization, Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings. Following the reorganization, a Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock and represents the Company's noncontrolling interests. As of September 30, 2014, partners held 38,993,858 Group LP partnership units, representing a 72% noncontrolling interest in Moelis & Company.

Moelis & Company will operate and control all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP, and thus the 15,260,806 shares of Class A common stock outstanding at September 30, 2014 represents the controlling interest.

Dividend

On October 28, 2014, the Board of Directors of Moelis & Company declared a special dividend of $1.00 per share and a regular quarterly dividend of $0.20 per share. The aggregate $1.20 per share dividend will be paid on November 24, 2014 to common stockholders of record on November 10, 2014. During the nine months ended September 30, 2014 the Company declared and paid dividends of $0.20 per share.

11. RELATED-PARTY TRANSACTIONS

Aircraft Lease —On April 21, 2010, Manager acquired an aircraft with funds received solely from its managing member (Mr. Moelis). In connection with the restructuring and IPO, Manager could no longer operate the aircraft for use in the Company's business and as a result, the arrangement under which the plane was provided to the Company for its use was required to be restructured. Starting on April 15, 2014, the aircraft was used by the Company pursuant to a ten-year dry lease with Manager, the terms of which were comparable to the market rates of leasing from an independent third party. For the three and nine months ended September 30, 2014, the Company incurred $156 and $310 in lease costs to be paid to Manager, respectively. Consistent with such dry lease arrangement, the

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

11. RELATED-PARTY TRANSACTIONS (Continued)

Company was obligated to bear all the costs of operating the aircraft. While the primary use of the aircraft was for business purposes, because of the benefit afforded to the Company in terms of security and productivity while traveling for personal reasons, the Company entered into a timesharing agreement with Mr. Moelis to allow him to use the aircraft for personal use. Under such timesharing agreement, Mr. Moelis was required to reimburse the Company for the maximum amount of reimbursement allowed by applicable Federal Aviation Administration rules. For the three and nine months ended September 30, 2014, Mr. Moelis incurred costs of approximately $221 and $301 pursuant to the timesharing agreement, respectively. Such amounts are included in prepaid expenses and other assets on the condensed consolidated and combined statements of financial condition. During the third quarter of fiscal 2014, Manager sold the aircraft and the ten-year dry lease was terminated.

On August 30, 2014, Manager acquired a new aircraft with funds received solely from its managing member (Mr. Moelis). The aircraft is used and operated by the Company pursuant to a dry lease with Manager which terminates on December 31, 2019. The terms of the dry lease are comparable to the market rates of leasing from an independent third party. Pursuant to this dry lease arrangement, the lessee is obligated to bear its share of the costs of operating the aircraft. For the three and nine months ended September 30, 2014, the Company incurred $61 in aircraft lease costs to be paid to Manager. In addition, there are two other lessees of the aircraft; one of whom is Mr. Moelis. These lessees share the lease, operating and related costs of the plane in proportion to their respective use pursuant to a cost sharing and operating agreement.

Promissory Notes —As of September 30, 2014, there were $120 of unsecured promissory notes from employees held by the Company (December 31, 2013: $831). Any outstanding balances are reflected in other receivables on the condensed consolidated and combined statements of financial condition. The notes held as of September 30, 2014 bear a rate of 4.00% and the note held at December 31, 2013, bore a rate of 4.75%. During the nine months ended September 30, 2014 and 2013, the Company received $831 and $383, respectively of principal repayments and recognized interest income of $5 and $29, respectively, on such notes, which is included in other income and expenses on the condensed consolidated and combined statements of operations.

Allocated Expenses —Prior to the Company's IPO in April of 2014, certain expenses have been allocated from the Parent based on the most relevant measure. In most cases, corporate overhead expenses specific to the advisory business were both identifiable and quantifiable, and allocated directly to the Company. The remaining corporate overhead expenses were allocated to the Company based on usage or the relative proportion of the Company's headcount to that of the Parent.

Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable and the allocated amounts are representative of the amounts that would have been recorded in the condensed consolidated and combined financial statements had the Company been operated independent of the Parent for historical periods presented.

Services Agreement —In connection with the Company's IPO, the Company entered into a services agreement with a related party, Moelis Asset Management LP, whereby the Company provides certain administrative services, technology, and office space to Moelis Asset Management LP for a fee totaling

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

11. RELATED-PARTY TRANSACTIONS (Continued)

$500 and $960 for the three months ended September 30, 2014 and the year-to-date post-IPO period ended September 30, 2014, respectively. The amount of the fee is based upon the estimated usage and related expense of all shared services between the Company and Moelis Asset Management LP during the relevant period, and will be assessed periodically by Management as per the terms of the agreement.

Joint Venture —As of September 30, 2014, the Company had a net balance due to the Australian JV (see Note 5) of $425 (December 31, 2013: $1,145), which is reflected in other assets on the condensed consolidated and combined statements of financial condition. This balance consists of amounts due to the Australian JV for advisory services performed and billable expenses incurred on behalf of the Company during the period, offset by expenses paid by the Company on behalf of the Australian JV. The relationship between the Company and the Australian JV is governed by a services agreement.

Other Equity Method Investment —In June of 2014, the Company made an investment of $265 into an entity controlled by a related party, Moelis Asset Management LP. The Company has determined that it should account for this investment as an equity method investment on the condensed consolidated and combined financial statements. For the three and nine months ended September 30, 2014, no income or loss was recorded on this investment.

Revenues —From time to time, the Company enters into advisory transactions with Moelis Asset Management LP and its affiliates. For the three and nine months ended September 30, 2014, the Company earned revenues of $2,769 and $3,717, respectively, associated with such transactions.

12. REGULATORY REQUIREMENTS

Under the SEC Uniform Net Capital Rule (SEC Rule 15c3-1) Alternative Standard under Section (a)(1)(ii), the minimum net capital requirement is $250. At September 30, 2014, Moelis U.S. had net capital of $83,828, which was $83,578 in excess of its required net capital. At December 31, 2013, Moelis U.S. had net capital of $101,690, which was $101,440 in excess of its required net capital.

Moelis U.S. does not carry customer accounts and does not otherwise hold funds or securities for, or owe money or securities to, customers and accordingly is exempt under Section (k)(2)(ii) of SEC Rule 15c3-3.

At September 30, 2014, the aggregate regulatory net capital of Moelis UK was $37,952 which exceeded the minimum requirement by $37,889. At December 31, 2013, the aggregate regulatory net capital of Moelis UK was $42,344, which exceeded the minimum requirement by $42,275.

13. COMMITMENTS AND CONTINGENCIES

Bank Line of Credit —The Company maintains an unsecured revolving credit facility and as of September 30, 2014, the commitment amount was $25,000 and matures on June 30, 2015.

Borrowings on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the borrower's option of (i) LIBOR plus 1% or (ii) Prime minus 1.50%. As of September 30, 2014 and 2013, the Company had no borrowings under the credit facility.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

13. COMMITMENTS AND CONTINGENCIES (Continued)

As of September 30, 2014, the Company's available credit under this facility was $16,669 as a result of the issuance of an aggregate amount of $8,331 of various standby letters of credit, which were required in connection with certain office lease and other agreements. The Company incurs a 1% per annum fee on the outstanding balance of issued letters of credit.

Leases —The Company maintains operating leases with expiration dates that extend through 2023. The Company incurred expense relating to its operating leases of $2,756 and $8,051 for the three and nine months ended September 30, 2014, respectively, and $2,818 and $8,501 for the three and nine months ended September 30, 2013, respectively.

The future minimum rental payments required under the operating leases in place at September 30, 2014 are as follows:

Fiscal year ended	Amount

Remainder of 2014	$	3,536
2015		12,778
2016		12,266
2017		12,224
2018		12,915
Thereafter		23,096


Total	$	76,815

Contractual Arrangements —In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and which provide indemnification for specified losses, including certain indemnification of certain officers, directors and employees.

Joint Venture Put and Call Options —In connection with the Company's Australian JV, the Company granted a put option in April 2010 enabling the key senior Australian executive to sell his shares held in the Australian JV back to the Company at fair value. The put option can be exercised if the key senior Australian executive ceases to be employed by the Australian JV (including due to death, disability or resignation but excluding termination for cause) and following such cessation of employment, the key senior Australian executive, the remaining Australian executives and the Company are unable to agree upon a restructuring of the Australian JV. The put option cannot be exercised prior to March 2015, except in the event of death or disability of the key senior Australian executive. If the put option is exercised, the Company will be required to pay 50% of the purchase price upon exercise and the remaining balance within 18 months (in cash or listed stock). In addition, since April 2010, the Company has held a call option to purchase the shares from the Trust at fair value with payment terms equal to those called for under the put option.

Legal —There are no legal actions pending or, to management's knowledge, threatened against the Company or any of its combined entities, other than ordinary course of business actions that we believe will not have a material adverse effect on our business or financial statements.

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

14. EMPLOYEE BENEFIT PLANS

The Company covers substantially all salaried employees with a defined contribution 401(k) plan. Each salaried employee of the Company who has attained the age of 21 is eligible to participate in the 401(k) plan on their first day of employment. Any employer contributions to the 401(k) plan are entirely at the discretion of the Company. The Company accrued expenses relating to employer matching contributions to the 401(k) plan for the three months ended September 30, 2014 and 2013 in the amount of $348 and $318, respectively, and $973 and $1,029 for the nine months ending September 30, 2014 and 2013, respectively.

15. INCOME TAXES

Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from Group LP.

The Company recorded an increase in the net deferred tax asset of $68,064 for the nine months ended September 30, 2014, which is primarily attributable to approximately $67,394 of tax impact associated with the Company's reorganization and the one-time cash distribution to partners of Old Holdings in connection with the IPO of Moelis & Company treated as an acquisition for U.S. federal income tax purposes of partnership units in Group LP from certain partners of Old Holdings. This distribution resulted in a deferred tax asset of which approximately $60,896 is attributable to exchanges by certain of the partners of Old Holdings who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $51,761) of the tax benefits associated with this portion of the deferred tax asset are payable to partners of Old Holdings over the next 15 years and recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital.

16. BUSINESS INFORMATION

We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our comprehensive approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client,

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Moelis & Company

Notes to the Condensed Consolidated and Combined Financial Statements (Continued)

(Unaudited)

(dollars in thousands)

16. BUSINESS INFORMATION (Continued)

M&A assignments can develop from relationships established on prior restructuring engagements and capital markets expertise can be instrumental on both M&A and restructuring assignments.

There were no clients that accounted for more than 10% of revenues for the three or nine months ended September 30, 2014 or 2013. Since the financial markets are global in nature, the Company generally manages its business based on the operating results of the enterprise taken as whole, not by geographic region. The following table sets forth the geographical distribution of revenues and assets based on the location of the office that generates the revenues or holds the assets, and therefore may not be reflective of the geography in which our clients are located.

	Three Months Ended September 30,				Nine Months Ended September 30,

	2014		2013		2014		2013
Revenues:
United States	$	102,099	$	79,955	$	291,818	$	211,735
Rest of World		26,552		18,773		83,037		45,356


Total	$	128,651	$	98,728	$	374,855	$	257,091

	September 30, 2014		December 31, 2013

Assets:
United States	$	268,023	$	359,072
Rest of World		84,166		84,391


Total	$	352,189	$	443,463

17. SUBSEQUENT EVENTS

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated and combined financial statements and related notes included elsewhere in this form 10-Q and our annual financial statements for the year ended December 31, 2013 included in Moelis & Company's Registration Statement filed with the U.S. Securities and Exchange Commission ("SEC"), effective April 15, 2014 (the "Registration Statement").

Forward-Looking Statements and Certain Factors that May Affect Our Business

The following discussion should be read in conjunction with our condensed consolidated and combined financial statements and the related notes that appear elsewhere in this Form 10-Q. We have made statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "intend," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined under "Risk Factors" in our Registration Statement.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as a prediction of future events. We are under no duty to and we do not undertake any obligation to update or review any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations whether as a result of new information, future developments or otherwise.

Executive Overview

Moelis & Company is a leading global independent investment bank that provides innovative strategic advice and solutions to a diverse client base, including corporations, governments and financial sponsors. With 16 offices located in North and South America, Europe, the Middle East, Asia and Australia, we advise clients around the world on their most critical decisions, including mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters.

We were founded in July 2007 by veteran investment bankers to create a global independent investment bank that offers multi-disciplinary solutions and exceptional transaction execution. We opened for business in New York and Los Angeles with a team of top tier advisory professionals. The dislocation in the financial services industry caused by the global financial crisis provided us with a unique opportunity to rapidly build a firm with global scale and broad advisory expertise, and we more than tripled our professional headcount from the end of 2008 through the end of 2011. Since our founding, we have added new Managing Directors with sector, regional or transactional expertise and with strong client relationships. In addition, we have established recruiting programs at top universities to hire talented junior professionals and instituted training programs to help develop them into advisory specialists.

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We have added Managing Directors to expand our sector expertise, and currently provide capabilities across all major industries including Consumer, Retail & Restaurants; Financial Institutions; Financial Sponsors; General Industrials; Healthcare; Natural Resources; Real Estate, Gaming, Lodging & Leisure and Technology, Media & Telecommunications. In addition, we hired professionals to broaden our global reach and opened a network of offices, expanding into London in 2008, Sydney in 2009, Dubai in 2010, Hong Kong and Beijing in 2011, Frankfurt, Mumbai and Paris in 2012 and Melbourne and São Paulo in 2014. We also added regional capabilities in the U.S., opening offices in Boston in 2007, Chicago in 2008 and Houston and Palo Alto in 2011. We have developed additional areas of advisory expertise to complement our strong M&A capabilities and to meet the changing needs of our clients. Our early investment in recapitalization and restructuring talent in mid-2008 positioned us to capitalize on the significant increase in restructuring volume during the global financial crisis. In 2009, we added expertise in advising clients on capital markets matters and advising financial institutions on complex risk exposures. Most recently in 2014, we added capabilities to provide capital raising, secondary transaction and other advisory services to private fund sponsors and limited partners. Our ability to provide services to our clients across sectors and regions and through all phases of the business cycle has led to long-term client relationships and a diversified revenue base.

We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters which set forth our fees. We generally generate fees at key transaction milestones, such as closing, the timing of which is outside of our control. As a result, revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter. The performance of our business depends on the ability of our professionals to build relationships with clients over many years by providing trusted advice and exceptional transaction execution.

Reorganization and Initial Public Offering

In April 2014, we reorganized our business in connection with Moelis & Company's IPO of Class A common stock. See Note 4 in these condensed consolidated and combined financial statements and Moelis & Company's Registration Statement filed with the U.S. Securities and Exchange Commission effective April 15, 2014 for further information. In connection with the reorganization and IPO described above, several transactions took place which had a significant impact on our results of operations for the nine months ended September 30, 2014 including the following:

•: $87,601 of compensation and benefits expense associated with the one-time non-cash acceleration of unvested equity held by Managing Directors;
•: $763 ($384 for the three months ended September 30, 2014) of compensation and benefits expense associated with the amortization of RSUs granted in connection with the IPO (excludes expense associated with RSUs granted at the time of the IPO in connection with 2013 incentive compensation); amortization expense of RSUs granted in connection with the IPO will be recognized over a five year vesting period;
•: $2,046 ($1,094 for the three months ended September 30, 2014) of compensation and benefits expense associated with the amortization of stock options granted in connection with the IPO; amortization expense of stock options granted in connection with the IPO will be recognized over a five year vesting period;
•: $4,014 of compensation and benefits expense associated with the issuance of cash (expense of $2,004) and fully vested shares of Class A common stock (expense of $2,010) in settlement of appreciation rights issued in prior years;

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•: $1,240 of professional fees expense associated with the one-time non-cash acceleration of unvested equity held by non-employee members of Moelis & Company's Global Advisory Board; and
•: $4,916 of expenses associated with the one-time non-cash acceleration of unvested equity held by employees of the Australian JV. Half of the expenses associated with acceleration of equity held by employees of the Australian JV is included in other expenses and the other half is included in income (loss) from equity method investments.

Business Environment and Outlook

Economic and global financial conditions can materially affect our operational and financial performance. See "Risk Factors" in our Registration Statement for a discussion of some of the factors that can affect our performance. Revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter.

For the nine months ended September 30, 2014, we earned revenues of $374.9 million, or an increase of 46% from the $257.1 million earned during the same period in 2013. This compares favorably with an 11% increase in the number of global completed M&A transactions and a 9% increase in global completed M&A volume in the same period (source: Thomson Financial as of October 8, 2014; includes all transactions greater than $100 million in value).

While announced M&A volume was relatively restrained from the global financial crisis through 2013, we are seeing a steady improvement in the M&A environment as demonstrated by the increase in transaction announcements in the first nine months of 2014. During this period, the dollar volume of global announced M&A transactions increased 57% and the number of global announced M&A transactions increased 22% over the prior year period (source: Thomson Financial as of October 8, 2014; includes all transactions greater than $100 million in value).

Based on historical experience, we believe the current economic backdrop (high corporate cash balances, healthy capital markets and low interest rates) provides a strong foundation for continued improvement in the M&A environment. Our clients have increasing confidence in the U.S. economy and financing remains readily available at historically low cost which should fuel continued growth in U.S. M&A activity. Additionally, European M&A activity is beginning to pick up, but we expect this recovery to be gradual reflecting the region's slow economic recovery. We also continue to experience a growing demand for independent advice as clients evaluate a wide range of strategic alternatives.

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Results of Operations

The following is a discussion of our results of operations for the three and nine months ended September 30, 2014 and 2013.

	Three Months Ended September 30,					Variance			Nine Months Ended September 30,						Variance

	Three Months Ended September 30,					2014 vs. 2013			Nine Months Ended September 30,						2014 vs. 2013
($ in thousands)	2014		2013			2014 vs. 2013			2014			2013			2014 vs. 2013
Revenues	$	128,651	$	98,728			30	%	$	374,855		$	257,091			46	%
Expenses:
Compensation and benefits		68,148		64,966			5	%		300,793			166,952			80	%
Non-compensation expenses		24,730		19,245			29	%		71,661			53,680			33	%


Total operating expenses		92,878		84,211			10	%		372,454			220,632			69	%
Operating income (loss)		35,773		14,517			146	%		2,401			36,459			-93	%
Other income and expenses		617		(1,101	)		N/M			622			(968	)		N/M
Income (loss) from equity method investments		1,105		1,739			-36	%		(2,966	)		2,588			N/M


Income (loss) before income taxes		37,495		15,155			147	%		57			38,079			N/M
Provision for income taxes		4,710		705			568	%		5,790			1,782			225	%


Net income (loss)	$	32,785	$	14,450			127	%	$	(5,733	)	$	36,297			N/M

N/M = not meaningful

Revenues

We operate in a highly competitive environment. Each revenue-generating engagement is separately solicited, awarded and negotiated, and there are usually no long-term contracted sources of revenue. As a consequence, our fee-paying client engagements are not likely to be predictable, and high levels of revenues in one quarter are not necessarily predictive of continued high levels of revenues in future periods. To develop new business, our professionals maintain an active business dialogue with a large number of existing clients and potential clients, as well as with their legal and other advisors. We add new clients each year as our bankers continue to expand their relationships, as we hire senior bankers who bring their client relationships and as we receive introductions from our relationship network of senior executives, board members, attorneys and other third parties. We also lose clients each year as a result of the sale or merger of clients, changes in clients' senior management, competition from other financial services firms and other causes.

We earn substantially all of our revenues from advisory engagements, and, in many cases, we are not paid until the successful completion of an underlying transaction. Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive significant advisory fees despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client or the inability of our client to restructure its operations or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out-of-pocket expenses.

We do not allocate our revenues by the type of advice we provide (M&A, recapitalizations and restructurings or other corporate finance matters) because of the complexity of the transactions on

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which we may earn revenues and our holistic approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements and capital markets expertise can be instrumental on both M&A and restructuring assignments.

Three Months Ended September 30, 2014 versus 2013

Revenues were $128.7 million for the three months ended September 30, 2014 compared with $98.7 million for the same period in 2013, representing an increase of 30%. The growth in revenues was primarily driven by an improving M&A environment which has led to increased dialogue with clients evaluating a wide range of strategic alternatives.

Nine Months Ended September 30, 2014 versus 2013

Revenues were $374.9 million for the nine months ended September 30, 2014 compared with $257.1 million for the same period in 2013, representing an increase of 46%. This compares favorably with an 11% increase in the number of global completed M&A transactions and a 9% increase in global completed M&A volume in the same period and demonstrates our continued advisory market share gains. (Source: Thomson Financial as of October 8, 2014; includes all transactions greater than $100 million in value).

While the number of clients we advised was relatively consistent year-over-year (we earned revenues from 206 clients as compared with 201 clients during the same period in 2013), the number of clients who paid fees equal to or greater than $1 million increased from 74 clients in the first nine months of 2013 to 99 clients in the same period of 2014.

Operating Expenses

The following table sets forth information relating to our operating expenses, which are reported net of reimbursements of certain expenses by our clients:

	Three Months Ended September 30,						Variance			Nine Months Ended September 30,						Variance

	Three Months Ended September 30,						2014 vs. 2013			Nine Months Ended September 30,						2014 vs. 2013
($ in thousands)	2014			2013			2014 vs. 2013			2014			2013			2014 vs. 2013
Expenses:
Compensation and benefits	$	68,148		$	64,966			5	%	$	300,793		$	166,952			80	%
% of revenues		53	%		66	%					80	%		65	%
Non-compensation expenses	$	24,730		$	19,245			29	%	$	71,661		$	53,680			33	%
% of revenues		19	%		19	%					19	%		21	%
Total operating expenses	$	92,878		$	84,211			10	%	$	372,454		$	220,632			69	%
% of revenues		72	%		85	%					99	%		86	%
Income (loss) before income taxes	$	37,495		$	15,155			147	%	$	57		$	38,079			N/M
% of revenues		29	%		15	%					N/M			15	%

N/M = not meaningful

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Our operating expenses are classified as compensation and benefits expenses and non-compensation expenses, and headcount is the primary driver of the level of our expenses. Compensation and benefits expenses account for the majority of our operating expenses. Non-compensation expenses, which include the costs of professional fees, travel and related expenses, communication, technology and information services, occupancy, depreciation and other expenses, generally have been less significant in comparison with compensation and benefits expenses. Expenses are recorded on the combined statements of operations, net of any expenses reimbursed by clients.

Operating expenses were $92.9 million for the three months ended September 30, 2014 and represented 72% of revenues, compared with $84.2 million for the same period in 2013 which represented 85% of revenues. Our income before taxes increased significantly, improving from income of $15.2 million for the three months ended September 30, 2013 to income of $37.5 million for the same period in 2014.

Operating expenses were $372.5 million for the nine months ended September 30, 2014 and represented 99% of revenues, compared with $220.6 million for the same period in 2013 which represented 86% of revenues. Our income before income taxes decreased significantly, declining from income of $38.1 million for the nine months ended September 30, 2013 to income of $0.1 million for the same period in 2014.

Our operating expenses (both compensation and non-compensation expenses) for the nine months ended September 30, 2014 were impacted by the significant reorganization and IPO related expenses as described above in "Reorganization and Initial Public Offering."

Compensation and Benefits Expenses

Our compensation and benefits expenses are determined by management based on revenues earned, the competitiveness of the prevailing labor market and anticipated compensation requirements for our employees, the level of recruitment of new Managing Directors, the amount of compensation expenses amortized for equity awards and other relevant factors.

Our compensation expenses consist of base salary and benefits, annual incentive compensation payable as cash bonus awards, including certain amounts subject to clawback and contingent upon a required period of service ("contingent cash awards") and amortization of equity-based compensation awards. Base salary and benefits are paid ratably throughout the year. Equity awards are amortized into compensation expenses on a graded basis (based upon the fair value of the award at the time of grant) during the service period over which the award vests, which is typically four to five years. The awards are recorded within equity as they are expensed. Contingent cash awards are amortized into compensation expenses over the required service period, which is typically two to three years. Cash bonuses, which are accrued each quarter, are discretionary and dependent upon a number of factors including the performance of the Company and are generally paid during the first two months of each calendar year with respect to prior year performance. The equity component of the annual incentive award is determined with reference to the Company's estimate of grant date fair value, which in turn determines the number of equity awards granted subject to a vesting schedule.

Due to our rapid expansion in the early years of our operations, the ratio of our compensation expenses to revenues has been higher than what we intend to target in the future. Newly hired bankers typically require a ramp up period before they and their client relationships begin to contribute meaningful revenues to the Company. As a result, our compensation ratio has been higher in prior periods of significant headcount growth. We have reduced our compensation ratio in recent periods primarily through increased production due to the continued maturation of our advisory platform as the tenure of our bankers has increased. These factors were more than offset by the large expense realized in the second quarter of 2014 as a result of the one-time vesting acceleration of equity held by Managing Directors. Based on these factors and an improving macroeconomic environment, we intend

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to target a compensation ratio of approximately 57% to 58%. However, if we identify opportunities to grow revenues through significant expansion or to position our Company during challenging market conditions for future growth, we may report a compensation ratio in excess of this target. We intend to compensate our personnel competitively in order to continue building our business and growing our firm.

Our compensation expenses are primarily based upon revenues, prevailing labor market conditions and other factors that can fluctuate, including headcount, and as a result, our compensation expenses may fluctuate materially in any particular period. Accordingly, the amount of compensation expenses recognized in any particular period may not be consistent with prior periods or indicative of future periods.

Three Months Ended September 30, 2014 versus 2013

For the three months ended September 30, 2014, compensation-related expenses of $68.1 million represented 53% of revenues, compared with $65.0 million which represented 66% of revenues in the prior year period. The increase in compensation expenses primarily relates to an increase in headcount as well as a higher discretionary bonus accrual, partially offset by lower equity amortization during 2014 as compared with 2013.

Our fixed compensation costs, which are primarily the sum of base salaries, payroll taxes and benefits and the amortization of previously issued equity and contingent cash awards, were $39.1 million and $37.7 million for the three months ended September 30, 2014 and 2013, respectively. The aggregate amount of discretionary cash bonus expenses, which generally represents the excess amount of total compensation over base compensation and amortization of equity and contingent cash awards, was $29.0 million and $27.3 million for the three months ended September 30, 2014 and 2013, respectively. The increase in discretionary cash bonus expense is related to our increase in revenues for the period.

Nine Months Ended September 30, 2014 versus 2013

For the nine months ended September 30, 2014, compensation-related expenses of $300.8 million represented 80% of revenues, compared with $167.0 million of compensation-related expenses which represented 65% of revenues in the prior year period. The increase in compensation expenses primarily relates to a higher discretionary bonus accrual and the acceleration of equity compensation expense associated with the IPO that occurred during 2014 as compared with 2013.

Our fixed compensation costs, which are primarily the sum of base salaries, payroll taxes and benefits and the amortization of previously issued equity and contingent cash awards, were $205.9 million and $118.1 million for the nine months ended September 30, 2014 and 2013, respectively. The increase in fixed compensation costs relates to the acceleration of equity compensation expense associated with the IPO that occurred in April 2014. The aggregate amount of discretionary cash bonus expenses, which generally represents the excess amount of total compensation over base compensation and amortization of equity and contingent cash awards, was $94.9 million and $48.9 million for the nine months ended September 30, 2014 and 2013, respectively. The increase in discretionary cash bonus expense is primarily related to our increase in revenues for the period.

Non-Compensation Expenses

Our non-compensation expenses include the costs of occupancy, professional fees, communication, technology and information services, travel and related expenses, depreciation and other expenses. Reimbursed client expenses are netted against non-compensation expenses.

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Historically, our non-compensation expenses, particularly occupancy and travel costs associated with business development, have increased as we have grown our business and made strategic investments. This trend may continue as we expand into new sectors, geographies and products to serve our clients' evolving needs. In addition, we will experience increased non-compensation expenses in connection with having become a public company.

Three Months Ended September 30, 2014 versus 2013

Non-compensation expenses were $24.7 million in the three months ended September 30, 2014, representing 19% of revenues, consistent with the ratio of 19% in the prior year period. In addition to incremental costs associated with operating as a public company, the increase in non-compensation expenses of $5.5 million was primarily driven by increased recruiting activity and new business development.

Nine Months Ended September 30, 2014 versus 2013

Non-compensation expenses were $71.7 million in the nine months ended September 30, 2014, representing 19% of revenues, up from $53.7 million, or 21% in the prior year period. The increase in non-compensation expense was primarily driven by increased travel expenses and professional fees, reflecting a more active business and recruiting environment.

Income (Loss) From Equity Method Investments

On April 1, 2010, we entered into the Australian JV, investing a combination of cash and certain net assets in exchange for a 50% interest in the Australian JV. The remaining 50% of the Australian JV is owned by an Australian trust established by and for the benefit of Australian executives. The Australian JV's primary business is offering advisory services, much like the Company. The Australian JV also has an equity capital markets and research, sales and trading business covering Australian public equity securities.

Three Months Ended September 30, 2014 versus 2013

Income (loss) from equity method investments, which relates to our share of gains and losses of the Australian JV, was income of $1.1 million and $1.7 million for the three months ended September 30, 2014 and 2013, respectively. During the three months ended September 30, 2014, the Australian JV generated $9.9 million of revenues and $7.7 million of expenses, resulting in net earnings of $2.2 million, of which we recognized our 50% share, or $1.1 million. For the same period in 2013, the Australian JV generated $10.8 million of revenues and $7.3 million of expenses, resulting in net earnings of $3.5 million, of which we recognized our 50% share, or $1.7 million. The Australian JV's revenues decreased by 9% for the three months ended September 30, 2014 compared with the same period in 2013. The Australian JV generally derives revenues from a varying number of engagements each period which may result in revenues that vary significantly from period to period. Operating expenses increased 5% during the three months ended September 30, 2014 when compared with the same period in 2013 primarily due to increased compensation and benefits expenses as well as professional fees associated with recruiting.

Nine Months Ended September 30, 2014 versus 2013

Income (loss) from equity method investments, which relates to our share of gains and losses of the Australian JV, was a loss of $3.0 million and income of $2.6 million for the nine months ended September 30, 2014 and 2013, respectively. During the nine months ended September 30, 2014, the Australian JV generated $17.4 million of revenues and $23.4 million of expenses, resulting in a net loss of $5.9 million, of which we recognized our 50% share, or $3.0 million. For the same period in 2013,

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the Australian JV generated $30.4 million of revenues and $25.2 million of expenses, resulting in net income of $5.2 million, of which we recognized our 50% share, or $2.6 million. The Australian JV's revenues decreased by 43% for the nine months ended September 30, 2014 compared with the same period in 2013. The Australian JV generally derives revenues from a varying number of engagements each period which may result in revenues that vary significantly from period to period. Operating expenses decreased 7% during the nine months ended September 30, 2014 when compared with the same period in 2013 primarily due to lower compensation expenses as a result of the lower revenues generated.

Provision for Income Taxes

Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other state and local taxes. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal, state and local income tax on its allocable share of result of operations from Group LP.

Three Months Ended September 30, 2014 versus 2013

During the three months ended September 30, 2014, the provision for income taxes was $4.7 million, which reflected an effective tax rate of 13%. The income tax provision and effective tax rate for the period primarily reflect the effect of the Company's allocable share of earnings from Group LP at the prevailing U.S. federal, state and local corporate income tax rate.

During the three months ended September 30, 2013, the provision for income taxes was $0.7 million, which reflected an effective tax rate of 5%. The income tax provision and effective tax rate for the period reflect the effect of certain nondeductible expenses, primarily related to the vesting of partnership units. None of the earnings for the period was subject to corporate income taxes for U.S. federal, state and local tax purposes.

Nine Months Ended September 30, 2014 versus 2013

During the nine months ended September 30, 2014, the provision for income taxes was $5.8 million on income before taxes of $0.1 million. The income tax provision for the period primarily reflects the effect of certain nondeductible expenses related to the vesting of Class A partnership units in Group LP in connection with the Company's reorganization and IPO. Only a portion of the earnings related to the post-IPO period was subject to U.S. federal, state and local income tax at the prevailing corporate income tax rate.

During the nine months ended September 30, 2013, the provision for income taxes was $1.8 million, which reflected an effective tax rate of 5%. The income tax provision and effective tax rate for the period reflect the effect of certain nondeductible expenses, primarily related to the vesting of partnership units. None of the earnings for the period was subject to corporate income tax for U.S. federal, state and local tax purposes.

Liquidity and Capital Resources

Our current assets have historically comprised cash, short-term liquid investments and receivables related to fees earned from providing advisory services. Our current liabilities include accrued expenses, including accrued employee compensation. We pay a significant portion of incentive compensation

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during the first two months of each calendar year with respect to the prior year's results. We have also historically distributed estimated partner tax payments in the first quarter of each year in respect of the prior year's operating results. Therefore, levels of cash generally have declined during the first quarter of each year after incentive compensation was paid to our employees and estimated tax payments were distributed to partners. Cash then gradually increased over the remainder of the year. We expect these practices to continue.

We evaluate our cash needs on a regular basis in light of current market conditions. Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of September 30, 2014 and December 31, 2013, the Company had cash equivalents of $64.0 million and $260.8 million, respectively, invested in U.S. Treasury Bills, bank time deposits and government securities money market funds. Additionally, as of September 30, 2014 and December 31, 2013, the Company had cash of $78.1 million and $42.2 million, respectively, maintained in U.S. and non-U.S. bank accounts, of which most U.S. account balances exceeded the FDIC coverage limit of $250,000.

In addition to cash and cash equivalents, we hold U.S. treasury bills classified as investments on our statement of financial condition as they have original maturities of three months or more from the date of purchase. As of September 30, 2014 and December 31, 2013, the Company held $74.0 million and $66.2 million of U.S. treasury bills classified as investments, respectively.

Our liquidity is highly dependent upon cash receipts from clients which are generally dependent upon the successful completion of transactions as well as the timing of receivable collections, which typically occurs within 60 days of billing. As of September 30, 2014 and December 31, 2013 accounts receivable were $23.0 million and $28.8 million, respectively, net of allowances of $1.6 million and $0.8 million, respectively.

To provide for working capital and other general corporate purposes, we maintain a $25.0 million unsecured revolving credit facility that matures on June 30, 2015. Advances on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the Company's option of (i) LIBOR plus 1% or (ii) Prime minus 1.50%. As of September 30, 2014, the Company had no borrowings under the credit facility.

As of September 30, 2014, the Company's available credit under this facility was $16.7 million as a result of the issuance of an aggregate amount of $8.3 million of various standby letters of credit, which were required in connection with certain office leases and other agreements. The Company incurs a 1% per annum fee on the outstanding balances of issued letters of credit.

On October 28, 2014, the Board of Directors of Moelis & Company declared a special dividend of $1.00 per share and a regular quarterly dividend of $0.20 per share. The aggregate $1.20 per share will be paid on November 24, 2014 to common stockholders of record on November 10, 2014. During the nine months ended September 30, 2014 the Company declared and paid dividends of $0.20 per share.

Regulatory Capital

We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, record-keeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 12 of the condensed consolidated and combined financial statements as of September 30, 2014 for further information. These regulations differ in the United States, United Kingdom, Hong Kong and other countries in which we operate a registered broker-dealer. The license under which we operate in each such country is meant to be appropriate to conduct an advisory business. We believe that we provide each of our subsidiaries with sufficient capital and liquidity, consistent with their business and regulatory requirements.

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Tax Receivable Agreement

In conjunction with the IPO, we have entered into a tax receivable agreement with our eligible Managing Directors that will provide for the payment by us to our eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (a) the increases in tax basis attributable to exchanges by our eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by us as a result of this tax receivable agreement. We expect to benefit from the remaining 15% of cash savings, if any, in income tax that we realize.

In connection with the IPO, the Company made a one-time cash distribution which is treated as an acquisition for U.S. federal income tax purposes of Class A partnership units in Group LP from certain partners of Old Holdings. This distribution resulted in a deferred tax asset of which approximately $60.9 million is attributable to exchanges by certain of the partners of Old Holdings who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $51.8 million) of the tax benefits associated with this portion of the deferred tax asset are payable to partners of Old Holdings over the next 15 years and recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital.

For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had we not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement.

Payments made under the tax receivable agreement are required to be made within 225 days of the filing of our tax returns. Because we generally expect to receive the tax savings prior to making the cash payments to the eligible selling holders of Group LP partnership units, we do not expect the cash payments to have a material impact on our liquidity.

In addition, the tax receivable agreement provides that, upon a merger, asset sale, or other form of business combination or certain other changes of control or if, at any time, we elect an early termination of the tax receivable agreement, our (or our successor's) obligations with respect to exchanged or acquired units (whether exchanged or acquired before or after such change of control or early termination) will be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement, and, in the case of an early termination election, that any units that have not been exchanged are deemed exchanged for the market value of the Class A common stock at the time of termination. Consequently, it is possible, in these circumstances, that the actual cash tax savings realized by us may be significantly less than the corresponding tax receivable agreement payments.

Cash Flows

Our operating cash flows are primarily influenced by the amount and timing of receipt of advisory fees, which are generally collected within 60 days of billing, and the payment of operating expenses, including payments of incentive compensation to our employees. We distribute estimated partner taxes and pay a significant portion of incentive compensation during the first two months of each calendar

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year with respect to the prior year's results. A summary of our operating, investing and financing cash flows is as follows:

	Nine Months Ended September 30,

($ in thousands)	2014			2013
Cash Provided By (Used In)
Operating Activities:
Net income (loss)	$	(5,733	)	$	36,297
Non-cash charges		121,773			37,549
Other operating activities		1,788			(79,621	)


Total operating activities		117,828			(5,775	)
Investing Activities		(14,115	)		51,212
Financing Activities		(263,816	)		(70,283	)
Effect of exchange rate changes		(823	)		75


Net increase (decrease) in cash		(160,926	)		(24,771	)
Cash and cash equivalents, beginning of period		303,024			185,623


Cash and cash equivalents, end of period	$	142,098		$	160,852

Nine Months Ended September 30, 2014

Cash and cash equivalents were $142.1 million at September 30, 2014, a decrease of $160.9 million from $303.0 million of cash and cash equivalents at December 31, 2013. Operating activities resulted in a net inflow of $117.8 million primarily attributable to the impact of non-cash equity compensation charges on net income (loss). Investing activities resulted in a net outflow of $14.1 million primarily attributable to purchases of investments, partially offset by proceeds from sales of investments. Financing activities resulted in a net outflow of $263.8 million primarily related to the pre and post offering distributions to partners and tax distributions to partners, partially offset by net proceeds received related to the issuance of Class A common stock.

Nine Months Ended September 30, 2013

Cash and cash equivalents were $160.9 million at September 30, 2013, a decrease of $24.8 million from $185.6 million at December 31, 2012. Operating activities resulted in a net outflow of $5.8 million primarily related to a decrease in compensation payable, partially offset by net income and non-cash equity compensation charges. Investing activities resulted in a net inflow of $51.2 million primarily attributable to net proceeds from sales of investments of U.S. Treasury Bills and bank time deposits. Financing activities resulted in a net outflow of $70.3 million, primarily related to tax and dividend distributions to partners.

Contractual Obligations

The following table sets forth information relating to our contractual obligations as of September 30, 2014:

	Payment Due by Period

($ in thousands)	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Operating Leases	$	76,815	$	13,086	$	24,493	$	25,851	$	13,385


Total	$	76,815	$	13,086	$	24,493	$	25,851	$	13,385

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In connection with the Company's Australian JV, the Company granted a put option enabling the key senior Australian executive to sell his shares held in the Australian JV back to the Company at fair value upon certain defined exit events. The put option cannot be exercised prior to March 2015, except in the event of death or disability of the key senior Australian executive. If the put option is exercised, the Company will be required to pay 50% of the purchase price upon exercise and the remaining balance within 18 months (in cash or listed stock). In addition, the Company holds a call option, exercisable upon the occurrence of certain defined events, to purchase the shares from the Australian Trust at fair value with the same payment terms as called for under the put option, described above.

The commitment table above excludes contractual amounts owed under the tax receivable agreement because the ultimate amount and timing of the amounts due are not presently known. As of September 30, 2014, a payable of $51.8 million has been recorded in amount due pursuant to tax receivable agreement in the condensed consolidated and combined financial statements representing management's best estimate of the amounts currently expected to be owed under the tax receivable agreement.

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our combined financial statements except for those described under "Contractual Obligations" above.

Market Risk and Credit Risk

Our business is not capital-intensive and we do not invest in derivative instruments or, generally, borrow through issuing debt. As a result, we are not subject to significant market risk (including interest rate risk, foreign currency exchange rate risk and commodity price risk) or credit risk.

Risks Related to Cash and Short-Term Investments

Our cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. We invest most of our cash in U.S. Treasury Bills, bank time deposits and government securities money market funds. Cash is maintained in U.S. and non-U.S. bank accounts. Most U.S. account balances exceed the FDIC coverage limit. In addition to cash and cash equivalents, we hold U.S. Treasury Bills and bank time deposits classified as investments on our statement of financial condition as they have original maturities of three months or more (but less than twelve months) from the date of purchase. We believe our cash and short-term investments are not subject to any material interest rate risk, equity price risk, credit risk or other market risk.

Credit Risk

We regularly review our accounts receivable and allowance for doubtful accounts by considering factors such as historical experience, credit quality, age of the accounts receivable and recoverable expense balances, and the current economic conditions that may affect a customer's ability to pay such amounts owed to the Company. We maintain an allowance for doubtful accounts that, in our opinion, provides for an adequate reserve to cover losses that may be incurred. See "—Critical Accounting Policies—Accounts Receivable and Allowance for Doubtful Accounts."

Exchange Rate Risk

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are recorded in the condensed consolidated and combined statements of operations. In addition, the reported amounts of our advisory revenues may be affected by movements in the rate of exchange between the pound sterling and the euro and the U.S. dollar, in which our financial statements are denominated. For the three and nine months ended September 30, 2014, the net impact of the fluctuation of foreign currencies in other comprehensive income in the combined statements of comprehensive income (loss) was losses of $3.2 million and $1.4 million, respectively. We have not entered into any transactions to hedge our exposure to these foreign currency fluctuations through the use of derivative instruments or other methods.

Critical Accounting Policies

We believe that the critical accounting policies included below represent those that are most important to the presentation of our financial condition and results of operations and require management's most difficult, subjective and complex judgment.

The preparation of combined financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period for which they are determined to be necessary.

Prior to our IPO in April of 2014, certain expenses have been allocated from the Parent based on the most relevant measure, including relative usage or proportion of the Company's headcount to that of the Parent. Occupancy expenses have been allocated to the Company based on the proportion of the Company's headcount to that of the Parent, and communication, technology and information services expenses have been allocated to the Company based on a combination of relative usage and the proportion of the Company's headcount to that of the Parent. All other expenses were specifically identifiable to the Company. Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable, and the allocated amounts are representative of the amounts that would have been recorded in the condensed consolidated and combined financial statements had the Company operated independent of the Parent for the historical periods presented.

In connection with the Company's IPO, the Company entered into a services agreement with a related party, Moelis Asset Management LP, whereby the Company provides certain administrative services and office space to Moelis Asset Management LP for a fee. See Note 11 for further information.

All intercompany balances and transactions within the Company have been eliminated.

Revenue and Expense Recognition

The Company recognizes revenues from providing advisory services when earned. Upfront fees and retainers are recognized over the estimated period during which the related services are to be performed. Transaction-related fees are recognized when all services for a transaction have been provided, specified conditions have been met and the transaction closes. Deferred revenues are recorded for fees received that have not yet been earned. Expenses are recorded on the combined financial statements, net of client reimbursements.

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Accounts Receivable and Allowance for Doubtful Accounts

The accompanying combined statements of financial condition present accounts receivable balances net of allowance for doubtful accounts based on the Company's assessment of the collectability of customer accounts.

Equity-based Compensation

The Company recognizes the cost of employee services received in exchange for an equity instrument award. The cost is based on its grant-date fair value amortized over the service period required by the award's vesting terms. Prior to the Company's IPO, the measurement of the grant-date fair value required Old Holdings to make estimates about its future operating results and the appropriate risk-adjusted discount rates. The methods used to estimate the fair value of equity-based compensation generally included the market approach and the income approach, each of which involve a significant degree of judgment. Under the market approach, fair value is determined with reference to observable valuation measures for comparable companies (e.g., multiplying a key performance metric of the comparable company by a relevant valuation multiple—adjusted for differences between Old Holdings and the referenced comparable). Under the income approach, fair value is determined by converting future amounts (e.g., cash flows or earnings) to a single present amount (discounted) using current expectations about those future amounts. Subsequent to the Company's IPO, the grant-date fair value of equity awards is based on quoted market prices at the time of grant. The Company recognizes such amounts in compensation and benefits expenses in the accompanying condensed consolidated and combined statements of operations and as an increase to equity in the accompanying condensed consolidated and combined statements of financial condition and changes in equity.

Equity Method Investments

Equity method investments primarily consist of the Company's investment in Moelis Australia Holdings. The Company accounts for its investment in the Australian JV under the equity method of accounting as the Company does not control the entity but jointly controls the Australian JV with the Australian Trust. The Company reflects its investment in investment in joint venture on the accompanying combined statements of financial condition. In connection with this investment, the Company acquired a call option to purchase the remaining 50 percent interest in the Australian JV. Also, in connection with the investment, the Company granted a put option enabling the key senior Australian executive to sell his remaining shares in the Australian JV back to the Company upon certain defined exit events. The call and the put options are embedded in the equity method investment and have not been separated as embedded derivatives because they do not meet the definition of a derivative given that the investee's shares are not publicly traded. The investment reflects the Company's share of contributions made to, distributions received from, and the equity

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earnings and losses of, the Australian JV. The Company reflects its share of gains and losses of the Australian JV in income (loss) from equity method investment in the combined statements of operations.

Income Taxes

Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes as applicable. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal and state income tax on its allocable share of results of operations from Group LP.

Recent Accounting Developments

For a discussion of recently issued accounting developments and their impact or potential impact on our combined financial statements, see Note 3—Recent Accounting Pronouncements, of the condensed consolidated and combined financial statements included in this 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk are set forth above in "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk and Credit Risk"

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in rule 13a-15(e) of the Securities Exchange

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Act of 1934, as amended (the "Exchange Act")). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is from time to time involved in legal proceedings incidental to the ordinary course of business. We do not believe any such proceedings will have a material adverse effect on our results of operations.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in our prospectus, dated April 15, 2014 and filed with the SEC on April 17, 2014 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibit Index

The list of exhibits is set forth under "Exhibit Index" at the end of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 7 ^th day of November.


		MOELIS & COMPANY
		/s/ KENNETH MOELIS Kenneth Moelis Chief Executive Officer
		/s/ JOSEPH SIMON Joseph Simon Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

		Description

3.1		Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the SEC on April 22, 2014)
3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed with the SEC on April 22, 2014)
10.1		Aircraft Dry Lease, dated September 23, 2014, among Moelis Asset Management LP (formerly Moelis & Company Holdings LP), Kenneth Moelis and the Registrant
10.2		Cost Sharing and Operating Agreement, dated September 23, 2014, among Moelis Asset Management LP (formerly Moelis & Company Holdings LP), Kenneth Moelis and the Registrant
10.3		Employment Agreement, dated September 3, 2014, by and among Eric Cantor, Moelis & Company Group LP and the Registrant
10.4		Amendment, dated April 15, 2014, by and between the Registrant, Moelis & Company Group GP LLC and the other limited partners from time to time party thereto to the Amended and Restated Agreement of Limited Partnership of Moelis & Company Group LP
31.1		Rule 13a-14(a) Certification of Chief Executive Officer of the Registrant in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Rule 13a-14(a) Certification of Chief Financial Officer of the Registrant in accordance with Section 302 of the Sarbanes-Oxley Act of 2002
32.1	*	Section 1350 Certification of Chief Executive Officer of the Registrant in accordance with Section 906 of the Sarbanes-Oxley Act of 2002
32.2	*	Section 1350 Certification of Chief Financial Officer of the Registrant in accordance with Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema
101.CAL	**	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	**	XBRL Taxonomy Extension Label Linkbase
101.PRE	**	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	**	XBRL Taxonomy Extension Definition Linkbase

*: Document has been furnished, is not deemed filed and is not to be incorporated by reference into any of the Registrant's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934 irrespective of any general incorporation language contained in any such filing.
**: In accordance with Rule 406T of Regulation S-T, the information in this exhibit is furnished and deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934 irrespective of any general incorporation language contained in any such filing, and otherwise is not subject to liability under these sections.

Exhibit 10.1

AIRCRAFT DRY LEASE

THIS AIRCRAFT DRY LEASE (this “ Lease ”) is made and entered into as of September 23, 2014, by and among Moelis & Company Manager LLC (“ Lessor ”), a Delaware limited liability company, on the one hand, and Kenneth D. Moelis (“ Mr. Moelis ”), a citizen of the United States and a resident of the State of California, Moelis & Company Group LP (“ Group LP ”), a Delaware limited partnership, and Moelis Asset Management LP (“ Management LP ”), a Delaware limited partnership, on the other. Mr. Moelis, Group LP, and Management LP are hereinafter also individually referred to as “ Lessee ” and collectively as “ Lessees ”.

W I T N E S S E T H:

WHEREAS, pursuant to an Aircraft Purchase Agreement, dated as of June 26, 2014 (the “ Purchase Agreement ”), Lessor purchased the aircraft set forth on Schedule 1 ( the “ Aircraft ”); and

WHEREAS, Lessor desires to lease the Aircraft to Lessees and Lessees desire to lease the Aircraft from Lessor commencing on the date of the actual delivery of the Aircraft outfitted and completed in accordance with the Specification (as such term is defined in the Purchase Agreement) by the Manufacturer (as defined in Schedule 1) to Lessor (currently scheduled for September 30, 2014) and the concurrent acceptance of the Aircraft by Lessees for lease hereunder as evidenced by the execution and delivery of the Aircraft Delivery and Acceptance Receipt pursuant to Section 5 (the “ Delivery Date ”), subject to the terms and conditions of this Lease.

NOW THEREFORE, for and in consideration of the foregoing recitals, the mutual promises, covenants, agreements, representations and warranties contained in this Lease, the parties agree as follows:

1. Lease of the Aircraft . Subject to the terms and conditions contained herein, Lessor agrees to lease the Aircraft to Lessees and Lessees agree to lease the Aircraft from Lessor, for the Lease Term (as defined in Section 2).

2. Term . The term of this Lease (the “ Lease Term ”) shall commence on the Delivery Date and end on December 31, 2019, unless otherwise extended by exercise of each Renewal Option (as defined under Section 22) by Lessees or cancelled or terminated pursuant to Section 24.

3. Operating Base . Lessor and Lessees acknowledge and accept that the operating base of the Aircraft shall be Van Nuys Airport (KVNY), Van Nuys, California (“ Operating Base ”).

4. Delivery to Lessees . Lessor or its designated representative shall deliver to Lessees or to their designated representative(s), on the Delivery Date, the Aircraft at Bradley International Airport (KBDL), Windsor Locks, Connecticut or such other location within the continental United States as Lessor and Lessees may agree to in writing.

5. Lessees’ Inspection and Acknowledgement of Delivery . On the Delivery Date, Lessees, through their designated representative(s), shall inspect the Aircraft, and shall note their acceptance of the Aircraft and any discrepancies or exceptions on the Aircraft Delivery and Acceptance Receipt substantially in the form of Exhibit “A” attached hereto.

6. Redelivery to Lessor . On the Termination Date, Lessees, at their own expense, shall make the Aircraft available for inspection by Lessor or its designated agent and shall redeliver to Lessor the Aircraft and all applicable records, including but not limited to log books, manuals, maintenance and inspection reports, programs, computer printouts and data, and all inspection, modification and overhaul records required to be maintained with respect to the Aircraft, at Bradley International Airport (KBDL), Windsor Locks, Connecticut on or such other location in the continental United States as Lessor and Lessees may agree to in writing. Lessees shall return the Aircraft to Lessor in a flight ready status, in compliance with all the requirements set forth under Section 11(a) through (e) and in the same condition as received, normal wear and tear excepted. Upon redelivery, each fuel tank shall contain approximately the same quantity of fuel as was contained in the fuel tanks when the Aircraft was delivered to Lessees (or, in the case of differences in such quantity, an appropriate adjustment will be made by payment at the then current fair market price of fuel).

7. Lessor’s Inspection and Acknowledgment of Redelivery . Lessor or its designated representative shall inspect the Aircraft and shall acknowledge redelivery of the Aircraft in the condition required under this Lease by executing the Aircraft Redelivery and Acceptance Receipt, substantially in the form of Exhibit “B” attached hereto, subject to any discrepancies or exceptions noted therein.

8. Rent . Lessees shall pay to Lessor for the use of the Aircraft, a fixed monthly rental (individually “ Fixed Rental ,” collectively “ Fixed Rentals ”) in the amount set forth in Exhibit “C” attached hereto, payable in advance on the first day of each and every month (“ Rental Payment Date ”), except that if the Delivery Date does not take place on September 30, 2014, solely for the period from and including the Delivery Date through the end of the month of the Delivery Date (the “ Interim Period ”), Lessor agrees that Lessees shall pay to Lessor as rent an amount equal to the Fixed Rental, divided by thirty (30), multiplied by the number of days in the Interim Period (the “ Interim Rent ”). Lessees shall pay the Interim Rent on the Delivery Date. All payments by Lessees shall be made by bank wire transfer in immediately available funds, free of any transmission charges or other charges of any sort, to the bank account designated by Lessor and in accordance with the instructions Lessor shall provide from time to time to Lessees.

In the event Lessees fail to pay any Fixed Rental within ten (10) days after their due date, Lessees shall pay, as a late payment charge, in addition to the amount of such Fixed Rental, interest thereon at the maximum lawful rate or one half of one percent (.5%) per month, whichever is less, from the date the Fixed Rental was originally due, until paid.

Lessees acknowledge that this is a net lease and agree that Lessees are obligated to pay all Fixed Rentals hereunder, and that said obligations and the rights of Lessor in and to such Fixed Rentals, shall be absolute and unconditional and shall not be subject to any

abatement, reduction, set-off, defense, counter-claim or recoupment, except as otherwise expressly provided in this Lease.

9. Log Books and Records . Lessees shall, at all times during the Lease Term, maintain or cause to be maintained and be responsible for all logs, books, manuals and records (including any computerized maintenance records and programs) pertaining to the Aircraft, engines, auxiliary power unit, and other major components and their maintenance during the Lease Term in accordance with the rules and regulations of the United States Federal Aviation Administration (“ FAA ”) and Lessees shall, at the end of the Lease Term, deliver such records in legible form to Lessor.

10. Use of Aircraft and Operational Control . Lessees acknowledge and agree that the Aircraft shall be operated exclusively under Part 91 of the Federal Aviation Regulations (“ FARs ”). Each Lessee, when in possession of and using the Aircraft, shall have and retain operational control of the Aircraft as defined in the applicable FARs (FARs § 1.1 General Definitions: Operational control , with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight) during the period of such possession and use by such Lessee. Likewise, for federal tax purposes, including applicable provisions of the United States Internal Revenue Code, as amended, and the Regulations and rulings promulgated thereunder, each Lessee, when in possession of and using the Aircraft, shall have and retain “possession, command and control” of the Aircraft during the period of such possession and use by such Lessee. Each Lessee acknowledges and agrees that it shall supply duly-qualified, current and properly rated pilots, whose licenses are in good standing and who meet the requirements established and specified by the insurance policies required hereunder and by the FAA, and who have attended and successfully completed the Manufacturer’s approved training course for the Aircraft. The pilots shall be under the exclusive command, control and direction of each Lessee in all phases of each such Lessee’s flights.

11. Operation and Maintenance Responsibilities of Lessees . Lessees shall each bear their share (based upon their respective utilization of the Aircraft) of all the operating costs, direct/variable and fixed, including, but not limited to, fuel, insurance premiums, hangar and storage charges, all the maintenance costs, scheduled and unscheduled, of the Aircraft and customary and routine refurbishing and modernization costs, if any. Without limiting the foregoing, Lessees shall arrange and pay for all maintenance, work, repairs and inspections, as are required by the Manufacturer, by Rolls-Royce Deutschland Ltd. & Co. KG (the engine manufacturer) and by the FAA, and in connection with the intended use and operations of the Aircraft; and Lessees shall supply or cause to be supplied to Lessor evidence of their compliance with the maintenance, overhaul and inspection requirements as submitted to the FAA, pursuant to its regulations, together with copies of reports of all inspections and periodic summaries of the total airframe hours, number of landings, total engine hours and cycles. Lessees, at their sole cost and expense, further agree to keep the Aircraft: (a) fully operational, duly certified and in airworthy condition at all times, and maintained in accordance with the Manufacturer’s recommended inspection program [FARs § 91.409(e) and (f)]; (b) in compliance with all the required inspections pursuant to the manufacturers’ maintenance manuals and programs for the Aircraft and its engines and components, including compliance with the Computerized Maintenance Management

System (“ CMMS ”) maintenance tracking system for the Aircraft; (c) in compliance with all FAA Airworthiness Directives and manufacturers’ Mandatory Service Bulletins; (d) in mechanical condition adequate to comply with all regulations of the FAA and any other Federal, state or local governing body, domestic or foreign, having jurisdiction over the maintenance, use or operation of the Aircraft; and (e) current and fully paid up under the CorporateCare program (“ CorporateCare ”) with respects to the engines, the Honeywell Maintenance Service Plan (“ MSP ”) with respect to the auxiliary power unit, the Manufacturer’s Smart Parts Plus Plan program (“ Smart Parts ”) with respect to the airframe and its components and systems, and the CMMS.

12. Additions and Alterations . Lessor consents and agrees that Lessees shall have the right to make, or cause to be made, customary and routine upgrades, improvements and similar modifications to the Aircraft and/or its engines or avionics, provided such upgrades, improvements and similar modifications, as well as any additional accessories, devices or equipment as may be available from time to time, shall be at Lessees’ sole cost and expense and in conformity with the specifications and inspections required or recommended by the manufacturers and the applicable FAA regulations and directives. Except for the foregoing, Lessees shall not in any way alter or modify, or cause to be made alterations or modifications to the Aircraft, including its engines and avionics, without the prior written consent of Lessor.

13. Inspection and Reports . Lessor shall have the right, but not the duty, to inspect the Aircraft at any reasonable time, wherever located. Lessees shall, at any reasonable time, make the Aircraft and Lessees’ records pertaining to the Aircraft available to Lessor for inspection. All such inspections made by Lessor shall be at its sole cost and expense; provided, however, that, upon the occurrence and continuation of an Event of Default (as defined in Section 23), Lessees shall be responsible for the cost and expense of Lessor of any inspection and Lessees shall pay Lessor such amount promptly upon demand.

14. Liens . Lessees will not directly or indirectly create, incur, assume or suffer to exist any liens on or with respect to (a) the Aircraft or any part thereof; (b) Lessor’s title thereto; or (c) any interest of Lessor (and Lessees will promptly, at their own expense, take such action as may be necessary to discharge any such lien), except (i) the respective rights Lessor and Lessees as herein provided, and (ii) liens created by or caused to be created by Lessor.

15. Taxes and Tax Indemnities . Lessees shall pay to and indemnify Lessor and its members, managers, officers, employees and agents (collectively, “ Indemnitees ”) for, and hold each Indemnitee harmless from and against, any sales, use, excise or aircraft property taxes (except for the annual property tax assessed by the Los Angeles County Tax Collector with respect to the Aircraft as a result of the Operating Base of the Aircraft, the payment of which shall be the sole and exclusive responsibility of Lessor), any ad valorem , value added, leasing, stamp, landing, airport use or other taxes, levies, imposts, duties, customs, charges, fees or withholdings of any nature, together with any penalties, fines, or interest thereon (“ Impositions ”) arising out of the transactions contemplated by this Lease or the use of the Aircraft by Lessees and imposed against any Indemnitee, Lessees or the Aircraft or any part thereof by any Federal or foreign government, any state, municipal or

local subdivision, any agency or instrumentality thereof or other taxing authority upon or with respect to the Aircraft or any part thereof or upon the ownership, delivery, leasing, possession, use, operation, maintenance, storage, return, transfer or release thereof, or upon the rentals, receipts or earnings arising therefrom, or upon or with respect to this Lease. Lessees specifically acknowledge and accept that should any taxing jurisdiction or authority assess or levy any sales, use, excise, property or similar taxes as a result of the lease of the Aircraft to Lessees, the payments of the Fixed Rentals under this Lease or Lessees’ use of the Aircraft, Lessees shall remit to Lessor all such taxes together with each Fixed Rental; provided, however, that if such taxes shall be due and payable at an earlier time as a matter of applicable laws, rules, regulations, orders, directives, licenses or permits of any governmental body, instrumentality, agency or authority, Lessees shall remit such taxes to Lessor at the required time. Except for the foregoing, in all other cases Lessees shall have the right to contest any Impositions, provided that (a) Lessees shall have given to Lessor written notice of any such Impositions, which notice shall state that such Impositions are being contested by Lessees in good faith with due diligence and by appropriate proceedings and that Lessees have agreed to indemnify each Indemnitee against any cost, expense, liability or loss (including, without limitation, reasonable attorneys’ fees) arising from or in connection with such contest; (b) in Lessor’s sole judgment, Lessor has received adequate assurances of payment of such contested Impositions; and (c) counsel for Lessor shall have determined that the nonpayment of any such Impositions or the contest of any such payment in such proceedings does not, in the sole opinion of such counsel, adversely affect the title, property or rights of Lessor. In case any report or return is required to be made with respect to any Impositions, Lessees will either (after notice to Lessor) make such report or return in such manner as will show the ownership of the Aircraft in Lessor, and send a copy of such report or return to Lessor or will notify Lessor of such requirement and make such report or return in such manner as shall be satisfactory to Lessor. Lessor agrees to cooperate fully with Lessees in the preparation of any such report or return.

16. Insurance . Lessees shall secure and maintain in full force and effect, at their sole cost and expense, throughout the Lease Term insurance policies containing such provisions and with insurance companies of recognized responsibility, as shall be reasonably satisfactory to Lessor. Without limitation to the generality of the foregoing, Lessees shall procure and maintain (a) aviation liability insurance covering public liability, property damage and including passenger legal liability, in an amount not less than the amount set forth on Schedule 1 hereto for any single occurrence; (b) all-risk aircraft hull and engine insurance (including, without limitation, foreign object damage insurance) in an amount not less than the amount set forth on Schedule 1 hereto; (c) breach of warranty insurance; and (d) war risk and allied perils insurance (including confiscation, appropriation, expropriation, terrorism and hijacking insurance) in the amounts set forth hereinabove. The coverage territory for all the foregoing polices shall be worldwide. All insurance policies shall name Lessor, and each Lessee as the named insureds, with Lessor (as the owner of the Aircraft) as loss payee, and shall provide that any cancellation or substantial change in coverage shall not be effective as to Lessor, for thirty (30) days after receipt by Lessor of written notice from such insurer(s) of such cancellation or change. All insurance shall insure Lessor’s interest, regardless of any breach or violation by Lessees of any warranties, declarations or conditions in such policies, shall include a severability of interest clause providing that such policy shall operate in the same manner if there were a separate policy covering each

insured, shall waive any right of set-off against Lessees or Lessor, and shall waive any rights of subrogation against Lessor. Such insurance shall be primary and not be subject to any offset by any other insurance carried by Lessor or any of Lessees. Each Lessee hereby appoints Lessor as each Lessee’s attorney-in-fact to make proof of loss and claim for and to receive payment of and to execute or endorse all documents, checks or drafts in connection with all policies of insurance in respect of the Aircraft. Any expense of adjusting or collecting insurance proceeds shall be borne by Lessees. Lessor may, at its option, apply proceeds of insurance, in whole or in part, to (i) repair or replace the Aircraft or any part thereof, or (ii) satisfy any obligation of Lessees to Lessor hereunder. Any balance remaining shall be retained by Lessor.

Annually on the anniversary of the Delivery Date, Lessees shall furnish to Lessor, a report describing in reasonable detail the insurance then carried and maintained on the Aircraft and certifying that such insurance complies with the terms hereof and a certificate of the insurer as to such insurance. Lessees shall advise Lessor in writing promptly of any default in the payment of any premium and of any other act or omission on the part of Lessees which might invalidate or render unenforceable, in whole or in part, any insurance on the Aircraft. In the event Lessees shall fail to maintain insurance as herein provided, Lessor may, at its option, provide such insurance, and Lessees shall, upon demand, reimburse forthwith Lessor for the cost thereof.

17. Loss or Damage . Lessees shall bear all risk of loss, theft, confiscation, damage to or destruction of the Aircraft from any cause whatsoever. Lessees shall promptly report any of the foregoing occurrences to the appropriate insurance company or companies, to Lessor, and to all concerned Federal, state, local or other governmental agencies, and shall furnish such information and execute such documents as may be necessary or required for Lessor, and under applicable laws. Lessees shall cooperate fully in any investigation of any claim or loss processed by Lessor under the Aircraft insurance policies.

Except as otherwise specifically provided hereinbelow, this Lease shall not terminate and the obligations of Lessees shall not be affected by reason of any damage to the Aircraft. Lessees shall be responsible for any expense of adjusting or collecting insurance proceeds and for the deductible, if any, associated with the damage, loss and destruction of the Aircraft, including but not limited to expenses resulting from foreign object damage.

In the event of total loss or destruction of all or substantially all of the Aircraft, or damage to the Aircraft which causes it to be irreparable in the opinion of the insurance carrier providing hull coverage pursuant to Section 16, or in the event of confiscation or seizure of the Aircraft, upon payment of such claims by the insurance company or companies to Lessor, as the case may be, no further payments of Fixes Rentals shall be due by Lessees and this Lease shall automatically terminate.

18. Indemnification . Lessees shall indemnify and save harmless Lessor, its successors and assigns, from and against any and all loss (including Lessees’ own loss of use), claims (including, without limitation, claims involving strict or absolute liability in tort, damage, injury, death, liability and third party claims), demands, costs and expenses of every nature, including reasonable attorneys’ fees, arising directly or indirectly from or in

connection with the possession, use, operation, maintenance or storage of the Aircraft, except when arising from the material default, willful misconduct or gross negligence of Lessor. Claims attributable to acts or events occurring before or after the Lease Term or after the Aircraft has been redelivered to Lessor in accordance with Section 6, shall be excluded from Lessees’ agreement to indemnify under this Section 18. Lessees’ obligations under this Section 18 shall survive termination of this Lease and shall remain in effect until all required indemnity payments have been made by Lessees to Lessor.

19. Representations, Warranties and Agreements of Lessor . Lessor represents, warrants and agrees as follows:

(a) Aircraft in Good Order and Repair . On the Delivery Date, the Aircraft shall be in an undamaged and airworthy condition with all systems and avionics functioning properly. The Aircraft shall be in full compliance with all FAA Airworthiness Directives and Mandatory Service Bulletins applicable to the Aircraft and shall have properly kept and updated maintenance and inspection records, reflecting the current maintenance and inspection status of the Aircraft, in accordance with all applicable FAA rules and regulations and the manufacturer’s recommendations.

(b) Manufacturers Warranties and Programs . In connection with Lessees’ operation and maintenance of the Aircraft during the Lease Term, Lessor shall allow Lessees to use and benefit from (i) all of the Manufacturer’s warranties (including the engine manufacturer’s warranties and other manufacturers’ warranties applicable thereunder), as provided to Lessor in accordance with Section 15 of the Aircraft Description & Customer Support Services Manual dated January 1, 2012 (“ Product Description ”) included in the Specification and incorporated in the Purchase Agreement and to assist and process any claims under such warranties, (ii) the initial training programs for pilots, mechanics and flight attendants as provided under Section 14.3 of the Product Description, and (iii) the enrollments on CorporateCare, MSP, Smart Parts and CMMS (all of which shall be the responsibility of Lessees to keep current and paid up).

(c) No Adverse Proceedings . No action, suit, or proceeding is currently pending or threatened against Lessor which shall in any material way affect Lessor’s financial status as of the date hereof, or impair the execution, delivery, or performance by Lessor of this Lease.

(d) Quiet Enjoyment . During the Lease Term, Lessor covenants that it shall not, through its own actions or inactions, interfere in Lessees’ quiet enjoyment of the Aircraft so long as no Event of Default on the part of Lessees shall have occurred and be continuing.

(e) Company Authorization . Lessor is a limited liability company, duly organized, validly existing and in good standing under the laws of Delaware, has all necessary powers to enter into the transaction contemplated in this Lease and has authorized and approved the lease of the Aircraft to Lessees.

20. Representations, Warranties and Agreements of Lessees .

Each Lessee represents, warrants and agrees as follows:

(a) Government Approvals . No consent or approval of, giving notice to, registration with, or taking of any other action in respect of or by, any Federal, state or local governmental authority or agency (including without limitation, the FAA), or other person is required with respect to the execution, delivery and performance by each Lessee of this Lease or the consummation of any of the transactions by each Lessee contemplated hereby or thereby, or if any such approval, notice, registration or action is required, it has been duly given or obtained.

(b) Lawful Use . The Aircraft will not be used, operated, maintained or stored in violation of any law or any rule, regulation or order of any government authority having jurisdiction (domestic or foreign), or in violation of any airworthiness certificate, license or registration relating to the Aircraft or its use, or in violation or breach of any representation or warranty made with respect to obtaining insurance on the Aircraft or any term or condition of such insurance policy. During the Lease Term, each Lessee shall operate the Aircraft solely under FARs Part 91.

(c) Aircraft Location . The Aircraft will not be operated or located in any area excluded from coverage by the terms of insurance or in any recognized or threatened area of hostilities, unless fully covered to Lessor’s satisfaction by war risk insurance.

(d) FAA Filings . Each Lessee shall take all steps necessary to preserve and protect Lessor’s U.S. Registration of the Aircraft. Lessees shall file or caused to be filed a copy of this Lease with the appropriate FAA office, in compliance with all applicable laws and regulations.

(e) Identification . A legible copy of the Lease shall be kept in the Aircraft at all times.

(f) No Adverse Proceedings . No action, suit, or proceeding is currently pending or threatened against Lessees, which shall in any material way affect the financial status of Lessees as of the date hereof, or impair the execution, delivery, or performance by Lessees of this Lease.

(g) Authorizations . Each Lessee has all the necessary powers to enter into the transaction contemplated in this Lease and each has authorized and approved the lease of the Aircraft from Lessor.

21. Disclaimer of Warranties . EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, THE AIRCRAFT IS BEING LEASED BY LESSOR TO LESSEES HEREUNDER ON AN “AS IS” AND “WHERE IS” BASIS AND WITHOUT ANY REPRESENTATION, GUARANTEE OR WARRANTY, EXPRESSED OR IMPLIED, OF ANY KIND BEING MADE OR GIVEN BY LESSOR, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EACH LESSEE HEREBY WAIVES ANY CLAIMS, RIGHTS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGE) CAUSED BY THE AIRCRAFT OR BY THE LOSS OF USE THEREOF BY EACH SUCH LESSEE.

22. Options to Extend . Provided Lessees are not in breach of the terms and conditions of this Lease, each Lessee shall have the option to extend the term at the end of the initial period for an additional period of one (1) year, and thereafter for a subsequent additional period of one (1) year, subject to such Lessee giving written notice to Lessor of the exercise of each such extension no more than six (6) months and no less than three (3) months prior to the expiration date of each such period (each a “ Renewal Option ”). All of the terms and conditions of this Lease shall apply to each of the foregoing extensions. In the event that a Renewal Option is not exercised, Lessees expressly acknowledges, consents and agrees that Lessor shall have the right to market the Aircraft for sale during the last three (3) months of the relevant period and Lessees shall cooperate with Lessor to schedule showings, inspections and/or demonstration flights of the Aircraft, provided that the intended use of the Aircraft by each Lessee shall always have priority over said rights of Lessor, the intention being that such rights shall be exercised solely at times and places that will not interfere with use or scheduled use of the Aircraft by each Lessee.

23. Events of Default . The term “ Event of Default ”, wherever used herein shall mean any of the following:

(a) Lessees shall have failed to make payment of a Fixed Rental within ten (10) days after the same shall become due;

(b) Lessees shall have failed to maintain at all times insurance coverage as required by Section 16;

(c) Lessees shall have breached any of their representations and warranties and shall have failed to cure same or commence curing same in good faith following the expiration of thirty (30) days written notice thereof from Lessor to Lessees;

(d) Lessees shall have failed to perform or observe (or cause to be performed and observed) any other obligation, covenant or agreement required to be performed under this Lease and such failure shall continue for thirty (30) days after written notice thereof from Lessor to Lessee; or

(e) Any of the Lessees becomes insolvent or fails to pay their debts when due or makes any assignment for the benefit of creditors, or seeks relief under any bankruptcy law or similar law for the protection of debtors, or suffers a petition of bankruptcy to be filed against it or a receiver or trustee appointed for substantially all of their assets, and such is not removed within sixty (60) days.

24. Lessor’s Remedies .

(a) Upon the occurrence of any Event of Default, Lessor may, at its option, exercise any or all remedies available at law or in equity, including, without limitation, any or all of the following remedies, as Lessor in its sole discretion shall elect:

(i) By notice in writing cancel or terminate this Lease, whereupon all rights of Lessees to the use of the Aircraft or any part thereof shall absolutely cease and terminate but Lessees shall remain liable as hereinafter provided; and thereupon Lessees, if so requested by Lessor, shall at Lessees’ expense promptly return the Aircraft to Lessor as required by Section 6, or Lessor, at its option, may enter upon the premises where the Aircraft is located and take immediate possession of and remove the Aircraft by summary proceedings or otherwise. Lessees specifically authorize Lessor’s entry upon any premises where the Aircraft may be located for the purpose of a peaceful retaking of the Aircraft, and Lessees shall waive any cause of action Lessees may have arising therefrom and shall forthwith pay to Lessor an amount equal to the total accrued and unpaid Fixed Rentals and all other accrued and unpaid amounts due hereunder, plus any and all losses and damages incurred or sustained by Lessor by reason of any default by Lessees under this Lease.

(ii) Perform or cause to be performed any obligation, covenant or agreement of Lessees hereunder. Lessees agree to pay all costs and expenses incurred by Lessor for such performance as additional Fixed Rental hereunder and acknowledge that such performance by Lessor shall not be deemed to cure said Event of Default.

(b) Lessees shall be liable for all costs, charges and expenses, including reasonable attorneys’ fees and disbursements, incurred by Lessor by reason of the occurrence of any Event of Default or the exercise of Lessor’s remedies with respect thereto.

(c) No remedy referred to herein is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity. No express or implied waiver by Lessor of any default or Event of Default hereunder shall in any way be, or be construed to be, a waiver of any future or subsequent default or Event of Default. The failure or delay of Lessor in exercising any rights granted to it hereunder upon any occurrence of any of the contingencies set forth herein shall not constitute a waiver of any such right upon the continuation or recurrence of any such contingencies or similar contingencies and any single or partial exercise of any particular right by Lessor shall not exhaust the same or constitute a waiver of any other right provided herein.

25. General Provisions .

(a) Broker/Finder Fees . Each party represents that it has dealt with no broker or finder in connection with the transaction contemplated by this Lease and that no broker or other person is entitled to any commission or finder’s fee in connection therewith. Lessor and Lessees each agree to indemnify and hold harmless one another against any loss, liability, damage, cost, claim or expense incurred by reason of any brokerage commission or finder’s fee alleged to be payable because of any act, omission or statement of the indemnifying party.

(b) Costs . Each party shall pay all of its own costs and expenses incurred or to be incurred by it in negotiating and preparing this Lease.

(c) Headings . Sections and other headings and captions of this Lease are included for convenience only and shall not affect the construction or interpretation of any of its provisions.

(d) Entire Agreement . This Lease constitutes the entire agreement among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations and understandings of the parties. No supplement, modification or amendment of this Lease shall be binding unless executed in writing by all the parties. No waiver of any of the provisions of this Lease shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

(e) Counterparts . This Lease may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties may exchange executed copies transmitted by telecopier or PDF e-mail, provided the executed originals are forwarded by mail or courier.

(f) Successors and Assigns . Lessees shall not sell, transfer, assign, encumber or, except with Lessor’s prior written consent, sublet or part with possession of the Aircraft or any of Lessees’ rights under this Lease. This Lease shall be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal representatives, successors and assigns; provided, however, that Lessees may not assign any of their rights under this Lease.

(g) No Third Party Rights . Nothing in this Lease whether express or implied, is intended to confer any rights or remedies under or by reason of this Lease on any persons other than the parties to it and their respective successors and assigns, nor is anything in this Lease intended to relieve or discharge the obligation or liability of any third persons to any party to this Lease, nor shall any provision give any third persons any right of subrogation or action over against any party to this Lease.

(h) Survival . All representations, warranties, covenants and agreements of the parties contained in this Lease, or in any instrument, certificate, exhibit, schedule, or other writing provided for in it, shall survive the Lease Term.

(i) Notices . All notices or other communications, which shall or may be given pursuant to this Lease, shall be in writing and shall be delivered by certified mail or registered mail with postage prepaid, return receipt requested, by facsimile transmission or by e-mail or by hand. Such communication shall be deemed given and received upon dispatch, if sent by facsimile (provided confirmation of successful transmission is received by the sending facsimile machine at the time of transmission) or e-mail (provided a transmission error message is not received by sender), or upon delivery if hand delivered, or within three (3) days of mailing, if sent by certified or registered mail, at the addresses of

the parties as set forth in Exhibit “D” attached hereto. Any address for notice to a party may be changed at any time by written notice to the other parties.

(j) Agreement Negotiated . The parties to this Lease are sophisticated and have been represented or had the opportunity to be represented in connection with the negotiation and performance of this Lease. The parties agree that no presumptions relating to the interpretation of contracts against the drafter of any particular clause should or may be applied in this case and, therefore, waive their effects.

(k) Governing Law . The validity of this Lease and the interpretation and performance of all its terms shall be construed and enforced in accordance with the laws of the State of California, as apply to contracts that are executed and performed entirely in California.

(l) Arbitration . Any dispute, claim or controversy of whatever nature arising out of or relating to this Lease or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before one neutral arbitrator. Such arbitrator shall be an attorney licensed to practice law in the United States, actively engaged in the practice of law for at least ten years and having at least five years of experience with and knowledge of business aviation. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rule & Procedures. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid or arbitration from a court of appropriate jurisdiction, or injunctive relief.

(m) Partial Invalidity . If any provision of this Lease is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Lease be construed to remain fully valid, enforceable and binding on the parties.

26. TRUTH-IN-LEASING.

(a) THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS DURING THE TWELVE MONTHS PERIOD (OR PORTION THEREOF DURING WHICH THE AIRCRAFT HAS BEEN SUBJECT TO U.S. REGISTRATION) PRECEDING THE DATE OF EXECUTION OF THIS LEASE AND PRESENTLY COMPLIES WITH APPLICABLE FAA MAINTENANCE AND INSPECTION REQUIREMENTS FOR OPERATION TO BE CONDUCTED UNDER THIS LEASE.

(b) EACH LESSEE CERTIFIES THAT EACH LESSEE, AND NOT LESSOR, IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT WHEN SUCH LESSEE UTILIZES THE AIRCRAFT UNDER THIS LEASE DURING THE LEASE TERM. EACH LESSEE FURTHER CERTIFIES THAT EACH LESSEE UNDERSTANDS HIS OR ITS RESPONSIBILITY FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

(c) EACH LESSEE CERTIFIES THAT THE AIRCRAFT WILL CONTINUE TO BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE. EACH LESSEE UNDERSTANDS THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have each caused this Aircraft Dry Lease to be duly executed as of the day and year first written above.

LESSOR:			LESSEE:

MOELIS & COMPANY MANAGER LLC			KENNETH D. MOELIS

By:	/s/ Ken Moelis	.	/s/ Ken Moelis			.
Name:	Ken Moelis	.
Title:	Managing Member	.

			LESSEE:

			MOELIS & COMPANY GROUP LP

			By:	/s/ Elizabeth Crain	.
			Name:	Elizabeth Crain	.
			Title:	Chief Operating Officer	.

			LESSEE:

			MOELIS ASSET MANAGEMENT LP

			By:	/s/ Osamu Watanabe	.
			Name:	Osamu Watanabe	.
			Title:	General Counsel	.

Exhibit 10.2

COST SHARING AND OPERATING AGREEMENT

THIS COST SHARING AND OPERATING AGREEMENT (this “ Agreement ”) is made and entered into as of September 23, 2014 by and among Kenneth D. Moelis (“ Mr. Moelis ”), a citizen of the United States and a resident of the State of California, Moelis & Company Group LP (“ Group LP ”), a Delaware limited partnership, and Moelis Asset Management LP (“ Management LP ”), a Delaware limited partnership. Mr. Moelis, Group LP, and Management LP are hereinafter also individually referred to as “ Party ” and collectively as “ Parties ”.

W I T N E S S E T H:

WHEREAS, pursuant to that certain Aircraft Dry Lease of even date hereof (the “ Lease ”) by and among Lessor, on the one hand, and the Parties, on the other, the Parties have leased a certain aircraft (as defined in the Lease, the “ Aircraft ”) from Moelis & Company Manager LLC (“ Lessor ”), a Delaware limited liability company;

WHEREAS, there is substantial variation among the Parties in their respective contemplated use of the Aircraft; and

WHEREAS, the Parties wish to memorialize their agreement regarding their utilization of the Aircraft and their sharing and allocation of the lease and operating costs of the Aircraft.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the Parties agree as follow:

1. Use and Operation of the Aircraft .

The Parties agree that each Party shall, from time to time, on a noncontinuous basis, have exclusive use of the Aircraft pursuant to the Lease. The Parties shall coordinate their respective utilization of the Aircraft by giving advance notice to the Service Provider (as defined in Section 4), by telephone, e-mail and/or facsimile, of any proposed use of the Aircraft, including commencing and ending dates of flights and projected destinations. The Party who first gives notice to the Service Provider of a proposed flight shall have the right to use the Aircraft for such noticed flight ( i.e. , on a first-come, first-serve basis). In the event a scheduling conflict should arise, which the Parties cannot mutually resolve after consulting with each other, the Party who first reserved the use of the Aircraft for the particular flight shall have priority. The Parties shall estimate their respective flight hours utilization of the Aircraft during the first twelve (12) consecutive calendar months of this Agreement and shall prepare with the Service Provider an Aircraft budget of the estimated operational expenses for such period. For the purpose of this Agreement, flight hours, or any fraction thereof to the nearest 1/10 hour, shall be measured as recorded by the Flight Management System of the Aircraft.

2. Operational Control of the Aircraft .

Each Party acknowledges and agrees that the Aircraft shall be operated exclusively under Part 91 of the Federal Aviation Regulations (“ FARs ”). Either Mr. Moelis, Group LP or Management LP, as the case may be, when in possession of and using the Aircraft, shall have and retain operational control of the Aircraft as defined in the applicable FARs (FARs § 1.1 General Definitions: Operational control , with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight) during the period of such possession and use by such Party. Likewise, for federal tax purposes, including applicable provisions of the United States Internal Revenue Code, as amended, and the Regulations and rulings promulgated thereunder, either Mr. Moelis, Group LP or Management LP, when in possession of and using the Aircraft, shall have and retain “possession, command and control” of the Aircraft during the period of such possession and use by such Party.

Mr. Moelis, Group LP or Management LP acknowledge and agree that each Party, when operating the Aircraft, shall obtain and utilize duly-qualified, current and type-rated pilots, whose licenses are in good standing, who meet the requirements established and specified by the insurance policies required under the Lease and by the FAA, and who have attended and successfully completed Bombardier’s approved training course for the Aircraft. Mr. Moelis, Group LP or Management LP further expressly acknowledge that, with respect to each Party’s utilization of the Aircraft, solely that Party utilizing the Aircraft (i) shall have the sole discretion and power to designate which pilots fly the Aircraft; (ii) shall have exclusive control and direction over said pilots; and (iii) shall have the power to substitute or otherwise terminate the pilots proposed or supplied by the Service Provider, for and on behalf and at the request of each such Party, and cause other competent duly qualified, current and type rated pilots, who conform to the requirements set forth hereinabove, to be hired for that Party’s respective flights of the Aircraft.

Mr. Moelis, Group LP or Management LP acknowledge and agree that, in accordance with the applicable FARs, the flight crew provided by the Service Provider, for and on behalf and at the request of each Party, and accepted by each such Party or otherwise hired or assigned by each of the Parties in connection with their respective flights, shall have full and exclusive authority to exercise all of its duties and responsibilities in regard to the safety of each flight conducted hereunder. Each Party specifically agrees that the flight crew, in its sole discretion, may terminate any flight, refuse to commence any flight, or take any other such action which, in the considered judgment of the assigned pilot in command, is necessitated by safety considerations. No such action by the pilot in command will create or support any liability for loss, injury, damage or delay to any Party or any other person. The Parties further agree that no Party will be liable for delay or failure to timely furnish or return the Aircraft pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty, war, civil commotion, strikes or labor disputes, weather conditions or acts of God.

3. Compliance with Lease .

Each Party represents to the other that they shall take no action or omit to take any action which shall result in such Party not being in compliance with the terms and conditions of the Lease.

4. Selection of Service Provider .

The Parties agree and consent to select an independent service provider (the “ Service Provider ”), mutually acceptable to the Parties, having substantial expertise and specialization in business aviation and specifically regarding the operations of executive business jet aircraft, for the purpose of providing specialized services with respect to the scheduling, operations and the maintenance of the Aircraft by the Parties during the Lease in accordance with the terms of this Agreement. The Parties shall cause the Service Provider to prepare an annual budget of the estimated costs and expenses associated with the operation of the Aircraft and related activities. Notwithstanding anything to the contrary set forth herein, each Party reserves the right to retain a separate independent service provider by giving written notice to the other Parties, whereupon such Party shall be solely responsible for the fees and expenses charged by such separate service provider.

5. Operating Costs and Allocation .

The Parties agree and accept that, for the purpose of this Agreement and the billing, allocation and payment of the costs associated with the operation of the Aircraft, such costs shall be divided into four categories and paid by the Parties as set forth hereinbelow:

5.1 Fixed Operating Costs .

5.1.1 Definition of Fixed Operating Costs . The Fixed Operating Costs shall be the cost of the following: fixed monthly rentals under the Lease (“ Fixed Rentals ”); insurance; hangar and storage rentals; flight crew personnel as employed and charged by the Service Provider and training of said flight crew personnel (initial and recurrent); a qualified mechanic as employed and charged by the Service Provider and training (initial and recurrent) of said mechanic; cabin attendant(s) as employed and charged by the Service Provider and any specialized training course of said cabin attendant(s); other professional personnel expressly required by the Parties for specialized services in connection with their flight and travel activities and related logistical arrangements; training flights; Service Provider’s management or administrative fees; those scheduled maintenance costs of airframe, engines, thrust reversers and avionics that are not covered by the specific plans and programs set forth under Section 5.2.1 ( i.e ., CorporateCare, MSP and Smart Parts as such terms are defined therein); the fees of the Computerized Maintenance Management System (“ CMMS ”) maintenance tracking system for the Aircraft; maintenance and flight manual subscriptions; software updates; database for Flight Management System; navigation chart services; publications; aeronautical registration fees; property taxes that are the responsibility of the Parties under the Lease, if any; and any other costs and expenses relating directly or indirectly, to the operation of the Aircraft, which are not expressly included under Sections 5.2.1, 5.3.1, and 5.4.1 hereof.

5.1.2 Payment of Fixed Operating Costs . The Parties agree that the Fixed Operating Costs shall be allocated to and paid by the Parties pro rata according to each Party’s utilization of the Aircraft. The Parties shall cause the Service Provider to deliver to each Party, no later than the twentieth (20th) day of each month, a statement of the actual Fixed Operating Costs incurred during the previous month, together with the amount of such costs allocated to each Party based on the estimated annual utilization of the Aircraft, which amount shall be payable by such Party in accordance with Section 6. For the purpose of the preceding sentence, the estimated utilization of the Aircraft by each Party shall be the contemplated utilization of such Party during the first twelve (12) consecutive calendar months of this Agreement for statements delivered prior to October 1, 2015 and such Party’s actual utilization of the Aircraft during the twelve months ended on the immediately preceding September 30 th for statements delivered on or after October 1, 2015 (by way of clarification, the foregoing shall not modify in any manner that the Fixed Operating Costs shall be allocated to and paid by the Parties pro rata according to each Party’s actual utilization of the Aircraft as set forth herein below).

No later than October 20th of each year during the term of this Agreement (or at such time as this Agreement is terminated), the Parties shall cause the Service Provider to deliver to each Party a statement of the aggregate amount of actual Fixed Operating Costs allocated to such Party based on the estimated utilization of the Aircraft for the twelve-month period ended on the preceding September 30 th (or on the termination date of this Agreement) and the aggregate amount of actual Fixed Operating Costs allocable to such Party based on the actual utilization of the Aircraft by the Parties for the twelve-month period ended on the preceding September 30 th (or on the termination date of this Agreement). Any excess of the amount of Fixed Operating Costs allocated over the amount of Fixed Operating Costs allocable shall be credited to such Party and any excess of Fixed Operating Costs allocable over the amount of Fixed Operating Costs allocated shall be payable by such Party in accordance with Section 6.

5.2 Direct Operating Costs .

5.2.1 Definition of Direct Operating Costs . The Direct Operating Costs, for the purposes of this Agreement, shall be the cost of the following: fuel, oil and other lubricants; the service rate per engine flying hour of the Rolls Royce CorporateCare program (“ CorporateCare ”) with respect to the engines; the hourly charges of the Honeywell Maintenance Service Plan (“ MSP ”) with respect to the auxiliary power unit; the hourly usage rate charges of the Bombardier Smart Parts Plus Plan (“ Smart Parts ”) with respect to the airframe and its components and systems; the crew expenses for airline travel, ground transportation, lodging, meals and other similar expenses related to the crew’s activities in connection with the operation of the Aircraft; compensation paid to qualified contract pilot(s) hired for specific flight(s) at the express request of the Party operating the Aircraft for such flight(s); compensation paid to contract cabin attendant(s) hired for specific flight(s) at the express request of the Party operating the Aircraft for such flight(s); compensation paid to other contract professional personnel hired to render specialized services in connection with specific flight and travel arrangements at the express request of the Party operating the Aircraft for such flight(s); weather services; flight service fees; flight planning fees; over flight fees; landing, ramp, parking, tie-down and ground handling fees; de-icing charges; storage and hangar use charges at temporary locations during Aircraft

flights; airport civilian aviation charges; customs and immigration charges; supplies; catering; communication charges, in-flight telephone calls, telecopier and data transmissions; and miscellaneous flight expenses.

5.2.2 Payment of Direct Operating Costs . The Direct Operating Costs incurred with respect to an Aircraft flight shall be paid by the Party utilizing and having operational control of the Aircraft for such flight within the meaning of the FARs Part 91. The Service Provider will issue, no later than the twentieth (20th) day of each month, separate statements directly to each Party for the Direct Operating Costs attributable to that Party’s utilization of the Aircraft.

5.3 Unscheduled Maintenance Costs .

5.3.1 Definition of Unscheduled Maintenance Costs . The Unscheduled Maintenance Costs, for purposes of this Agreement, shall be the cost of the following: compliance with applicable FAA Airworthiness Directives and manufacturers’ Mandatory Service Bulletins, and all those items of unscheduled maintenance which are not included in CMMS and the recommended inspection program of the Aircraft.

5.3.2 Payment of Unscheduled Maintenance Costs . Any cost of Unscheduled Maintenance Costs shall be allocated to and paid by the Parties pro rata according to each Party’s utilization of the Aircraft since the commencement date of this Agreement to the date such cost is incurred.

5.4 Nonrecurring Costs .

5.4.1 Definition of Nonrecurring Costs . The Nonrecurring Costs, for the purposes of this Agreement, shall be the cost of the following: customary and routine refurbishments, improvements, upgrades and similar modifications, additions and alterations to the Aircraft, its engines and avionics, as permitted in accordance with the terms and conditions of the Lease.

5.4.2 Payment of Nonrecurring Costs . Prior to incurring any Nonrecurring Costs, the Parties shall consult with each other and approve the anticipated expenditure. The cost of such Nonrecurrent Costs shall be allocated to and paid by the Parties pro rata according to each Party’s utilization of the Aircraft since the commencement date of this Agreement to the date such cost is incurred.

6. Bank Account and Payments .

The Parties agree to pay all amounts shown as due in accordance with this Agreement on statements from the Service Provider within seven (7) days from receipt of such statements, by depositing such sums directly into a trust account established by the Service Provider at a bank approved by the Parties (the “ Trust Account ”).

7. Operating Costs Deposit .

As a deposit toward the monthly payments of the costs and expenses associated with the operation of the Aircraft, the Parties shall deposit or cause to be

deposited into the Trust Account on or around the date of the delivery of the Aircraft to the Parties, an amount determined and mutually agreed with the Service Provider (the “ Operating Costs Deposit ”), which shall be credited among the Parties pro rata based upon their respective utilization of the Aircraft during the first twelve (12) consecutive calendar months of this Agreement. The Service Provider, within twenty days after the end of each month, shall furnish each Party with a statement detailing all credits and debits to the Trust Account for the preceding month, without consideration of the amount of the Fixed Operating Costs Deposit. Within seven days of receipt of such statement, each Party shall reimburse the Trust Account by the amount that the debits exceed the credits for such Party.

8. Indemnification .

8.1 Scope of Indemnification . Each Party shall indemnify the other Party (the “ Indemnitee ”) from and against any all claims, demands, liabilities, costs (including without limitation, attorneys’ fees and costs), expenses, damages, losses, suits, proceedings and actions, whether judicial, administrative, investigative or otherwise, of any nature whatsoever, known or unknown, liquidated or unliquidated, that may be incurred by the Indemnitee or in which the Indemnitee may become involved, arising out of such Party’s breach of this Agreement or operation of the Aircraft in any manner or for any purpose excepted from coverage under the insurance maintained by the Parties pursuant to the terms of the Lease.

8.2 Cumulative Rights . The right of any Indemnitee to the indemnification provided in this Section 8 shall be in addition to any rights such Indemnitee may otherwise be entitled by contract or as a matter of law or equity and shall extend to such Indemnitee’s successors, assigns and legal representatives.

9. Relationship of the Parties .

The Parties intend this Agreement to provide solely for the sharing of the costs of the lease and operation of the Aircraft. The Parties do not intend to form a partnership under any laws, including the laws of the State of California or the United States of America, any of its states, or the laws of any other jurisdiction. Nothing contained in this Agreement shall in any way create any association, partnership, joint venture, or principal and agent relationship between or among the Parties hereto or be construed to evidence the intention of the Parties to constitute such.

10. Termination .

This Agreement shall terminate and all rights and obligations of the Parties under this Agreement shall cease upon the termination of the Lease or upon the written consent of the parties, subject, however, to each of the Parties promptly settling any outstanding amounts due or receiving reimbursement of any amounts to be credited pursuant to the provisions of Section 5.

11. Miscellaneous .

11.1 Section Headings . Section and other headings and captions contained in this Agreement are for reference purposes only and are in no way intended to interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof.

11.2 Counterpart Originals . This Agreement and any amendment hereto may be executed in any number of counterparts with the same effect as if the Parties hereto had signed the same document; provided, however, that the counterparts in the aggregate shall have been executed by all of the Parties hereto. All counterparts shall be construed together and shall constitute one and the same instrument. The Parties may exchange executed copies transmitted by telecopier or PDF e-mail, provided the executed originals are forwarded by mail or courier.

11.3 Agreement Negotiated . The Parties to this Agreement are sophisticated and have been represented or had the opportunity to be represented in connection with the negotiation and performance of this Agreement. The Parties agree that no presumptions relating to the interpretation of contracts against the drafter of any particular clause should or may be applied in this case and, therefore, waive their effects.

11.4 Governing Law . The Parties agree that the provisions of this Agreement shall be construed and enforced according to the laws of California regardless of the choice of laws provisions of California or any other jurisdiction.

11.5 Arbitration . Any dispute, claim or controversy of whatever nature arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, California before one neutral arbitrator. Such arbitrator shall be an attorney licensed to practice law in the United States, actively engaged in the practice of law for at least ten years and having at least five years of experience with and knowledge of business aviation. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rule & Procedures. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid or arbitration from a court of appropriate jurisdiction, or injunctive relief.

11.6 Severability . If any provision in this Agreement is found by a court of competent jurisdiction to be illegal, invalid, unlawful, void, or unenforceable, then such provision shall be enforced to the extent that it is not illegal, invalid, unlawful, void or unenforceable, and the remainder of this Agreement shall continue in full force and effect.

11.7 Prior Agreements . This Agreement contains all of the agreements of the Parties hereto with respect to any matter covered or mentioned in this Agreement, and no prior agreement or understanding, oral or written, express or implied, pertaining to any such matter shall be effective for any purpose. The Parties acknowledge that all such prior agreements, representations and negotiations are deemed superseded by the execution of this Agreement to the extent they are not incorporated herein.

11.8 Modifications . This Agreement may only be modified if the modification is in writing and is signed by the Party against whom enforcement is sought.

11.9 Remedies Cumulative . Each right, power and remedy provided for in this Agreement or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Agreement or now or hereafter existing at law, in equity, by statute or otherwise, and the exercise or beginning of the exercise of the forbearance of exercise by any Party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by such Party of any or all of such other rights, powers or remedies.

11.10 Waiver . No consent or waiver, express or implied, by any Party to or of any breach or default by any other Party in the performance of obligations under this Agreement shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party. Failure on the part of any Party to complain of any act or failure to act by any other Party or to declare any other Party in default, irrespective of how long such failure continues, shall not constitute a waiver by any Party of its rights under this Agreement.

11.11 Notices . All notices or other communications, which shall or may be given pursuant to this Agreement, shall be in writing and shall be delivered by certified mail or registered mail with postage prepaid, return receipt requested, by facsimile transmission or by e-mail or by hand. Such communication shall be deemed given and received upon dispatch, if sent by facsimile (provided confirmation of successful transmission is received by the sending facsimile machine at the time of transmission) or e-mail (provided a transmission error message is not received by sender), or upon delivery if hand delivered, or within three (3) days of mailing, if sent by certified or registered mail, at the addresses of the parties as set forth in Exhibit “A” attached hereto. Any address for notice to a party may be changed at any time by written notice to the other parties.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the Parties have executed this Cost Sharing and Operating Agreement as of the day and year first above written.

KENNETH D. MOELIS

/s/ Ken Moelis		.


MOELIS & COMPANY GROUP LP

By:	/s/ Elizabeth Crain	.
Name:	Elizabeth Crain	.
Title:	Chief Operating Officer	.


MOELIS ASSET MANAGEMENT LP

By:	/s/ Osamu Watanabe	.
Name:	Osamu Watanabe	.
Title:	General Counsel	.

Exhibit 10.3

Employment Agreement

This Employment Agreement (the “ Agreement ”), dated as of August 27, 2014 (the “ Effective Date ”), is made by and between Moelis and Company Group LP (together with any successor thereto, the “ Company ”) and Eric Cantor (the “ Executive ”).

1. Employment .

(a) General . On or about September 1, 2014, the Company will employ the Executive, and the Executive accepts employment with the Company, on the terms and conditions herein provided (the date the Executive starts employment, the “ Start Date ”). The Executive will have his primary office in New York, NY and Washington, DC.

(b) At-Will Employment . The Executive’s employment with the Company will be “at-will” employment and either party may terminate it at any time with or without “ Cause ” or “ Good Reason ” (each as defined in the Company’s 2014 Omnibus Plan). The Company may terminate the employment of the Executive at any time without notice and without Cause; provided that such termination shall be effective no later than 90 days after it gives any notice. Neither the Executive’s job performance nor promotions, commendations, bonuses or any other positive treatment by the Company give rise to or in any way serve as the basis for modification or amendment of the at-will nature of the employment. The period of the Executive’s employment with the Company under this Agreement is the “ Employment Period ”.

(c) Position and Duties . The Executive shall serve as a Vice Chairman and Managing Director of the Company with such customary responsibilities, duties and authority as the Company and the Company’s Chief Executive Officer may from time to time assign to the Executive. Except as the Company otherwise approves in writing, the Executive shall devote his full business time and efforts to the business and affairs of the Company (which may include service to the Company’s affiliates) and, during the Employment Period, shall not undertake any additional activities without the advance approval of the Company; provided the Company will not unreasonably withhold its consent to political, speaking and charitable activities to the extent that such activities would not (i) conflict or materially interfere with the Executive’s performance of his duties hereunder and/or (ii) create potential conflict or client issues for the Company. The Executive agrees to observe and comply with the rules and policies of the Company as adopted by the Company from time to time.

(d) Board Seat . Moelis & Company Partner Holdings LP agrees to nominate the Executive and to vote and take all other actions to elect the Executive to the Board of Directors of Moelis & Company and agrees not to allow the removal (other than as a result of the termination of the Executive’s employment by the Executive or the Company) until the 2015 annual meeting for the election of Directors, when all Directors will be up for re-election.

(e) Registration Requirements . In order to function as a Managing Director of the Company, the Executive must be and remain registered as a general securities representative in the Executive’s work location and have passed the Series 79 examinations. The Company will work with the Executive to seek a waiver of the Series 79 if possible. Absent a waiver, the Executive will obtain Series 79 registration within 90 days from the Executive’s Start Date.

2. Compensation and Related Matters .

(a) Base Salary . During the Employment Period, the Company will pay the Executive base compensation (“ Base Salary ”) equal to $400,000 annually, paid in semi-monthly installments in

accordance with the customary payroll practices of the Company, subject to adjustment, if and as determined by the Board provided any reduction shall be applicable generally to a majority of Managing Directors of the Company.

(b) Annual Incentive Compensation . During the Employment Period, the Executive will be eligible for an annual discretionary performance bonus, subject to the satisfaction of the Company with the performance of the Executive. The Company will pay any such annual discretionary performance bonus at the same time or times and subject to the same conditions (such as repayment upon the Executive’s resignation prior to specified dates) as payments to other Managing Directors in the United States generally.

Initial Cash Award . The Company will pay the Executive an initial incentive cash award of $400,000 (the “ Initial Incentive Cash Award ”) in the first payroll payment following his Start Date.

Initial Restricted Stock Unit Award . On the Start Date, the Company will grant the Executive Initial Restricted Stock Units (“ Initial RSUs ”) in the amount of $1,000,000. For purposes of the foregoing, the value of Initial RSUs will be based on the average closing price (the “ Start Date Price ”) of the Company’s common stock on the 5 trading days prior to the Start Date. The Initial RSUs will vest as follows: 1/3 of the Initial RSUs shall vest on the 3 rd anniversary of the Start Date, 1/3 on the 4 th anniversary of the Start Date, and 1/3 on 5 th anniversary of the Start Date (each a “ Vesting Date ”). If (i) the Executive notifies the Company of his intent to terminate his employment (or engagement as a consultant or otherwise) in the business of the Company and/or its affiliates other than (x) for Good Reason (as defined in the 2014 Omnibus Incentive Plan) or (y) notification after the second anniversary of his Start Date, to take a full-time elected or appointed position in federal government, state government, or national political party or (ii) the Company notifies the Executive that it intends to terminate his employment (or engagement) for Cause (as defined in the 2014 Omnibus Incentive Plan), the Executive shall forfeit any unvested Initial RSUs. If the Company terminates the Executive without Cause or the Executive notifies the Company of his intent to terminate his employment (or engagement) for Good Reason or for notification after the second anniversary of his Start Date, to take a full-time elected or appointed position in federal government, state government, or national political party, the Executive shall be entitled to continue to vest the Initial RSUs on the above vesting schedule subject to not engaging in any Detrimental Activities (as defined in the Initial RSU Notice and Statement of Terms and Conditions); provided in the case of notification by the Executive after the second anniversary of his Start Date to take a full-time elected or appointed position in federal government, state government, or national political party, if applicable ethics rules for such position prohibit ownership of the unvested Initial RSUs, such Initial RSUs shall vest as of the Executive’s commencement of such position. The Initial RSUs shall be subject to the terms and conditions of the 2014 Omnibus Incentive Plan and the Notice and Statement of Terms and Conditions.

2015 Annual Incentive Compensation . For calendar year 2015, the Executive will receive guaranteed incentive compensation of US$1,600,000 comprised of US$1,200,000 cash and a grant of Incentive Restricted Stock Units (the “ Incentive RSUs ”) in the amount of US$400,000 (together the “ Guaranteed Bonus ”). The Company will pay the cash portion of the Guaranteed Bonus in four equal installments at or about the end of each quarter subject to the same conditions (such as repayment upon the Executive’s resignation prior to specified dates) as payments of 2015 incentive compensation generally to other Managing Directors in the United States. The Company will grant the Incentive RSUs in four equal grants at or about the end of each quarter with the same vesting schedule as payments of 2014 Incentive RSUs generally to other Managing Directors in the United States. The Incentive RSUs shall be subject to the terms and conditions of the 2014 Omnibus Incentive Plan and the Notice and Statement of Terms and Conditions for the Incentive RSUs;

provided if after the second anniversary of the grant date, the Executive notifies the Company of his intent to terminate his employment to take a full-time elected or appointed position in federal government, state government, or national political party, the Executive shall be entitled to continue to vest the Incentive RSUs on their vesting schedule subject to not engaging in any Detrimental Activities (as defined in the Incentive RSU Notice and Statement of Terms and Conditions); provided if applicable ethics rules for such position prohibit ownership of the unvested Incentive RSUs, such Incentive RSUs shall vest as of the Executive’s commencement of such position.

2016 Incentive Compensation . For calendar year 2016, the Executive will be eligible for a discretionary performance bonus, subject to the satisfaction of the Company with the performance of the Executive. The Company will pay any such discretionary performance bonus quarterly, subject to the same conditions (such as repayment upon the Executive’s resignation prior to specified dates) as payments to 2016 incentive compensation to other Managing Directors in the United States generally.

Cash Repayment Obligation . In connection with the Executive’s Initial Cash Award and 2015 and 2016 cash incentive bonus , if (a) (i) the Executive notifies the Company of his intent to terminate his employment (or engagement as a consultant or otherwise) other than for Good Reason or for notification after the second anniversary of the payment date, to take a full-time elected or appointed position in federal government, state government, or national political party , or (ii) the Company notifies the Executive that it intends to terminate his employment (or engagement) for Cause (each a “ Termination Notice ”) and (b) within 12 months following such termination, the Executive provides services to or engages in any Competitive Enterprise (as defined in Section 4(c)), the Executive shall, prior to providing any such services, repay to the Company the percentage (the “ Repayment Percentage ”) of his Initial Cash Award and his 2015 and 2016 cash bonus (including any cash portion of the Guaranteed Bonus) set forth in the following table:

Period in which the Executive or the Company gives a Termination Notice and within 12 months of such notice the Executive provides services to or engages in a Competitive Enterprise	Repayment Percentage
During the quarter of the payment and the next four quarters	100	%
During fifth quarter following the payment quarter	75	%
During sixth quarter following the payment quarter	50	%
During seventh quarter following the payment quarter	25	%
During eighth quarter or later following the payment quarter	0	%

(c) Benefits . To the extent permitted under the terms thereof, the Executive shall be entitled to participate in employee benefit plans, programs and arrangements of the Company, as in effect from time to time, including the Company’s medical and dental insurance plans and 401(k) plan that apply to similarly situated executive employees of the Company.

(d) Expenses . The Company shall reimburse the Executive for all reasonable travel and other business expenses properly incurred in the performance of the Executive’s duties to the Company and in accordance with the Company’s expense reimbursement policies. In particular, the Company will reimburse the Executive for the reasonable cost of an apartment in New York for the first twelve

months of his employment. After the first twelve months, the Company will reimburse the Executive for the hotel equivalent rate per night that he uses the apartment while in New York on business.

(e) Vacation . The Executive shall be entitled to paid vacation in accordance with the Company’s vacation policies applicable to executives of the Company. The Executive will take vacation at his and the Company’s reasonable and mutual convenience.

3. Termination .

(a) Notice of Termination by Executive . It is reasonable and necessary to provide a smooth transition if the Executive chooses to leave the Company. Consequently, the Executive agrees to provide the Company with 90 days prior written notice of his intent to terminate his employment (the “ Notice Period ”); provided that such Notice Period will not apply if the Executive terminates his employment for Good Reason (as defined in Section 3(d) below). The Company may elect to place the Executive on paid leave for all or any part of such Notice Period. Notwithstanding anything to the contrary in this paragraph, in the event the Executive is terminating his employment to run for a full-time elected position or to accept a full-time appointed position, in each case in federal government, state government or in a national political party, the Notice Period will be 30 days (instead of 90 days) prior written notice of the Executive’s intent to terminate, and the Company may elect to waive such Notice Period.

(b) Effect of Notice of Termination . If on or prior to the date any incentive compensation is paid or any equity interests vests, the Executive gives notice of his intent to terminate his employment (or engagement as a consultant or otherwise) in the business of the Company and/or its affiliates (other than for Good Reason), the Executive shall not be entitled to receive any such incentive compensation and shall forfeit any such unvested equity interests. If on or prior to the date any incentive compensation is paid, the Company terminates the Executive’s employment (or engagement), the Executive shall not be entitled to receive any such incentive compensation.

4. Restrictive Covenants .

(a) Non-Compete . Except as the Company otherwise agrees, the Executive shall not during the Employment Period and, if the Executive terminates his employment under this agreement other than for Good Reason for 90 days thereafter, directly or indirectly provide services to, engage in, have any equity interest in, or manage or operate any Competitive Enterprise (as defined below); provided , however , that the Executive shall be permitted to acquire a passive equity interest in such a Competitive Enterprise provided (i) the Executive notifies the Company of any such investment in accordance with the Company’s notification policies in effect from time to time and (ii) the interest acquired is not more than five percent (5%) of such Competitive Enterprise’s outstanding equity interests.

(b) Non-Solicit . During the Employment Period and for a period of twelve months following immediately after the termination or expiration of the Employment Period, the Executive shall not, directly or indirectly, recruit or otherwise solicit, encourage or induce any limited partner, employee, independent contractor, consultant, service provider or supplier of the Company (i) to terminate his, her or its employment or arrangement with the Company, or (ii) to otherwise change his, her or its relationship with the Company; provided that this Non-Solicit covenant shall not apply to Kristi Way or Kristin Young.

(c) “Competitive Enterprise” . “ Competitive Enterprise ” means any business enterprise that is engaged, or owns or controls a significant interest in any entity that is engaged, in either case, primarily or in

any substantial manner in any place in the world in (x) investment banking or securities activities or financial services, including, without limitation, private equity, hedge fund or other asset or investment management businesses, or (y) any business activities in which the Company and/or its affiliates are engaged primarily or in any substantial manner; in each case excluding Moelis Asset Management LP and its affiliates.

(d) Non-Disparagement . Except pursuant to Section 5(c), the Executive agrees that, during the Employment Period and at all times thereafter, he will not disparage in any material respect the Company, any of its products or practices, or any of its directors, officers, agents, representatives, stockholders or affiliates, either orally or in writing.

5. Nondisclosure of Proprietary Information .

(a) Except in connection with the good faith performance of the Executive’s duties hereunder or pursuant to Section 5(c) , the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets or intellectual property of, from or relating to the Company (including, without limitation, information, documents, techniques or other know-how or materials owned, developed or possessed by the Company, whether in tangible or intangible form, the terms of this Agreement, any information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, investment performance, “track record,” finances, principals, business partners, investors, clients, personnel, strategic planning, portfolio investments and/or companies, service providers, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, prospects, and any and all information of any nature relating to the Company and its affiliates, including any vehicle(s) formed in connection therewith or as a successor thereto) (collectively, “ Proprietary Information ”), or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The foregoing matters are important, material and confidential proprietary information and trade secrets and affect the successful conduct of the businesses of the Company (and any successor or assignee of the Company). Notwithstanding the foregoing, Proprietary Information does not include information that (i) becomes publicly available (other than by disclosure or other wrongful act by the Executive), (ii) is contained in a publicly available document, (iii) was known to the Executive before the Executive commenced employment with the Company, or (iv) is required to be disclosed by law. The Executive acknowledges that it is reasonable and necessary for the Company to take these reasonable steps to maintain the confidentiality of its Proprietary Information.

(b) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, computer disk drives, flash drives, disks, or any other materials concerning the Proprietary Information in his possession.

(c) The Executive may comply with a lawful and valid subpoena or other legal process but shall: (i) give the Company the earliest possible notice thereof, (ii) as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and (iii) assist such counsel at Company’s expense in resisting or otherwise responding to such process.

(d) Nothing in this Agreement shall prohibit the Executive from (i) disclosing information and documents when required by law, subpoena or court order (subject to the requirements of Section 5(c)

above), (ii) disclosing information and documents to his attorney or tax adviser for the purpose of securing legal or tax advice, (iii) disclosing the post-employment restrictions in this Agreement in confidence to any potential new employer, or (iv) retaining, at any time, his personal correspondence, his personal rolodex and documents related to his own personal benefits, entitlements and obligations.

6. [Omitted] .

7. Injunctive Relief .

The Executive understands that that a breach of the covenants contained in Sections 4 and 5 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Sections 4 and 5 , in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief, without having to post a bond or other surety. The Executive agrees not to raise as a defense or objection to the request or granting of such relief that the Executive could compensate the Company for a breach of this Agreement by an award of money damages, and the Executive waives any requirements for the securing or posting of any bond in connection with such remedy.

8. Assignment and Successors .

The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. The Executive may not assign, delegate or transfer any of the Executive’s rights or obligations, other than the Executive’s rights to payments hereunder, which may be transferred only by will or operation of law. Notwithstanding the foregoing, the Executive shall be entitled, to the extent permitted under applicable law and the applicable benefit plans, programs and arrangements described under Section 2(c) , to select and change a beneficiary or beneficiaries to receive compensation hereunder following his death by giving written notice thereof to the Company.

9. Governing Law .

This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the state of Delaware, without reference to the principles of conflicts of law or choice of law of the state of Delaware, or any other jurisdiction, and where applicable, the laws of the United States.

10. Notices .

Any notice, request, claim, demand, document or other communication hereunder to either party shall be effective upon receipt (or refusal of receipt) and shall be in writing and (a) delivered personally to the person or to an officer of the person to whom the same is directed, (b) sent by facsimile, overnight mail or registered or certified mail, return receipt requested, postage prepaid, or (c) sent by email, with electronic, written or oral confirmation of receipt, in accordance with the following sentence. Such communication, in the case of the Company, shall be mailed to its principal office, and in the case of the Executive: (i) if the Executive is then employed by the Company, shall be emailed to the Executive at the Executive’s

“@moelis.com” email address, and (ii) if the Executive is no longer employed by the Company, shall be mailed to the Executive’s most recent home address or emailed to the Executive’s most recently disclosed personal email address, in either case as the Executive has provided the Company in writing.

11. Counterparts .

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile, email or in PDF format shall be deemed effective for all purposes.

12. Entire Agreement .

This Agreement is intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and supersede all prior understandings and agreements, whether written or oral. The parties further intend that this Agreement shall constitute the complete and exclusive statement of the terms of this Agreement and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

13. Amendments; Waivers .

This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company. By an instrument in writing similarly executed, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties with any specifically identified provision of this Agreement that such other party was or is obligated to comply with or perform; provided , however , that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity. Except as otherwise set forth in this Agreement, the respective rights and obligations of the parties under this Agreement shall survive any termination of the Executive’s employment.

14. Construction .

This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party shall not apply.

15. Arbitration .

(a) Except as expressly provided in clauses (b) or (c) below, if any claim, controversy or dispute arises in connection with this Agreement, Executive’s employment by the Company or any termination thereof, the Company and the Executive agree to final and binding arbitration administered by JAMS or any successor organization or body thereto pursuant to its Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness, with the exception that the Executive and the Company agree that no depositions will be taken, except if ordered by the arbitrator due to extraordinary circumstances. The arbitration hearing will take place at the JAMS hearing site located nearest to the Company’s office at which the Executive is providing services or was providing services as of the date his employment or other relationship terminated. Any such arbitration shall be before one arbitrator, who shall be a former judge, selected in accordance with the rules described above.

This agreement to arbitrate disputes includes, but is not limited to, any claims of discrimination and/or harassment under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, claims for breach of contract or the implied covenant of good faith and fair dealing, tortious conduct (whether intentional or negligent), including claims of misappropriation, fraud, conversion, interference with economic advantage or contract, breach of fiduciary duty, misrepresentation, or any other federal, state or local law relating to discrimination in employment, any claims relating to wage and hour claims and any other statutory or common law claims. In the course of any arbitration, the employee and the Company agree: (1) to request that a written award be issued by the arbitrator(s); (2) that each side is entitled to receive any and all relief they would be entitled to receive in a court proceeding; and (3) that the Executive will not be required to pay any fees in the arbitration that are greater than the fees the Executive would be required to pay in a court proceeding. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction.

(b) The Executive and the Company knowingly and voluntarily agree to waive any rights that might otherwise exist to request a jury trial or other court proceeding, except that the Executive and the Company agree that each has the right to seek injunctive or other equitable relief from a court with respect to the enforcement of any obligations the Executive may have regarding any notice period the Company is entitled to, trade secrets, confidential information, non-solicitation of employees, consultants or independent contractors, non-solicitation of clients or customers, non-competition, inventions, work product or other intellectual property and non-disparagement (whether such obligations arise pursuant to this Agreement, any employee handbook, any confidentiality and/or restrictive covenant agreement, the common law or otherwise).

(c) Any claims filed by the parties in arbitration must be brought in the parties’ individual capacity and not as a plaintiff or class member in any purported class, collective or representative proceeding. In the event that the preceding sentence is ruled to be unenforceable, any such purported class, collective or representative proceeding must be heard in court and not in arbitration.

(d) Each provision of this arbitration agreement is intended to be severable, and the invalidity or unenforceability of any portion or provision of this agreement shall not affect the validity, enforceability or legality of the remainder hereof. In the event any provision of this arbitration policy is determined by any court of competent jurisdiction or arbitrator(s) to be illegal, invalid or unenforceable as written, such provision shall be interpreted so as to be legal, valid and enforceable to the fullest extent possible under applicable law. In the event any provision of this arbitration policy is determined by a court of competent jurisdiction or arbitrator(s) to be void, the remaining provisions of this arbitration policy shall nevertheless be binding upon the parties with the same effect as though the void provision thereof had been severed and deleted.

16. Enforcement .

If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

17. Executive Acknowledgement .

The Executive acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment. The Executive further acknowledges that, immediately prior to entering into this Agreement, the Executive is not bound by any noncompetition, nondisclosure, confidentiality, employment or other agreements (collectively, “ Other Agreements ”) which would prevent or restrict the performance of the Executive’s duties hereunder, that by entering into this Agreement the Executive will not be in breach of any Other Agreements or cause the Company to incur any liability with respect to any Other Agreements, and that the Executive shall indemnify and hold harmless the Company with respect to any liability arising from the breach of any Other Agreements. The Executive further acknowledges that this Agreement is confidential as are all the terms and conditions expressed herein and that the Agreement and such terms and conditions may not be disclosed by the Executive in any manner or form to any party, other than as required by applicable law, as necessary to enforce the terms of this Agreement or to the Executive’s spouse, attorney and/or tax advisor (if any), without the prior written approval of the Company. The Executive further acknowledges that the Executive will be bound by the terms and conditions contained in the Company’s employee handbook, as it may be amended from time to time and will, upon request of the General Partner, sign a copy thereof from time to time.

18. Section 409A .

It is the intent of the parties that the payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance issued thereunder (“ Section 409A ”) (except to the extent exempt as short term deferrals or otherwise) and accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. In the event that following the Effective Date the Company reasonably determines that any compensation or benefits payable under this Agreement may be subject to Section 409A, the Company and Executive shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to exempt the compensation and benefits payable under this Agreement from Section 409A and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement or any other arrangement between the Executive and the Company or its affiliates during the six-month period immediately following the Executive’s separation from service shall instead be paid on the first business day after the date that is six months following the Executive’s separation from service (or, if earlier, the Executive’s date of death). To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to the Executive under this Agreement shall be paid to the Executive on or before the last day of the year following the year in which the expense was incurred, and the amount of expenses eligible for reimbursement (and in kind benefits provided to the Executive) during one year may not affect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments and benefits described in this Agreement will be exempt from or comply with Section 409A and, except to the extent provided in this Section 18, makes no undertaking to preclude Section 409A from applying to any such payment. The Executive shall be solely responsible for the payment of any taxes and penalties incurred under 409A or any other provision of the Code.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

	COMPANY

	Moelis & Company Group LP


	By:	/s/ Elizabeth Crain
	Name: Elizabeth Crain
	Title: Chief Operating Officer


	EXECUTIVE


	/s/ Eric Cantor
	Eric Cantor

Moelis & Company Partner Holdings LP agrees to Section 1(d) “Board Seat” set forth above.

Moelis & Company Partner Holdings LP
By its General Partner Moelis & Company Holdings GP LLC


By:	/s/ Elizabeth Crain
Name: Elizabeth Crain
Title: Chief Operating Officer

Exhibit 10.4

FIRST AMENDMENT TO THE

AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP

MOELIS & COMPANY GROUP LP

a Delaware limited partnership

This FIRST AMENDMENT (this “Amendment”) is made by the undersigned as of November 7, 2014 to amend the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) of Moelis & Company Group LP, a Delaware limited partnership (the “Partnership”), dated as of April 15, 2014, by and among Moelis & Company Group GP LLC, a Delaware limited liability company, as the sole general partner (the “General Partner”), Moelis & Company, a Delaware corporation (the “Special Limited Partner”), and the Limited Partners (as defined therein) (the “Limited Partners” and, together with the General Partner, the “Partners”)

W I T N E S S E T H:

WHEREAS , in accordance with the terms of the Partnership Agreement, the Partners desire to amend the Partnership Agreement as described herein and agree to the related actions described herein;

WHEREAS , the requisite Consents of the Partners to this Amendment have been obtained in accordance with the terms of the Partnership Agreement; and

WHEREAS , except to the extent expressly further amended by this Amendment, the Partnership Agreement remains in full force and effect.

NOW, THEREFORE , in consideration of the mutual promises and obligations contained herein, the Partners, intending to be legally bound, hereby agree as follows:

ARTICLE 1. DEFINITIONS

Capitalized terms that are used but not defined in this Amendment shall have the meanings ascribed to such terms in the Partnership Agreement.

ARTICLE 2. AMENDMENT

Section 14.2(a) . Section 14.2(a) of the Partnership Agreement shall be deleted in its entirety and the following shall be inserted in lieu thereof:

“(a) Subject to Section 14.2(c), the Special Limited Partner shall use its reasonable best efforts, at its sole expense, to file with the Commission:

(i) as soon as practicable after the Company becomes eligible to file a shelf-registration statement on Form S-3, a shelf registration statement on Form S-3 (or, if the Special Limited Partner elects, such other form under the Securities Act then available to the Special Limited Partner) providing for (a) the exchange, from time to time, of all Partnership Class A Common Interests held by any Former Common Holder (or its Substituted Limited Partner) and all Partnership Class A Common Interests not the subject of clause (a) of the definition of Lock-Up Partnership Interests for Class A Shares and (b) the resale, pursuant to Rule 415 under the Securities Act from time to time, of such Class A Shares received upon such exchange by such Holders; and

(ii) within three (3) months following the fourth (4 th ) anniversary of the IPO Closing Date, a shelf registration statement on Form S-3 (or, if the Special Limited Partner elects, such other form under the Securities Act then available to the Special Limited Partner) providing for (a) the exchange, from time to time, of all Partnership Class A Common Interests held by any Holder of Lock-Up Partnership Interests for Class A Shares and (b) the resale, pursuant to Rule 415 under the Securities Act from time to time, of such Class A Shares received upon such exchange by such Holders.

The Special Limited Partner will notify the General Partner, within five (5) business days after the date on which a shelf registration statement is first filed with the Commission pursuant to this Section 14.2 , of the filing. The Special Limited Partner will use its commercially reasonable efforts to cause each such shelf registration statement to be declared effective by the Commission as soon as reasonably practicable after such filing, subject to Section 14.2(c). The Special Limited Partner further agrees to prepare and file with the Commission such amendments and supplements to each such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective, subject to Section 14.2(c), until all Registrable Securities included in such

registration statement have been sold thereunder in accordance with the method of distribution set forth therein and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition or Rule 144 under the Securities Act (or any successor rule). ”

Section 14.2(c) . Section 14.2(c) of the Partnership Agreement shall be deleted in its entirety and the following shall be inserted in lieu thereof:

“(c) Notwithstanding anything to the contrary contained in this Agreement, the Special Limited Partner shall be entitled, from time to time, by providing written notice to the General Partner, (i) to require such Holders to suspend the use of the prospectus for sales of Registrable Securities under any registration statement filed pursuant to this Section 14.2 for a reasonable period of time not to exceed, with respect to such registration statement, 90 days in succession or 180 days in the aggregate in any 12-month period (a “ Suspension Period ”), and (ii) to postpone the filing of any shelf registration statement pursuant to Section 14.2(a) , in each case, if the Special Limited Partner shall determine that it is required to disclose in any such registration statement a financing, acquisition, corporate reorganization or other similar transaction or other material event or circumstance affecting the Special Limited Partner or its securities, and that the disclosure of such information at such time would be detrimental to the Special Limited Partner or the holders of its equity securities.

In the case of a suspension pursuant to clause (i) above, immediately upon receipt of such notice, the applicable Holders shall suspend the use of any such prospectus until the requisite changes to such prospectus have been made as required below. Any Suspension Period shall terminate at such time as the public disclosure of such information is made. After the expiration of any Suspension Period and without any further request from a Holder, the Special Limited Partner shall as promptly as reasonably practicable prepare a post-effective amendment or supplement to the applicable registration statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

In the case of a postponement pursuant to clause (ii) above, the Special Limited Partner shall use its reasonable best efforts to file such shelf registration statement within 90 days after such time as the public disclosure of such information is made.”

ARTICLE 3. EFFECTIVENESS OF AMENDMENT

This Amendment shall be effective upon execution by the General Partner. From and after the date hereof, each reference to the Partnership Agreement in any other instrument or document shall be deemed a reference to the Partnership Agreement as amended hereby unless the context otherwise requires.

ARTICLE 4. EFFECTIVENESS OF AMENDMENT

4.1 No Other Amendments . The Partnership Agreement has not been amended other than by this Amendment and, as amended by this Amendment, the Partnership Agreement is and remains in full force and effect. In the event of any conflict between this Amendment and the Partnership Agreement, the terms of this Amendment shall prevail.

4.2 Governing Law . This Amendment shall be construed in accordance with and governed by the laws of the State of Delaware (without regard to principles of conflicts of laws) to the extent not preempted by applicable Federal law.

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first set forth above.

	Moelis & Company Group GP LLC

	By: Moelis & Company, its sole member


	By:	/s/ Osamu Watanabe
	Name:	Osamu Watanabe
	Title:	General Counsel

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Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth Moelis, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q for the period ending September 30, 2014 of Moelis & Company as filed with the Securities and Exchange Commission on the date hereof;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and have:

a.: designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.: [paragraph omitted in accordance with the Exchange Act Rule 13a-14(a)];
c.: evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.: disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and to the audit committee of the registrant's board of directors:

a.: all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


November 7, 2014		/s/ KENNETH MOELIS Kenneth Moelis Chief Executive Officer

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Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Simon, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q for the period ending September 30, 2014 of Moelis & Company as filed with the Securities and Exchange Commission on the date hereof;

2.

3.

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and have:

a.: designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.: [paragraph omitted in accordance with the Exchange Act Rule 13a-14(a)];
c.: evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.: disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

a.: all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


November 7, 2014		/s/ JOSEPH SIMON Joseph Simon Chief Financial Officer

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Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Kenneth Moelis, Chief Executive Officer of Moelis & Company (the "Company"), certifies with respect to the Quarterly Report of the Company on Form 10-Q for the quarterly period ended September 30, 2014 (the "Report") that, to the best of his knowledge:

(1): The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2): The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


November 7, 2014		/s/ KENNETH MOELIS Kenneth Moelis Chief Executive Officer

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Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Joseph Simon, Chief Financial Officer of Moelis & Company (the "Company"), certifies with respect to the Quarterly Report of the Company on Form 10-Q for the quarterly period ended September 30, 2014 (the "Report") that, to the best of his knowledge:

(1): The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2): The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


November 7, 2014		/s/ JOSEPH SIMON Joseph Simon Chief Financial Officer

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Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002