JMP Group Inc. (Form: 10-Q, Received: 05/01/2014 16:30:02)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014 OR

☐	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: 001-33448

JMP Group Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-1450327
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

600 Montgomery Street, Suite 1100, San Francisco, California 94111

(Address of principal executive offices)

Registrant’s telephone number: (415) 835-8900

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 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. Yes ☒ 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). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐

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

The number of shares of the Registrant’s common stock, par value $0.001 per share, outstanding as of April 30, 2014 was 21,706,307.

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements - JMP Group Inc.	4
	Consolidated Statements of Financial Condition – March 31, 2014 and December 31, 2013 (Unaudited)	4
	Consolidated Statements of Operations - For the Three Months Ended March 31, 2014 and 2013 (Unaudited)	6
	Consolidated Statements of Comprehensive Income - For the Three Months Ended March 31, 2014 and 2013 (Unaudited)	7
	Consolidated Statement of Changes in Equity - For the Three Months Ended March 31, 2014 (Unaudited)	7
	Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2014 and 2013 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	54

PART II.	OTHER INFORMATION	54

Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55

SIGNATURES		56

EXHIBIT INDEX		57

- 2 -

AVAILABLE INFORMATION

JMP Group Inc. is required to file current, annual and quarterly reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the Securities and Exchange Commission (the "SEC"). You may read and copy any document JMP Group Inc. files with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website at http://www.sec.gov, from which interested persons can electronically access JMP Group Inc.’s SEC filings.

JMP Group Inc. provides its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, Forms 3, 4 and 5 filed by or on behalf of directors, executive officers and certain large stockholders, and any amendments to those documents filed or furnished pursuant to the Exchange Act free of charge on the Investor Relations section of its website located at http://www.jmpg.com. These filings will become available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. From time to time JMP Group Inc. may use its website as a channel of distribution of material company information.

JMP Group Inc. also makes available, in the Investor Relations section of its website and will provide print copies to stockholders upon request, (i) its corporate governance guidelines, (ii) its code of business conduct and ethics, and (iii) the charters of the audit, compensation, and corporate governance and nominating committees of its board of directors. These documents, as well as the information on the website of JMP Group Inc., are not intended to be part of this quarterly report and inclusions of our internet address in this Form 10-Q are inactive textual references only.

- 3 -

PART I. FINANCIAL INFORMATION

ITEM 1.

Financial Statements

JMP Group Inc.

Consolidated Statements of Financial Condition

(Unaudited)

(Dollars in thousands, except per share data)

	March 31, 2014			December 31, 2013

Assets
Cash and cash equivalents	$	41,676		$	65,906
Restricted cash and deposits (includes cash on deposit with clearing broker of $435 and $150 at March 31, 2014 and December 31, 2013, respectively)		75,550			68,029
Receivable from clearing broker		1,557			1,280
Investment banking fees receivable, net of allowance for doubtful accounts of zero at March 31, 2014 and December 31, 2013		15,507			13,161
Marketable securities owned, at fair value		31,505			29,295
Incentive fee receivable		2,919			7,910
Other investments (includes $180,452 and $161,518 measured at fair value at March 31, 2014 and December 31, 2013, respectively)		180,678			161,773
Loans held for investment, net of allowance for loan losses		1,144			825
Loans collateralizing asset-backed securities issued, net of allowance for loan losses ⁽¹⁾		783,326			727,270
Interest receivable		1,851			1,876
Fixed assets, net		2,019			2,092
Deferred tax assets		13,868			12,492
Other assets		12,215			30,022
Total assets	$	1,163,815		$	1,121,931

Liabilities and Equity
Liabilities:
Marketable securities sold, but not yet purchased, at fair value	$	14,506		$	13,749
Accrued compensation		18,256			51,347
Asset-backed securities issued		713,508			716,423
Interest payable		3,266			2,767
Note payable		-			15,000
Line of credit		-			2,895
CLO III warehouse credit facility		50,413			-
Bond payable		94,300			46,000
Deferred tax liability		3,841			3,625
Other liabilities		32,770			32,885
Total liabilities		930,860			884,691

Commitments and Contingencies
JMP Group Inc. Stockholders' Equity
Common stock, $0.001 par value, 100,000,000 shares authorized; 22,780,052 shares issued at both March 31, 2014 and December 31, 2013; 21,833,073 and 21,819,446 shares outstanding at March 31, 2014 and December 31, 2013, respectively		23			23
Additional paid-in capital		133,472			132,547
Treasury stock, at cost, 946,979 and 960,606 shares at March 31, 2014 and December 31, 2013, respectively		(5,967	)		(6,076	)
Retained earnings (Accumulated deficit)		2,845			(109	)
Total JMP Group Inc. stockholders' equity		130,373			126,385
Nonredeemable Non-controlling Interest		102,582			110,855
Total equity		232,955			237,240
Total liabilities and equity	$	1,163,815		$	1,121,931

⁽¹⁾ Includes loans which will be used to collateralize CLO III. Refer to Note 5 for further discussion.

See accompanying notes to consolidated financial statements.

- 4 -

JMP Group Inc.

Consolidated Statements of Financial Condition - (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

Assets and liabilities of consolidated variable interest entities ("VIEs") included in total assets and total liabilities above:

	March 31, 2014		December 31, 2013

Cash and cash equivalents	$	65	$	211
Restricted cash		44,454		43,497
Loans collateralizing asset-backed securities issued, net of allowance for loan losses		723,255		726,774
Interest receivable		1,614		1,851
Incentive fees receivable		136		-
Deferred tax assets		2,111		1,935
Other assets		3,098		3,602
Total assets of consolidated VIEs	$	774,733	$	777,870

Accrued compensation		125		405
Asset-backed securities issued		713,508		716,423
Note payable ⁽¹⁾		2,500		4,053
Interest payable		1,881		1,947
Deferred tax liability		1,564		1,647
Other liabilities		834		882
Total liabilities of consolidated VIEs	$	720,412	$	725,357

(1)

March 31, 2014 and December 31, 2013 balances are inclusive of intercompany loan.

The asset-backed securities issued (“ABS”) by the VIE are limited recourse obligations payable solely from cash flows of the loans collateralizing them and related collection and payment accounts pledged as security. Accordingly, only the assets of the VIE can be used to settle the obligations of the VIE.

See accompanying notes to consolidated financial statements.

- 5 -

JMP Group Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31,
	2014			2013

Revenues
Investment banking	$	25,053		$	12,107
Brokerage		6,656			5,194
Asset management fees		5,544			6,751
Principal transactions		(3,693	)		1,917
Gain on sale, payoff and mark-to-market of loans		380			1,089
Net dividend income (loss)		235			(8	)
Other income		222			288
Non-interest revenues		34,397			27,338

Interest income		8,588			8,158
Interest expense		(4,828	)		(11,299	)
Net interest income (expense)		3,760			(3,141	)

Provision for loan losses		(497	)		(949	)

Total net revenues after provision for loan losses		37,660			23,248

Non-interest expenses
Compensation and benefits		31,376			19,605
Administration		1,722			1,331
Brokerage, clearing and exchange fees		925			887
Travel and business development		851			958
Communications and technology		948			853
Occupancy		825			804
Professional fees		807			1,024
Depreciation		227			226
Other		212			83
Total non-interest expenses		37,893			25,771
Net loss before income tax expense		(233	)		(2,523	)
Income tax expense (benefit)		1,696			(812	)
Net loss		(1,929	)		(1,711	)
Less: Net income (loss) attributable to nonredeemable non-controlling interest		(5,927	)		8
Net income (loss) attributable to JMP Group Inc.	$	3,998		$	(1,719	)

Net income (loss) attributable to JMP Group Inc. per common share:
Basic	$	0.17		$	(0.08	)
Diluted	$	0.17		$	(0.08	)

Dividends declared per common share	$	0.045		$	0.035

Weighted average common shares outstanding:
Basic		21,820			22,607
Diluted		23,612			22,607

See accompanying notes to consolidated financial statements.

- 6 -

JMP Group Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2014			2013

Net loss	$	(1,929	)	$	(1,711	)
Other comprehensive income
Unrealized gain on cash flow hedge, net of tax		-			14
Comprehensive loss		(1,929	)		(1,697	)
Less: Comprehensive (loss) income attributable to non-controlling interest		(5,927	)		8
Comprehensive income (loss) attributable to JMP Group Inc.	$	3,998		$	(1,705	)

JMP Group Inc.

Consolidated Statement of Changes in Equity

(Unaudited)

(In thousands)

	JMP Group Inc. Stockholders' Equity
											Retained			Accumulated		Nonredeemable
								Additional			Earnings			Other		Non-
	Common Stock				Treasury			Paid-In			(Accumulated			Comprehensive		controlling
	Shares		Amount		Stock			Capital			Deficit)			Loss		Interest			Total Equity
Balance, December 31, 2013		22,780	$	23	$	(6,076	)	$	132,547		$	(109	)	$	-	$	110,855		$	237,240
Net income		-		-		-			-			3,998			-		(5,927	)		(1,929	)
Additonal paid-in capital - stock-based compensation		-		-		-			1,734			-			-		-			1,734
Dividends and dividend equivalents declared on common stock and restricted stock units		-		-		-			-			(1,044	)		-		-			(1,044	)
Purchases of shares of common stock for treasury		-		-		(33	)		-			-			-		-			(33	)
Reissuance of shares of common stock from treasury		-		-		142			35			-			-		-			177
Purchase of subsidiary shares from non-controlling interest holders		-		-		-			(844	)		-			-		(5,156	)		(6,000	)
Distributions to non-controlling interest holders		-		-		-			-			-			-		3,389			3,389
Capital contributions from non-controlling interest holders		-		-		-			-			-			-		(579	)		(579	)
Balance, March 31, 2014		22,780	$	23	$	(5,967	)	$	133,472		$	2,845		$	-	$	102,582		$	232,955

See accompanying notes to consolidated financial statements.

- 7 -

JMP Group Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net loss	$	(1,929	)	$	(1,711	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		497			949
Accretion of deferred loan fees		(351	)		(701	)
Amortization of liquidity discount, net		(28	)		8,740
Amortization of debt issuance costs		85			31
Amortization of original issue discount, related to CLO II		224			-
Interest paid in kind		-			(351	)
Gain on sale and payoff of loans		(380	)		(999	)
Change in other investments:
Fair value		4,201			(1,093	)
Incentive fees reinvested in general partnership interests		(1,921	)		(3,312	)
Change in fair value of small business loans		-			(90	)
Realized loss (gain) on other investments		9			(167	)
Depreciation and amortization of fixed assets		227			226
Stock-based compensation expense		1,959			964
Deferred income taxes		(1,159	)		(3,599	)
Net change in operating assets and liabilities:
Decrease (increase) in interest receivable		25			(158	)
Increase in receivables		(15,485	)		(4,813	)
Increase in marketable securities		(2,210	)		(3,482	)
Decrease (increase) in restricted cash (excluding restricted cash reserved for lending activities), deposits and other assets		18,847			(14,248	)
Increase in marketable securities sold, but not yet purchased		757			722
Increase in interest payable		499			628
Decrease in accrued compensation and other liabilities		(34,242	)		(6,733	)
Net cash used in operating activities		(30,375	)		(29,197	)

Cash flows from investing activities:
Purchases of fixed assets		(154	)		(105	)
Purchases of other investments		(23,282	)		(41,952	)
Sales of other investments		19,941			7,612
Funding of loans collateralizing asset-backed securities issued		(127,933	)		(46,161	)
Funding of small business loans		-			(1,000	)
Funding of loans held for investment		(319	)		-
Sale and payoff of loans collateralizing asset-backed securities issued		60,569			38,293
Principal receipts on loans collateralizing asset-backed securities issued		11,570			6,413
Net change in restricted cash reserved for lending activities		(6,940	)		1,455
Net cash used in investing activities		(66,548	)		(35,445	)

See accompanying notes to consolidated financial statements.

- 8 -

JMP Group Inc.

Consolidated Statements of Cash Flows - (Continued)

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2014			2013
Cash flows from financing activities:
Proceeds from CLO III credit warehouse		50,413			-
Proceeds from bond issuance		48,300			46,000
Payments of debt issuance costs		(1,707	)		(1,694	)
Repayment of note payable		(15,000	)		(3,934	)
Repayment of line of credit		(2,895	)		(6,000	)
Repayment of asset-backed securities issued		(3,139	)		-
Dividends and dividend equivalents paid on common stock and RSUs		(8	)		(809	)
Purchases of shares of common stock for treasury		(33	)		(82	)
Capital contributions of nonredeemable non-controlling interest holders		(579	)		7,317
Distributions to non-controlling interest shareholders		3,389			(1,780	)
Purchase of subsidiary shares from non-controlling interest holders		(6,000	)		-
Cash settlement of stock-based compensation		(48	)		-
Net cash provided by financing activities		72,693			39,018
Net decrease in cash and cash equivalents		(24,230	)		(25,624	)
Cash and cash equivalents, beginning of period		65,906			67,075
Cash and cash equivalents, end of period	$	41,676		$	41,451

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	3,983		$	1,436
Cash paid during the period for taxes	$	4,784		$	2,848

Non-cash investing and financing activities:
Reissuance of shares of common stock from treasury related to vesting of restricted stock units and exercises of stock options	$	142		$	163

See accompanying notes to consolidated financial statements.

- 9 -

JMP GROUP INC.

Notes to Consolidated Financial Statements

March 31, 2014

(Unaudited)

1. Organization and Description of Business

JMP Group Inc., together with its subsidiaries (collectively, the “Company”), is an independent investment banking and asset management firm headquartered in San Francisco, California. The Company conducts its brokerage business through JMP Securities LLC (“JMP Securities”), its asset management business through Harvest Capital Strategies LLC (“HCS”) and HCAP Advisors LLC (“HCAP Advisors“), its corporate credit business through JMP Credit Corporation (“JMP Credit”) and JMP Credit Advisors LLC (“JMPCA”), and certain principal investments through JMP Capital LLC (“JMP Capital”). The above entities, other than HCAP Advisors, are wholly-owned subsidiaries. JMP Securities is a U.S. registered broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority (“FINRA”). JMP Securities operates as an introducing broker and does not hold funds or securities for, or owe any money or securities to customers and does not carry accounts for customers. All customer transactions are cleared through another broker-dealer on a fully disclosed basis. HCS is a registered investment advisor under the Investment Advisers Act of 1940, as amended, and provides investment management services for sophisticated investors in investment partnerships and other entities managed by HCS. From September 2011 through May 2013, the Company also conducted corporate credit business through partially owned Harvest Capital Credit LLC (“HCC LLC”). On December 18, 2012, HCAP Advisors was formed as a Delaware Limited Liability Company. Effective May 1, 2013, HCAP Advisors provides investment advisory services to Harvest Capital Credit Corporation (“HCC”). Through JMPCA, the Company manages Cratos CLO I Holdings, LLC (“CLO I”), JMPCA CLO II Ltd (“CLO II”) and JMPCA CLO III Ltd (“CLO III”).

2. Summary of Significant Accounting Policies

Recent Transactions

In January 2014, the Company contributed an additional $15.0 million investment to CLO III. With this contribution, the Company has met its $25.0 million commitment. The $25.0 million was used to purchase loans, prior to leveraging the existing CLO III credit warehouse held at BNP Paribas. As of March 31, 2014, $50.4 million was used from the credit facility to fund additional CLO III loans.

In the first quarter of 2014, the Company repurchased $6.0 million of the unsecured subordinated notes from CLO II non-controlling interests, increasing the Company’s ownership from 72.8% to 98.0%. The effects of changes on the Company’s equity from net income attributable to JMP Group Inc. and the purchase of CLO II non-controlling interest are noted below.

	Three Months Ended March 31,
	2014			2013

Net income (loss) attributable to JMP Group Inc.	$	3,998		$	(1,719	)
Transfers from non-controlling interest
Decrease in JMP Group Inc. paid-in capital for purchase of CLO II interest		(844	)		-
Net transfers from non-controlling interest		(844	)		-
Change from net income (loss) attributable to JMP Group Inc and transfers from non-controlling interest	$	3,154		$	(1,719	)

Basis of Presentation

These consolidated financial statements and related notes are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its 2013 10-K. These consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for the fair statement of the results for the interim periods. The results of operations for any interim period are not necessarily indicative of the results to be expected for a full year.

The consolidated accounts of the Company include the wholly-owned subsidiaries, JMP Securities, HCS, JMP Capital, JMP Credit, JMPCA, CLO III (effective December 11, 2013), and the partially-owned subsidiaries Harvest Growth Capital LLC (“HGC”), Harvest Growth Capital II LLC (“HGC II”), HCC LLC (from August 18, 2011 through May 2, 2013), CLO I, CLO II (effective April 30, 2013), and HCAP Advisors (effective May 1, 2013). All material intercompany accounts and transactions have been eliminated in consolidation. Non-controlling interest on the Consolidated Statements of Financial Condition at March 31, 2014 and December 31, 2013 relate to the interest of third parties in the partly-owned subsidiaries.

See Note 2 - Summary of Significant Accounting Policies in the Company's 2013 10-K for the Company's significant accounting policies.

- 10 -

3. Recent Accounting Pronouncements

ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists was issued to provide guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity settles at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The adoption of ASU 2013-11 on January 1, 2014 did not have a material impact on the Company’s financial statement disclosures.

4. Fair Value Measurements

The following tables provide fair value information related to the Company’s financial instruments at March 31, 2014 and December 31, 2013:

	At March 31, 2014
(In thousands)	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	41,676	$	41,676	$	-	$	-	$	41,676
Restricted cash and deposits		75,550		75,550		-		-		75,550
Marketable securities owned		31,505		31,505		-		-		31,505
Other investments		180,678		2,048		70,004		108,400		180,452
Loans held for investment, net of allowance for loan losses		1,144		-		-		1,046		1,046
Loans collateralizing asset-backed securities issued, net of allowance for loan losses		783,326		-		792,393		-		792,393
Long term receivable		1,084		-		-		1,273		1,273
Total assets:	$	1,114,963	$	150,779	$	862,397	$	110,719	$	1,123,895

Liabilities:
Marketable securities sold, but not yet purchased	$	14,506	$	14,506	$	-	$	-	$	14,506
Asset-backed securities issued		713,508		-		708,509		-		708,509
Bond payable		94,300		-		95,846		-		95,846
CLO III warehouse credit facility		50,413		-		50,413		-		50,413
Total liabilities:	$	872,727	$	14,506	$	854,768	$	-	$	818,861

	At December 31, 2013
(In thousands)	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	65,906	$	65,906	$	-	$	-	$	65,906
Restricted cash and deposits		68,029		68,029		-		-		68,029
Marketable securities owned		29,295		29,295		-		-		29,295
Other investments		161,773		57		49,389		112,072		161,518
Loans held for investment, net of allowance for loan losses		825		-		-		693		693
Loans collateralizing asset-backed securities issued, net of allowance for loan losses		727,270		-		737,327		-		737,327
Long term receivable		1,152		-		-		1,364		1,364
Total assets:	$	1,054,250	$	163,287	$	786,716	$	114,129	$	1,064,132

Liabilities:
Marketable securities sold, but not yet purchased	$	13,749	$	13,749	$	-	$	-	$	13,749
Asset-backed securities issued		716,423		-		710,961		-		710,961
Note payable		15,000		-		15,000		-		15,000
Line of credit		2,895		-		2,895		-		2,895
Bond payable		46,000		-		46,552		-		46,552
Total liabilities:	$	794,067	$	13,749	$	775,408	$	-	$	789,157

- 11 -

Recurring Fair Value Measurement

The following tables provide information related to the Company’s assets and liabilities carried at fair value on a recurring basis at March 31, 2014 and December 31, 2013:

(In thousands)	March 31, 2014
	Level 1		Level 2		Level 3		Total

Marketable securities owned	$	31,505	$	-	$	-	$	31,505
Other investments:
Investments in hedge funds managed by HCS		-		66,511		-		66,511
Investments in funds of funds managed by HCS		-		-		153		153
Total investment in funds managed by HCS		-		66,511		153		66,664
Investments in private equity/ real estate funds		-		-		6,178		6,178
Warrants and other held at JMPS and JMPG LLC		-		-		741		741
Equity securities in HGC, HGC II and JMP Capital		2,048		3,493		94,260		99,801
Forward purchase contract		-		-		7,068		7,068
Total other investments		2,048		70,004		108,400		180,452
Total assets:	$	33,553	$	70,004	$	108,400	$	211,957

Marketable securities sold, but not yet purchased		14,506		-		-		14,506

Total liabilities:	$	14,506	$	-	$	-	$	14,506

(In thousands)	December 31, 2013
	Level 1		Level 2		Level 3		Total

Marketable securities owned	$	29,295	$	-	$	-	$	29,295
Other investments:
Investments in hedge funds managed by HCS		-		44,647		-		44,647
Investments in funds of funds managed by HCS		-		-		139		139
Total investment in funds managed by HCS		-		44,647		139		44,786
Investments in private equity/ real estate funds		-		-		5,967		5,967
Warrants and other held at JMPS and JMPG LLC		-		-		1,121		1,121
Equity securities in HGC, HGC II and JMP Capital		57		4,742		97,981		102,780
Forward purchase contract		-		-		6,864		6,864
Total other investments		57		49,389		112,072		161,518
Total assets:	$	29,352	$	49,389	$	112,072	$	190,813

Marketable securities sold, but not yet purchased		13,749		-		-		13,749

Total liabilities:	$	13,749	$	-	$	-	$	13,749

The Company holds a limited partner investment in a private equity fund. This fund aims to achieve medium to long-term capital appreciation by investing in a diversified portfolio of technology companies that leverage the growth of Greater China. The Company also holds an investment in a real estate fund, which aims to generate revenue stream from investments in real estate joint ventures. The Company recognizes this investment using the fair value option. The primary reason for electing the fair value option was to measure gains on the same basis as the Company’s other equity securities, which are stated at fair value.

The Company’s Level 2 assets held in other investments consist of small business loans (through May 2, 2013), investments in hedge funds managed by HCS, and equity securities in HGC, HGC II, and JMP Capital. The fair value of the Level 2 small business loans is calculated using the average market bid and ask quotation obtained from a loan pricing service. The fair value of the investment in hedge funds is calculated using the net asset value. These assets are considered Level 2, as the underlying hedge funds are mainly invested in publicly traded stocks whose value is based on quoted market prices. The Level 2 equity securities in HGC, HGC II, and JMP Capital reflect investments in public securities, where the Company is subject to a lockup period. The fair value of the Level 2 equity securities in HGC, HGC II and JMP Capital is calculated by applying a discount rate to the quoted market prices of the portfolio securities due to lack of marketability.

- 12 -

The tables below provide a reconciliation of the beginning and ending balances for the assets held at fair value using significant unobservable inputs (Level 3) for the three months ended March 31, 2014 and 2013.

(In thousands)	Balance as of December 31, 2013		Purchases		Sales		Settlements			Total gains (losses) - realized and unrealized included in earnings (1)			Transfers in/(out) of Level 3		Balance as of March 31, 2014		Unrealized gains/(losses) included in earnings related to assets still held at reporting date
Investments in funds of funds managed by HCS	$	139	$	-	$	-	$	-		$	14		$	-	$	153	$	14
Limited partner investment in private equity fund		5,967		-		-		(134	)		345			-		6,178		345
Warrants and other held at JMPS		1,121		-		-		(19	)		(361	)		-		741		-
Equity securities held by HGC, HGC II and JMP Capital		97,981		2,788		-		-			(6,509	)		-		94,260		(6,509	)
Forward Purchase Contract		6,864		-		-		-			204			-		7,068		204
Total Level 3 assets	$	112,072	$	2,788	$	-	$	(153	)	$	(6,307	)	$	-	$	108,400	$	(5,946	)

⁽¹⁾ No Level 3 asset gains (losses) are included in other comprehensive income. All realized and unrealized gains (losses) related to Level 3 assets are included in earnings.

(In thousands)	Balance as of December 31, 2012		Purchases		Sales			Settlements		Total gains (losses) - realized and unrealized included in earnings (1)			Transfers in/(out) of Level 3		Balance as of March 31, 2013		Unrealized gains/(losses) included in earnings related to assets still held at reporting date
Investments in funds of funds managed by HCS	$	109	$	-	$	-		$	-	$	8		$	-	$	117	$	8
Limited partner investment in private equity fund		2,332		-		-			-		226			-		2,558		226
Warrants and other held at JMPS		413		-		-			-		(117	)		-		296		(117	)
Warrants and equity held at HCC		2,577		100		-			-		425			-		3,102		425
Small business loans		35,447		1,389		(43	)		-		30			-		36,823		30
Equity securities held by HGC, HGC II and JMP Capital		41,075		7,782		-			-		(379	)		-		48,478		(379	)
Forward Purchase Contract		5,437		-		-			-		(437	)		-		5,000		(437	)
Total Level 3 assets	$	87,390	$	9,271	$	(43	)	$	-	$	(244	)	$	-	$	96,374	$	(244	)

⁽¹⁾ No Level 3 asset gains (losses) are included in other comprehensive income. All realized and unrealized gains (losses) related to Level 3 assets are included in earnings.

Purchases and sales of Level 3 assets shown above were recorded at fair value at the date of the transaction.

Total gains and losses included in earnings represent the total gains and/or losses (realized and unrealized) recorded for the Level 3 assets and are reported in Principal Transactions in the accompanying Consolidated Statements of Operations.

Transfers between levels of the fair value hierarchy result from changes in the observability of fair value inputs used in determining fair values for different types of financial assets and are recognized at the beginning of the reporting period in which the event or change in circumstances that caused the transfer occurs.

There was one transfer of $2.0 million into Level 1 from Level 2 for the three months ended March 31, 2014 as a result of the expiration of a lockup discount. There were no other transfers between Level 1, Level 2 or Level 3 during the three months ended March 31, 2014 and 2013.

Included in other investments are investments in partnerships in which one of the Company’s subsidiaries is the investment manager and general partner. The Company accounts for these investments using the equity method as described in Note 2 - Summary of Significant Accounting Policies in the Company's 2013 10-K. The Company’s proportionate share of those investments is included in the tables above. In addition, other investments include warrants and investments in funds managed by third parties. The investments in private investment funds managed by third parties are generally not redeemable at the option of the Company. As of March 31, 2014, the Company had unfunded investment commitments of $0.1 million related to private investment funds managed by third parties.

- 13 -

The amount of unrealized gains and losses included in earnings attributable to the change in unrealized gains and losses relating to Level 3 assets still held at the end of the period are reported in Principal Transactions in the accompanying Consolidated Statements of Operations.

The Company used the following valuation techniques with unobservable inputs when estimating the fair value of the Level 3 assets:

Dollars in thousands

Fair Value at

March 31, 2014

Valuation Technique

Unobservable Input

Range

(Weighted Average)

Investments in Funds of Funds managed by HCS (1)

153

Net Asset Value

N/A

Limited Partner in Private Equity /Real Estate Fund (1)

6,178

Net Asset Value

N/A

Warrants and Other held at JMPS and JMPG LLC

741

Black-Scholes Option Model

Annualized volatility of credit

18.25%(16.77%)

Equity securities in HGC, HGC II and JMP Capital (2)

94,260

Market comparable companies

Revenue multiples

3.3x

16.4x (7.1x)

EBITDA multiples

13.7x

26.9x (18.6x)

(3)

Discount for lack of marketability

30%

40%(32%)

Market transactions

Revenue multiples

3.5x

7.0x (5.3x)

EBITDA multiples

11.8x

26.6x (17.6x)

Control premium

25%

Forward purchase contract (2)

7,068

Market comparable companies

Revenue multiples

10.5x

16.4x (13.1x)

Billing multiples

8.6x

12.3x (10.2x)

(3)

Discount for lack of marketability

30%

Market transactions

Revenue multiples

7.0x

Control premium

25%

(1) The Company uses the reported net asset value per share as a practical expedient to estimate the fair value of the investments in funds of funds managed by HCS and limited partner investment in private equity funds.

(2) The fair value of each HGC, HGC II and JMP Capital investment is calculated using a weighted allocation between the fair values assessed by the public comparables and M&A comparable valuation techniques.

(3) The Company applies a discount for lack of marketability (“DLOM”) to its investments, ranging from 30% to 50%. The discount is determined by the level of revenue of the investee and proximity to filing. The minimum discount applied is 30% for investees that either generate revenue exceeding $100 million, or have filed a registration statement. Higher discounts are applied to investees with less than $100 million of revenue or that are not on file, reflecting the longer anticipated term to a liquidity event. When HGC and HGC II investments become public, the Company is typically subject to a lock up period. In valuing these public companies, the Company has incorporated 5% per month of lockup into its valuations. As the typical lockup period is six months, the DLOM methodology has a floor threshold of 30% to mirror the discount rates applied once the investment goes public.

Dollars in thousands

Fair Value at December 31, 2013

Valuation Technique

Unobservable Input

Range

(Weighted Average)

Investments in Funds of Funds managed by HCS (1)

139

Net Asset Value

N/A

Limited Partner in Private Equity /Real Estate Fund (1)

5,967

Net Asset Value

N/A

Warrants and Other held at JMPS and JMPG LLC

1,121

Black-Scholes Option Model

Annualized volatility of credit

15.4%

25.4%(13.4%)

Equity securities in HGC, HGC II and JMP Capital (2)

97,981

Market comparable companies

Revenue multiples

2.4x

14.5x (6.3x)

EBITDA multiples

14.9x

31.9x (22.1x)

(3)

Discount for lack of marketability

30%

40%(32%)

Market transactions

Revenue multiples

3.4x

7.6x (5.7x)

EBITDA multiples

11.8x

26.6x (17.7x)

Control premium

25%

Forward purchase contract (2)

6,864

Market comparable companies

Revenue multiples

10.6x

14.5x (12.3x)

Billing multiples

8.7x

11.6x (10.0x)

(3)

Discount for lack of marketability

30%

Market transactions

Revenue multiples

7.0x

Control premium

25%

- 14 -

(3) The Company applies a DLOM to its investments, ranging from 30% to 50%. The discount is determined by the level of revenue of the investee and proximity to filing. The minimum discount applied is 30% for investees that either generate revenue exceeding $100 million, or have filed a registration statement. Higher discounts are applied to investees with less than $100 million of revenue or that are not on file, reflecting the longer anticipated term to a liquidity event.

The significant unobservable input used in the fair value measurement of the warrants held at JMP Securities is the annualized volatility of credit. Significant increases in the rate would result in a significantly higher fair value measurement.

The significant unobservable inputs used in the fair value measurement of the equity securities and the forward purchase contract in HGC, HGC II and JMP Capital are Revenue, EBITDA and Billing multiples, discount for lack of marketability, and control premiums. Significant increases in the multiples in isolation would result in a significantly higher fair value measurement. Increases in the discounts and premium in isolation would result in decreases to the fair value measurement.

Non-recurring Fair Value Measurements

The Company's assets that are measured at fair value on a non-recurring basis result from the application of lower of cost or market accounting or write-downs of individual assets. The Company held no assets measured at fair value on a non-recurring basis at March 31, 2014 or December 31, 2013.

Small Business Loans

Small business loans represent the secured subordinated debt extended by HCC LLC to small to mid-sized companies. At inception, the loans were carried at the principal amount outstanding net of deferred fees, deferred costs and the allowance for loan losses. Changes to adopt investment company accounting were retrospectively applied and as of September 30, 2012, HCC LLC reported all investments, including debt investments, at market value or, in the absence of a readily available market value, at fair value, with unrealized gains and losses recorded in Gain on sale, payoff and mark-to-market on the Consolidated Statements of Operations. The Company recorded unrealized gains of $0.1 million relating to the fair value adjustment of small business loans in the first quarter of 2013, prior to the deconsolidation of HCC LLC on May 2, 2013.

In connection with the HCC initial public offering on May 2, 2013, the Company ceased consolidating HCC LLC and began recognizing its investment, including common stock and warrants of HCC, using the fair value option. The primary reason for electing the fair value option was to measure gains on the same basis as the Company’s other equity securities, which are stated at fair value. The Company’s investments in HCC common stock and warrants are included in other investments. The Company recorded unrealized loss of $0.1 million in the quarter ended March 31, 2014 related to its investments in HCC. Dividends received during the quarter ended March 31, 2014 on HCC stock of $0.2 million were recorded in net dividend income on the Consolidated Statements of Operations.

Loans Held for Investment

At both March 31, 2014 and December 31, 2013, loans held for investment included two loans. Given the small size of this loan portfolio segment, the Company reviews credit quality of the loans within this portfolio segment on a loan by loan basis mainly focusing on the borrower’s financial position and results of operations as well as the current and expected future cash flows on the loan.

Effective July 1, 2013, the Company agreed to lend a health sciences fund investment advising company up to $2.0 million, at an interest rate of 10% per year. The outstanding principal balance and all accrued and unpaid interest is due and payable on July 1, 2018. As of March 31, 2014 and December 31, 2013, the Company’s loan outstanding to this entity was $1.1 million and $0.8 million, respectively.

The Company determined the fair value of loans held for investment to be $0.7 million as of both March 31, 2014 and December 31, 2013, using anticipated cash flows, discounted at an appropriate market credit adjusted interest rate.

Investments at Cost

On February 11, 2010, the Company made a $1.5 million investment in Class D Preferred Units of Sanctuary Wealth Services LLC (“Sanctuary”), which provides a turnkey platform that allows independent wealth advisors to establish an independent advisory business without the high startup costs and regulatory hurdles. During the fourth quarter of 2010, the Company determined that its investment in Sanctuary was fully impaired and recorded an impairment loss of $1.5 million, which was included in Principal Transactions on the Consolidated Statements of Operations.

On April 3, 2012, the Company purchased a $2.3 million receivable for $1.4 million from Sanctuary. The $1.4 million was comprised of $0.5 million in cash consideration and $0.9 million in connection with the partial redemption of the $1.5 million investment in Sanctuary. The Company recognized the $0.9 million as a gain in Principal Transactions, and the $2.3 million receivable in Other Assets. The carrying value of the long-term receivable was $1.1 million and $1.2 million as of March 31, 2014 and December 31, 2013, respectively. The Company determined the fair value of the long-term receivable to be $1.3 million and $1.4 million as of March 31, 2014 and December 31, 2013, respectively, using anticipated cash flows, discounted at an appropriate market credit adjusted interest rate. Significant increases in the market credit adjusted interest rate in isolation would result in decreases to the fair value measurement.

Derivative Financial Instruments

The Company entered into a forward purchase contract to secure the acquisition of shares of a privately-held company. The contract and subsequent amendment incorporates downside protection for up to two years, for a cost basis of $5.0 million. In January 2012, the Company exchanged $5.0 million for physical custody of the shares. For two years beginning December 1, 2012, the Company could, at its discretion, become the beneficial and record holder of the shares. If the Company has not yet exercised its option at December 1, 2014, the shares will be assigned automatically to the Company. This contract is recorded in Other Investments in the Consolidated Statements of Financial Condition at fair value. The Company records changes in the fair value of this forward contract as unrealized gain or loss in Principal Transactions. For the three months ended March 31, 2014 and 2013, the Company recorded $0.2 million unrealized gain and a $0.4 million unrealized loss. Once the shares are in the Company’s name, the shares will be accounted for as equity securities, remaining in Other Investments in the Consolidated Statements of Financial Condition.

- 15 -

5. Loans Collateralizing Asset-backed Securities Issued

Loans collateralizing asset-backed securities issued are commercial loans securitized and owned by the Company’s CLOs. The loans consist of those loans within the CLO securitization structure at the acquisition date of CLO I and loans purchased by the CLOs subsequent to the CLO I acquisition date. As of March 31, 2014, CLO III was not yet funded, and therefore, the loans in this entity were not collateralizing asset-backed securities issued. However, given the intent of the CLO III structure, these loans were included in the loans collateralizing asset-backed securities line item. The following table presents the components of loans collateralizing asset-backed securities issued as of March 31, 2014 and December 31, 2013:

(In thousands)	Loans Collateralizing Asset-backed Securities
	March 31, 2014			December 31, 2013
Outstanding principal	$	792,461		$	735,891
Allowance for loan losses		(4,368	)		(3,871	)
Liquidity discount		(1,140	)		(1,168	)
Deferred loan fees, net		(3,627	)		(3,582	)
Valuation allowance	N/A			N/A
Total loans, net	$	783,326		$	727,270

Loans recorded upon the acquisition of CLO I at fair value reflect a liquidity discount and a credit discount. The tables below summarize the activity in the loan principal, allowance for loan losses, liquidity discount, deferred loan fees and carrying values, net for the loans as of and for the three months ended March 31, 2014:

(In thousands)	Three Months Ended March 31, 2014
	Principal			Allowance for Loan Losses			Liquidity Discount			Deferred Loan Fees			Carrying Value, Net
Non-impaired Loans
Balance at beginning of period	$	735,891		$	(3,871	)	$	(1,168	)	$	(3,582	)	$	727,270
Purchases		128,770			-			-			(837	)		127,933
Repayments		(11,570	)		-			-			-			(11,570	)
Accretion of discount		-			-			28			351			379
Provision for loan losses		-			(497	)		-			-			(497	)
Sales and payoff		(60,630	)		-			-			441			(60,189	)
Balance at end of period	$	792,461		$	(4,368	)	$	(1,140	)	$	(3,627	)	$	783,326

The tables below summarize the activity in the loan principal, allowance for loan losses, liquidity discount, deferred loan fees and carrying values, net for the impaired loans and non-impaired loans as of and for the three months ended March 31, 2013:

(In thousands)	Three Months Ended March 31, 2013
	Principal			Allowance for Loan Losses			Liquidity Discount			Deferred Loan Fees			Carrying Value, Net
Impaired Loans
Balance at beginning of period	$	3,517		$	(1,022	)	$	(720	)	$	(16	)	$	1,759
Purchases		(11	)		-			-			-			(11	)
Accretion of discount		-			-			-			2			2
Provision for loan losses		-			(870	)		-			-			(870	)
Balance at end of period	$	3,506		$	(1,892	)	$	(720	)	$	(14	)	$	880

Non-impaired Loans
Balance at beginning of period	$	410,483		$	(2,105	)	$	(2,332	)	$	(6,802	)	$	399,244
Purchases		46,968			-			-			(807	)		46,161
Repayments		(6,402	)		-			-			-			(6,402	)
Accretion of discount		-			-			504			699			1,203
Provision for loan losses		-			(79	)		-			-			(79	)
Sales and payoff		(37,356	)		-			43			625			(36,688	)
Balance at end of period	$	413,693		$	(2,184	)	$	(1,785	)	$	(6,285	)	$	403,439

Allowance for Loan Losses

The Company recorded a general reserve of $0.5 million and $0.1 million during the quarters ended March 31, 2014 and 2013, respectively on non-impaired loans. $0.4 million of the reserve booked in the quarter ended March 31, 2014, related to the loans associated with CLO III, launched in December 2013.

- 16 -

A summary of the activity in the allowance for loan losses for loans collateralizing asset-backed securities for the three months ended March 31, 2014 and 2013 is as follows:

(In thousands)	Three Months Ended March 31,
	2014			2013
Balance at beginning of period	$	(3,871	)	$	(3,127	)
Provision for loan losses:
Specific reserve		-			(870	)
General reserve		(497	)		(79	)
Balance at end of period	$	(4,368	)	$	(4,076	)

Impaired Loans, Non-Accrual, Past Due Loans and Restructured Loans

A loan is considered to be impaired when, based on current information, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the original loan agreement, including scheduled principal and interest payments. As of March 31, 2014 and December 31, 2013, the Company held no impaired loans. The $787.6 million and $731.1 million of recorded investment amount of loans collateralizing asset-backed securities issued were collectively evaluated for impairment, as of March 31, 2014 and December 31, 2013, respectively.

As of March 31, 2014 and December 31, 2013, the Company classified all its loans as Cash Flow loans, as their funding decisions were all driven by the revenues of the borrower. At March 31, 2014 and December 31, 2013, no loans were on non-accrual status. The Company recorded no interest income, other than the accretion of liquidity discounts, for the impaired loans with a weighted average loan balance of $2.8 million that were on non-accrual status during the three months ended March 31, 2013.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. No loans were past due at March 31, 2014 or December 31, 2013.

At March 31, 2014 and December 31, 2013, the Company held no loans whose terms were modified in a troubled debt restructuring (“TDR”).

Credit Quality of Loans

The Company, at least on a quarterly basis, reviews each loan and evaluates the credit quality of the loan. The review primarily includes the following credit quality indicators with regard to each loan: 1) Moody's rating, 2) current internal rating and 3) performance. The tables below present, by credit quality indicator, the Company's recorded investment in loans collateralizing asset-backed securities issued at March 31, 2014 and December 31, 2013.

(In thousands)	Senior Secured Bonds/ Notes - Cash Flow				Cash Flow (CF)
	March 31,		December 31,		March 31,		December 31,
	2014		2013		2014		2013

Moody's rating:
Baa1 - Baa3	$	-	$	-	$	15,822	$	16,057
Ba1 - Ba3		-		-		224,733		215,281
B1 - B3		-		3,114		533,991		482,579
Caa1 - Caa3		-		-		12,765		13,729
Ca		-		-		383		381
Total:	$	-	$	3,114	$	787,694	$	728,027

Internal rating: ⁽¹⁾
2	$	-	$	3,114	$	760,679	$	700,168
3		-		-		27,015		27,859
Total:	$	-	$	3,114	$	787,694	$	728,027

Performance:
Performing	$	-	$	3,114	$	787,694	$	728,027
Total:	$	-	$	3,114	$	787,694	$	728,027

(1)	Loans with an internal rating of 4 or below are reviewed individually to identify loans to be designated for non-accrual status.

The Company determined the fair value of loans collateralizing asset-backed securities to be $792.4 million and $412.0 million as of March 31, 2014 and December 31, 2013, respectively; primarily using the average market bid and ask quotation obtained from a loan pricing service. Such loans are identified as Level 2 assets. When average market bid and ask quotations were not available, the loans are identified as Level 3 assets. The fair value of these Level 3 loans are calculated internally based on their performance. This analysis incorporates comparable loans traded in the marketplace, the obligor's industry, future business prospects, capital structure, and expected credit losses. Significant declines in the performance of the loan would result in decreases to the fair value measurement.

- 17 -

6. Debt

Bond Payable

In January 2013, we raised approximately $46.0 million from the sale of 8.00% Senior Notes (the “2013 Senior Notes”). In January 2014, we raised an additional approximate $48.3 million from the sale of 7.25% Senior Notes (the “2014 Senior Notes”). The 2013 Senior Notes will mature on January 15, 2023 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 15, 2016, at a redemption price equal to the principal amount redeemed plus accrued and unpaid interest. The notes bear interest at a rate of 8.00% per year, payable quarterly on January 15, April 15, July 15 and October 15 of each year. The 2014 Senior Notes will mature on January 15, 2021, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 15, 2017, at a redemption price equal to the principal amount redeemed plus accrued and unpaid interest. The notes bear interest at a rate of 7.25% per year, payable quarterly on January 15, April 15, July 15 and October 15 of each year, beginning April 15, 2014.

The 2013 Senior Notes and 2014 Senior Notes (collectively, the “Senior Notes”) were issued pursuant to indentures with U.S. Bank National Association, as trustee. The indentures contain a minimum liquidity covenant that obligates the Company to maintain liquidity of at least an amount equal to the lesser of (i) the aggregate amount due on the next eight scheduled quarterly interest payments on the Senior Notes, or (ii) the aggregate amount due on all remaining scheduled quarterly interest payments on the Senior Notes until the maturity of the Senior Notes. The indenture also contains customary event of default and cure provisions. If an uncured default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the Senior Notes may declare the Senior Notes immediately due and payable.

The Senior Notes will be the Company’s general unsecured senior obligations, will rank equally with all existing and future senior unsecured indebtedness and will be senior to any other indebtedness expressly made subordinate to the notes. The notes will be effectively subordinated to all of our existing and future secured indebtedness (to the extent of the value of the assets securing such indebtedness) and structurally subordinated to all existing and future liabilities of our subsidiaries, including trade payables.

The Company incurred $3.4 million of debt issuance costs, which were capitalized and included in Other Assets. These issuance costs are amortized over the estimated life of the bond. As of March 13, 2014, the Company held $3.2 million of unamortized debt issuance costs.

CLO III Warehouse Credit Facility

On December 11, 2013, CLO III closed on a $100.0 million warehouse credit agreement with BNP Paribas. CLO III is a special purpose vehicle whose debt will be secured by a diversified portfolio of broadly syndicated leveraged loans. As the Company consolidates CLO III, the warehouse credit facility is presented on the financial statements. However, in event of default, there is limited recourse to the Company. CLO III pays BNP Paribas an administrator agent fee of $25 thousand per year, in addition to interest at a rate per annum equal to LIBOR plus 1.40%, payable quarterly. The warehouse will remain available through December 10, 2014. On such date, any outstanding amounts convert to a term loan, half of the balance to be paid down by April 24, 2015 and the remaining by September 10, 2015. After December 10, 2014, the outstanding amount will bear interest at LIBOR plus 2.25%. The Company’s outstanding balance on this warehouse credit facility was $50.4 million and zero as of March 31, 2014 and December 31, 2013, respectively. The Company incurred $40 thousand interest expense related to this warehouse credit facility for the quarter ended March 31, 2014.

Note Payable and Lines of Credit

As of March 31, 2014, the Company held revolving lines of credit related to JMP Securities, and HGC II.

A credit agreement (the “Credit Agreement”) with City National Bank (“CNB”) provides a line of credit of up to $30.0 million to the extent the aggregate outstanding balance of all facilities do not exceed $58.5 million. The unused portion of the line incurs an unused facility fee at the rate of 0.25% per annum, paid quarterly. The line of credit will remain available through April 30, 2014. On such date, any outstanding amounts convert to a term loan. The term loan will be repaid in quarterly installments of 3.75% of funded debt for the first two years, 5.00% of funded debt for the next two years, and the remainder due at maturity on August 24, 2017. The Company anticipated that the proceeds for this line of credit would be used to fund certain commitments to HCC LLC, to repurchase Company stock and other permitted investments, and for other general working capital purposes. The Company’s outstanding balance on this line of credit was zero as of both March 31, 2014 and December 31, 2013.

Pursuant to the Credit Agreement, on April 25, 2013, JMP Group drew $15.0 million on a term loan. This term loan was to be repaid in quarterly installments of $1.2 million beginning March 31, 2014, with a final payment of approximately $1.3 million on December 31, 2016. The outstanding balance on this term loan was $15.0 million as of December 31, 2013. The Company paid the balance of the term loan in the first quarter of 2014. The outstanding balance on this term loan was zero as of March 31, 2014.

JMP Securities holds a $15.0 million revolving line of credit with CNB to be used for regulatory capital purposes during its securities underwriting activities. The unused portion of the line bears interest at the rate of 0.25% per annum, paid monthly. Draws on the revolving line of credit bear interest at the rate of prime and are available through May 6, 2014, on which date, any existing outstanding amount will convert to a loan maturing on May 6, 2015. There was no borrowing on this line of credit as of March 31, 2014 or December 31, 2013.

On November 22, 2013, HGC II entered into a line of credit of $3.0 million with CNB. Draws on the line bear interest at the rate of prime plus 0.5% per annum, paid quarterly. The line of credit will be available through December 1, 2015 or fifteen days prior to the expiration of the commitment period of HGC II unless renewed. Proceeds from this line of credit will be used to purchase investments, prior to capital calls from HGC II investors. The Company’s outstanding balance on this line of credit was zero and $2.9 million as of March 31, 2014 and December 31, 2013, respectively.

The Credit Agreement contains financial and other covenants, including, but not limited to, limitations on debt, liens and investments, as well as the maintenance of certain financial covenants. A violation of any one of these covenants could result in a default under the Credit Agreement, which would permit CNB to terminate our note and require the immediate repayment of any outstanding principal and interest. At March 31, 2014, the Company was in compliance with the loan covenants. The term loans are collateralized by a pledge of the Company’s assets, including its interests in each of JMP Securities and HCS.

- 18 -

7. Asset-backed Securities Issued

CLO I

On May 17, 2007, CLO I completed a $500.0 million aggregate principal amount of notes (the “Notes”) on-balance sheet debt securitization and obtained $455.0 million of third-party financing. The Notes will be repaid from the cash flows generated by the loan portfolio owned by CLO I. The Notes were issued in six separate classes as set forth in the table below. The Company owns approximately 94.0% of the unsecured subordinated notes and $13.8 million of Class C, D and E notes ($2.0 million of Class C, $4.1 million of Class D and $7.7 million of Class E notes). These unsecured subordinated notes and the Class C, D and E notes owned by the Company are eliminated upon consolidation of JMP Credit, and therefore, are not reflected on the Company’s consolidated statement of financial condition at March 31, 2014 and December 31, 2013.

(In millions)	As of March 31, 2014
	Notes Originally Issued		Outstanding Principal Balance			Net Outstanding Balance			Interest Rate Spread to LIBOR				Ratings (Moody's /S&P) (1)
Class A Senior Secured Floating Rate Revolving Notes due 2021	$	326.0	$	286.2		$	286.2		0.26%	-	0.29%		Aaa/AAA
Class B Senior Secured Floating Rate Notes due 2021		30.0		30.0			30.0				0.50	%	Aaa/AAA
Class C Senior Secured Deferrable Floating Rate Notes due 2021		35.0		35.0			35.0				1.10	%	Aaa/AA+
Class D Secured Deferrable Floating Rate Notes due 2021		34.0		34.0			34.0				2.40	%	A1/A-
Class E Secured Deferrable Floating Rate Notes due 2021		30.0		30.0			30.0				5.00	%	Ba1/BB
Total secured notes sold to investors	$	455.0	$	415.2		$	415.2
Unsecured subordinated notes due 2021		45.0		45.0			45.0
Total notes for the CLO I offering	$	500.0	$	460.2		$	460.2
Consolidation elimination	N/A			(58.7	)		(58.7	)
Total asset-backed securities issued	N/A		$	401.5		$	401.5

(1)	These ratings are unaudited and were the current ratings as of March 31, 2014 and are subject to change from time to time.

(In millions)	As of December 31, 2013
	Notes Originally Issued		Outstanding Principal Balance			Net Outstanding Balance			Interest Rate Spread to LIBOR				Ratings (Moody's /S&P) (1)
Class A Senior Secured Floating Rate Revolving Notes due 2021	$	326.0	$	289.0		$	289.0		0.26%	-	0.29%		Aaa/AAA
Class B Senior Secured Floating Rate Notes due 2021		30.0		30.0			30.0				0.50	%	Aaa/AAA
Class C Senior Secured Deferrable Floating Rate Notes due 2021		35.0		35.0			35.0				1.10	%	Aaa/AA+
Class D Secured Deferrable Floating Rate Notes due 2021		34.0		34.0			34.0				2.40	%	A1/A-
Class E Secured Deferrable Floating Rate Notes due 2021		30.0		30.0			30.0				5.00	%	Ba1/BB
Total secured notes sold to investors	$	455.0	$	418.0		$	418.0
Unsecured subordinated notes due 2021		45.0		45.0			45.0
Total notes for the CLO I offering	$	500.0	$	463.0		$	463.0
Consolidation elimination	N/A			(58.7	)		(58.7	)
Total asset-backed securities issued	N/A		$	404.3		$	404.3

(1)

These ratings are unaudited and were the current ratings as of December 31, 2013 and are subject to change from time to time.

The secured notes and subordinated notes are limited recourse obligations payable solely from cash flows of the CLO I loan portfolio and related collection and payment accounts pledged as security. Payment on the Class A-1 notes rank equal, or pari-passu, in right of payment with payments on the Class A-2 notes and payment on the Class A-1 and Class A-2 notes rank senior in right of payment to the other secured notes and the subordinated notes. Payment on the Class B, Class C, Class D and Class E notes generally rank subordinate in right of payment to any other class of notes which has an earlier alphabetical designation. The subordinated notes are subordinated in right of payment to all other classes of notes and will not accrue interest. Interest on the secured notes is payable quarterly at a per annum rate equal to LIBOR plus the applicable spread set forth in the table above. Payment of interest on the Class C, Class D and Class E notes is payable only to the extent proceeds are available under the applicable payment priority provisions. To the extent proceeds are not so available, interest on the Class C, Class D and Class E notes will be deferred. As of March 31, 2014 and December 31, 2013, all interest on the secured notes was current. As of March 31, 2014 and December 31, 2013, all of the Class A-1 notes were drawn. The secured notes are secured by the CLO loan portfolio and the funds on deposit in various related collection and payment accounts. The terms of the debt securitization subject the loans included in the CLO loan portfolio to a number of collateral quality, portfolio profile, interest coverage and overcollateralization tests.

- 19 -

The reinvestment period for CLO I ended in May 2013. As of this date, all scheduled principal payments from the borrowers are applied to paying down the most senior (AAA) CLO notes. The Company is still permitted to reinvest unscheduled principal payments, subject to certain restrictions, which includes most loan payoffs.

The Notes recorded upon the acquisition of CLO I in April 2009 at fair value reflect a liquidity discount. The activity in the note principal and liquidity discount for the three months ended March 31, 2014 and 2013 comprised the following:

(In thousands)	Three Months Ended March 31, 2014								Three Months Ended March 31, 2013
	Principal			Liquidity Discount		Net			Principal		Liquidity Discount			Net

Balance at beginning of period	$	404,280		$	-	$	404,280		$	431,003	$	(15,548	)	$	415,455
Repayments		(2,759	)		-		(2,759	)		-		-			-
Amortization of discount		-			-		-			-		9,244			9,244
Balance at end of period	$	401,521		$	-	$	401,521		$	431,003	$	(6,304	)	$	424,699

CLO II

On April 30, 2013, CLO II completed a $343.8 million aggregate principal amount of notes (the “Secured Notes”). The Secured Notes offered in this proposed transaction were issued in multiple tranches and are rated by Standard & Poor's Ratings Services and, in respect of certain tranches, Moody's Investors Service, Inc. The Secured Notes will be repaid from the cash flows generated by the loan portfolio owned by CLO II. The Company owned approximately 72.8% of the unsecured subordinated notes at December 31, 2013. In the first quarter of 2014, the Company repurchased $6.0 million of the unsecured subordinated notes from CLO II non-controlling interests, increasing the Company’s ownership from 72.8% to 98.0%. These unsecured subordinated notes are eliminated upon consolidation of JMP Credit, and therefore, are not reflected on the Company’s consolidated statement of financial condition at March 31, 2014.

(In millions)	As of March 31, 2014
	Notes Originally Issued		Outstanding Principal Balance			Issuance Discount			Net Outstanding Balance			Interest Rate Spread to LIBOR			Ratings (Moody's) (1)
Class X Senior Secured Floating Rate Notes due 2016	$	3.8	$	3.4		$	-		$	3.4			1.00	%	AAA
Class A Senior Secured Floating Rate Notes due 2023		217.6		217.6			(0.8	)		216.8			1.18	%	AAA
Class B Senior Deferred Floating Rate Notes due 2023		34.0		34.0			(0.3	)		33.7			1.75	%	AA
Class C Senior Deferred Floating Rate Notes due 2023		17.0		17.0			(0.6	)		16.4			2.75	%	A
Class D Senior Deferred Floating Rate Notes due 2023		18.7		18.7			(1.5	)		17.2			3.85	%	BBB
Class E Senior Deferred Floating Rate Notes due 2023		18.7		18.7			(2.5	)		16.2			5.25	%	BB
Class F Senior Deferred Floating Rate Notes due 2023		10.2		10.2			(1.9	)		8.3			5.75	%	B
Total secured notes sold to investors	$	320.0	$	319.6		$	(7.6	)	$	312.0
Unsecured subordinated notes due 2023		23.8		23.8			(0.3	)		23.5
Total notes for the CLO II offering	$	343.8	$	343.4		$	(7.9	)	$	335.5
Consolidation elimination	N/A			(23.8	)		0.3			(23.5	)
Total CLO II asset-backed securities issued	N/A		$	319.6		$	(7.6	)	$	312.0

(1)

These ratings are unaudited and were the current ratings as of March 31, 2014 and are subject to change from time to time.

- 20 -

(In millions)	As of December 31, 2013
	Notes Originally Issued		Outstanding Principal Balance			Issuance Discount			Net Outstanding Balance			Interest Rate Spread to LIBOR			Ratings (Moody's) (1)
Class X Senior Secured Floating Rate Notes due 2016	$	3.8	$	3.8		$	-		$	3.8			1.00	%	AAA
Class A Senior Secured Floating Rate Notes due 2023		217.6		217.6			(0.8	)		216.8			1.18	%	AAA
Class B Senior Deferred Floating Rate Notes due 2023		34.0		34.0			(0.3	)		33.7			1.75	%	AA
Class C Senior Deferred Floating Rate Notes due 2023		17.0		17.0			(0.6	)		16.4			2.75	%	A
Class D Senior Deferred Floating Rate Notes due 2023		18.7		18.7			(1.6	)		17.1			3.85	%	BBB
Class E Senior Deferred Floating Rate Notes due 2023		18.7		18.7			(2.5	)		16.2			5.25	%	BB
Class F Senior Deferred Floating Rate Notes due 2023		10.2		10.2			(2.1	)		8.1			5.75	%	B
Total secured notes sold to investors	$	320.0	$	320.0		$	(7.9	)	$	312.1
Unsecured subordinated notes due 2023		23.8		23.8			(0.3	)		23.5
Total notes for the CLO II offering	$	343.8	$	343.8		$	(8.2	)	$	335.6
Consolidation elimination	N/A			(23.8	)		0.3			(23.5	)
Total CLO II asset-backed securities issued	N/A		$	320.0		$	(7.9	)	$	312.1

(1)

These ratings are unaudited and were the current ratings as of December 31, 2013 and are subject to change from time to time.

The secured notes and subordinated notes are limited recourse obligations payable solely from cash flows of the CLO II loan portfolio and related collection and payment accounts pledged as security. Payment on the Class X notes rank equal, or pari-passu, in right of payment with payments on the Class A notes and payment on the Class X and Class A notes rank senior in right of payment to the other secured notes and the subordinated notes. Payment on the Class B, Class C, Class D and Class E notes generally rank subordinate in right of payment to any other class of notes which has an earlier alphabetical designation. The subordinated notes are subordinated in right of payment to all other classes of notes and will not accrue interest. Interest on the secured notes was payable quarterly commencing October 2013 at a per annum rate equal to LIBOR plus the applicable spread set forth in the table above. Payment of interest on the Class C, Class D and Class E notes is payable only to the extent proceeds are available under the applicable payment priority provisions. To the extent proceeds are not so available, interest on the Class C, Class D and Class E notes will be deferred. The secured notes are secured by the CLO II loan portfolio and the funds on deposit in various related collection and payment accounts. The terms of the debt securitization subject the loans included in the CLO II loan portfolio to a number of collateral quality, portfolio profile, interest coverage and overcollateralization tests.

The Notes recorded upon the acquisition of CLO II in April 2013 at fair value reflect a purchase discount. The activity in the note principal and purchase discount for the three months ended March 31, 2014 comprised the following:

(In thousands)	Three Months Ended March 31, 2014
	Principal			Issuance Discount			Net

Balance at beginning of period	$	320,000		$	(7,857	)	$	312,143
Repayments		(380	)		-			(380	)
Amortization of discount		-			224			224
Balance at end of period	$	319,620		$	(7,633	)	$	311,987

Interest on Asset Backed Securities

Total interest expenses related to the asset-backed securities issued for the three months ended March 31, 2014 and 2013 were $3.0 million and $10.3 million, respectively, which comprised of a cash coupon of $2.7 million and $1.1 million and a liquidity discount amortization of zero and $9.2 million, respectively. As of both March 31, 2014 and December 31, 2013, accrued interest payable on the Notes was $1.9 million.

Fair Value of Asset Backed Securities

The Company determined the fair value of asset-backed securities issued to be $708.5 million and $711.0 million as of March 31, 2014 and December 31, 2013, respectively, based upon pricing from published market research for equivalent-rated CLO notes. Based on the fair value methodology, the Company has identified the asset-backed securities issued as Level 2 liabilities.

8. Stockholders’ Equity

Stock Repurchase Program

On March 5, 2013, the Company's board of directors authorized the repurchase of an additional 1.3 million shares, and extended the authorization of the repurchase of all previously authorized shares for repurchases through December 31, 2014.

During the three months ended March 31, 2014 and 2013, the Company repurchased 4,656 and 12,790 shares, respectively, of the Company’s common stock at an average price of $7.04 per share and $6.41 per share, respectively, for an aggregate purchase price of $33 thousand and $0.1 million, respectively. The 4,656 shares repurchased during the three months ended March 31, 2014 that were deemed to have been repurchased in connection with employee stock plans, whereby the Company’s shares were issued on a net basis to employees for the payment of applicable statutory withholding taxes and therefore such withheld shares are deemed to be purchased by the Company. The Company repurchased 3,284 shares during the three months ended March 31, 2013 that were deemed to have been repurchased in connection with employee stock plans, whereby the Company’s shares were issued on a net basis to employees for the payment of applicable statutory withholding taxes and therefore such withheld shares are deemed to be purchased by the Company. The remaining shares were purchased on the open market.

- 21 -

The timing and amount of any future open market stock repurchases will be determined by JMP management based on its evaluation of market conditions, the relative attractiveness of other capital deployment activities, regulatory considerations and other factors. Any open market stock repurchase activities will be conducted in compliance with the safe harbor provisions of Rule 10b-18 of the Exchange Act, or in privately negotiated transactions. Repurchases of common stock may also be made under an effective Rule 10b5-1 plan which permits common stock to be repurchased when the Company may otherwise be prohibited from doing so under insider trading laws. This repurchase program may be suspended or discontinued at any time.

9. Stock-Based Compensation

On March 26, 2007, the board of directors adopted the JMP Group Inc. 2007 Equity Incentive Plan (“JMP Group 2007 Plan”), which was approved by the stockholders on April 12, 2007. The board reauthorized this plan and it was approved by our stockholders on June 6, 2011. JMP Group Inc. authorized the issuance of 4,000,000 shares of its common stock under this Plan. This amount is increased by any shares JMP Group Inc. purchases on the open market, or through any share repurchase or share exchange program, as well as any shares that may be returned to the JMP Group 2007 Plan or the JMP Group LLC 2004 Equity Incentive Plan (“JMP Group 2004 Plan”) as a result of forfeiture, termination or expiration of awards; not to exceed a maximum aggregate number of shares of 2,960,000 shares under the JMP Group 2004 Plan. The Company will issue shares upon exercises or vesting from authorized but unissued shares or from treasury stock.

Stock Options

The following table summarizes the stock option activity for the three months ended March 31, 2014:

	Three Months Ended
	March 31, 2014
	Shares Subject			Weighted Average
	to Option			Exercise Price

Balance, beginning of year		2,370,290		$	7.54
Granted ⁽¹⁾		1,525,000			6.84
Cancelled		(48,100	)		10.00
Forfeited		(50,000	)		6.24
Balance, end of period		3,797,190		$	7.24

Options exercisable at end of period		772,190		$	10.00

(1)

These options have a Company performance-based condition and a three-year service condition and will vest when both conditions are met.

The following table summarizes the stock options outstanding as well as stock options vested and exercisable as of March 31, 2014:

March 31, 2014

Options Outstanding

Options Vested and Exercisable

Weighted

Average

Weighted

Average

Weighted

Range of

Remaining

Average

Aggregate

Remaining

Average

Aggregate

Exercise

Number

Contractual

Exercise

Intrinsic

Number

Contractual

Exercise

Intrinsic

Prices

Outstanding

Life in Years

Price

Value

Exercisable

Life in Years

Price

Value

$6.05

$10.00

3,797,190

4.53

7.24

1,759,300

772,190

1.66

10.00

The Company recognizes stock-based compensation expense for stock options over the graded vesting period of the options using the accelerated attribution method. The Company recognized compensation expense related to stock options of $0.4 million and zero for the three months ended March 31, 2014 and 2013, respectively.

As of March 31, 2014, there was $5.1 million of unrecognized compensation expense related to stock options.

There were no stock options exercised during the quarters ended March 31, 2014 and 2013. As a result, the Company did not recognize any current income tax benefits from the exercise of stock options during these periods.

The Company uses the Black-Scholes option-pricing model or other quantitative models to calculate the fair value of option awards.

In the first quarter of 2014, the Company granted stock options to purchase approximately 1.5 million shares of the Company's common stock to certain employees and directors for long-term incentive purposes. The options have an exercise price ranging from $6.79 to $7.33 per share, an exercise period of 5.8 years and a Company performance-based condition as well as a three-year requisite service period. The fair value of these options was determined using a quantitative model using the following assumptions: expected life of 5.8 years, risk-free interest rate ranging from 1.92% to 2.02%, dividend yield ranging from 2.41% to 2.64% and volatility ranging from 41.41% to 43.15%. The risk-free rate was interpolated from the U.S. constant maturity treasuries for a term corresponding to the maturity of the option. The volatility was calculated from the historical weekly stock prices of the Company as of the grant date for a term corresponding to the maturity of the option. The dividend yield was calculated as the annualized most recent declared dividend divided by stock price.

- 22 -

Restricted Stock Units and Restricted Shares

In the first quarter of 2014, the Company granted approximately 428,000 restricted stock units (“RSUs”) to certain employees as deferred compensation. In addition, approximately 334,000 and 67,000 RSUs were granted in the first quarter of 2014 to certain employees for long-term incentive purposes and as hiring bonuses, respectively. These RSUs have requisite service periods of two to three years and receive cash dividend equivalents during the vesting periods. The fair value of these RSUs was determined based on the closing price of the Company’s stock on the grant date without any discount. Approximately 48,000 RSUs were granted in the first quarter of 2014 to Company directors. These RSUs have requisite service periods of one year. The fair value of these RSUs was determined based on the closing price of the Company’s stock on the grant date, discounted for dividends not received during the vesting period.

The following table summarizes the RSUs activity for the three months ended March 31, 2014:

	Three Months Ended
	March 31, 2014
	Restricted			Weighted Average
	Stock Units			Grant Date Fair Value

Balance, beginning of year		1,881,149		$	6.70
Granted		876,407			6.98
Vested		(22,532	)		7.88
Forfeited		(116,599	)		6.54
Balance, end of period		2,618,425		$	6.79

The aggregate fair value of RSUs vested during the three months ended March 31, 2014 and 2013 were $0.2 million and zero. For the three months ended March 31, 2014 and 2013, the income tax benefits realized from the vested RSUs was $0.1 million and zero, respectively.

The Company recognizes compensation expense for RSUs over the vesting period using the accelerated attribution method when they are subject to graded vesting and on a straight-line basis when they are subject to cliff vesting. For the three months ended March 31, 2014 and 2013, the Company recorded compensation expenses of $1.6 million and $0.8 million for RSUs.

For the three months ended March 31, 2014 and 2013, the Company recognized income tax benefits of $0.8 million and $1.0 million, respectively, related to the compensation expense recognized for RSUs. As of March 31, 2104, there was $10.3 million of unrecognized compensation expense related to RSUs expected to be recognized over a weighted average period of 1.56 years.

The Company pays cash dividend equivalents on certain unvested RSUs. Dividend equivalents paid on RSUs are generally charged to retained earnings. Dividend equivalents paid on RSUs expected to be forfeited are included in compensation expense. The Company accounts for the tax benefit related to dividend equivalents paid on RSUs as an increase on additional paid-in capital.

10. Net Income per Share of Common Stock

Basic net income (loss) per share for the Company is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted net income (loss) per share is calculated by adjusting the weighted average number of outstanding shares to reflect the potential dilutive impact as if all potentially dilutive stock options or RSUs were exercised or converted under the treasury stock method. However, for periods that the Company has a net loss the effect of outstanding stock options or RSUs is anti-dilutive and, accordingly, is excluded from the calculation of diluted loss per share.

- 23 -

The computations of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 are shown in the tables below:

(In thousands, except per share data)	Three Months Ended March 31,
	2014		2013

Numerator:
Net income (loss) attributable to JMP Group, Inc	$	3,998	$	(1,719	)

Denominator:
Basic weighted average shares outstanding		21,820		22,607

Effect of potential dilutive securities:
Restricted stock units		1,792		-
Diluted weighted average shares outstanding		23,612		22,607

Net income (loss) per share
Basic	$	0.17	$	(0.08	)
Diluted	$	0.17	$	(0.08	)

In the table above, unvested non-forfeitable RSUs that have divided equivalent rights are treated as a separate class of securities in calculated net income or loss per share. The impact of applying this methodology was a reduction in basic net income per share of $0.01 and zero for the quarters ended March 31, 2014 and 2013.

Stock options to purchase 3,187,206 and 2,419,261 shares of common stock for the quarters ended March 31, 2014 and 2013, respectively, were anti-dilutive and, therefore, were not included in the computation of diluted weighted-average common shares outstanding.

Stock options to purchase 886,222 of these shares were not included in the computation of diluted weighted-average common shares outstanding for the quarter ended March 31, 2014, because relevant performance-based condition has not been met.

Restricted stock units for 239,202 and 1,454,841 shares of common stock for the three months ended March 31, 2014 and 2013, respectively, were anti-dilutive and, therefore, were not included in the computation of diluted weighted-average common shares outstanding.

11. Employee Benefits

All salaried employees of the Company are eligible to participate in the JMP Group 401(k) Plan after three months of employment. Participants may contribute up to the limits set by the U.S. Internal Revenue Service. There were no contributions by the Company during the three months ended March 31, 2014 or 2013.

12. Income Taxes

A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the three months ended March 31, 2014 and 2013 is as follows:

	Three Months Ended March 31,
	2014			2013
Tax at federal statutory tax rate		35.00	%		34.00	%
State income tax, net of federal tax benefit and other permanent items		1.00	%		0.56	%
Rate before one-time events		36.00	%		34.56	%
Deferred tax asset written off related to options and RSUs		-3.45	%		-2.05	%
Adjustment for prior year taxes		-45.22	%		0.00	%
Change in New York valuation		137.30	%		2.53	%
Adjustment for permanent items (HGC, HGC II, HCC LLC, CLO II and HCAP Advisors non-controlling interest) (1)		-896.19	%		-3.02	%
California state enterprise zone tax credit		0.00	%		1.64	%
Change in state tax rate		40.43	%		0.00	%
Effective tax rate		-731.13	%		33.66	%

(1)	HCC LLC (until May 2, 2013), CLO II (effective April 30, 2013), HCAP Advisors (effective May 1, 2013), HGC and HGC II are consolidated for financial reporting purposes but not for tax purposes.

Income tax expense was $1.7 million on pre-tax loss of $0.2 million for the quarter ended March 31, 2014 compared to an income tax benefit of $0.8 million on pre-tax loss of $2.5 million for the same period in 2013 and resulted in effective tax rates of negative 731% and positive 34%.

- 24 -

The increase in the effective tax rate for the quarter ended March 31, 2014 compared to the same period in 2013 was primarily attributable to the income and losses associated with HCC LLC (until May 2, 2013), CLO II (effective April 30, 2013), HCAP Advisors (effective May 1, 2013), HGC and HGC II, which are consolidated for financial reporting purposes but excluded from the computation of income tax expense. The effective tax rate is high as it is calculated on a consolidated level using tax expense related to the Company (excluding non-controlling interest) divided by pre-tax loss including non-controlling interest.

The effective tax rate calculated excluding the non-controlling interest in pre-tax loss for the quarter ended March 31, 2014 is 32% compared to 36% for the same period in 2013. The decrease in the effective tax rate is primarily attributable to the partial release of the valuation allowance. The effective tax rate approach is used to compute the tax expense with the exception of the non-controlling interest which is calculated on a discrete basis due to its historical volatility.

New York Senate Bill 6359 was enacted on March 31, 2014 and becomes effective January 1, 2015. This bill includes changes to the corporate tax rate, establishing economic nexus provisions and unitary combined reporting requirements. These changes have an impact on the Company’s measurement of the New York State net deferred tax assets. As a result, in the quarter ended March 31, 2014, the Company partially released the valuation allowance related to non-NOL deferred tax assets and recorded an income tax benefit of $0.3 million.

13. Commitments and Contingencies

The Company leases office space in California, Illinois, Georgia, Massachusetts, Minnesota, New York, and Pennsylvania under various operating leases. Rental expense for both the three months ended March 31, 2014 and 2013 were $0.9 million. The Company recorded sublease income of $79 thousand and $39 thousand for the three months ended March 31, 2014 and 2013, respectively. The California, Illinois, Minnesota and New York leases included a period of free rent at the start of the lease. Rent expense is recognized over the entire lease period uniformly net of the free rent savings. The aggregate minimum future commitments of these leases are:

Year Ending December 31,	Minimum Future Lease Commitments
2014		3,104
2015		4,105
2016		4,052
2017		3,447
2018		2,254
Thereafter		903
	$	17,865

In the normal course of business, the Company enters into underwriting commitments. Settlement of transactions relating to such underwriting commitments, which were open at March 31, 2014 and December 31, 2013, had no material effect on the consolidated financial statements.

The marketable securities owned and the restricted cash, as well as the cash held by the clearing broker, may be used to maintain margin requirements. At March 31, 2014 and December 31, 2013, the Company had $0.4 million and $0.2 million of cash on deposit with JMP Securities’ clearing broker, respectively. Furthermore, the marketable securities owned may be hypothecated or borrowed by the clearing broker.

Unfunded commitments are agreements to lend to a borrower, provided that all conditions have been met. As of March 31, 2014 and December 31, 2013, the Company had unfunded commitments of $60.6 million and $40.4 million, respectively, in the Corporate Credit segment. $8.8 million and $8.7 million of the unfunded commitments as of March 31, 2014 and December 31, 2013 relate to commitments traded but not yet closed in CLO II. $34.0 million and $10.4 million of the unfunded commitments as of March 31, 2014 and December 31, 2013 relate to commitments traded but not yet closed in CLO III. The Company determined the fair value of the unfunded commitments to be $60.9 million and $41.0 million as of March 31, 2014 and December 31, 2013, respectively, using the average market bid and ask quotation obtained from a loan pricing service.

14. Regulatory Requirements

JMP Securities is subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital, as defined, and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. JMP Securities had net capital of $32.0 million and $59.1 million, which were $31.0 million and $58.1 million in excess of the required net capital of $1.0 million at March 31, 2014 and December 31, 2013, respectively. JMP Securities’ ratio of aggregate indebtedness to net capital was 0.45 to 1 and 0.16 to 1 at March 31, 2014 and December 31, 2013, respectively.

Since all customer transactions are cleared through another broker-dealer on a fully disclosed basis, JMP Securities is not required to maintain a separate bank account for the exclusive benefit of customers in accordance with Rule 15c3-3 under the Exchange Act.

15. Related Party Transactions

The Company earns base management fees and incentive fees from serving as investment advisor for various affiliated entities, including corporations, partnerships, limited liability companies, and offshore investment companies. The Company also owns an investment in most of such affiliated entities. As of March 31, 2014 and December 31, 2013, the aggregate fair value of the Company’s investments in the affiliated entities for which the Company serves as the investment advisor was $76.9 million and $55.3 million, respectively, which consisted of investments in hedge and other private funds of $66.5 million and $44.6 million, respectively, investments in funds of funds of $0.1 million for both periods, and an investment in HCC common stock of $10.3 million and $10.6 million, respectively. Base management fees earned from these affiliated entities were $3.0 million and $2.4 million for the quarters ended March 31, 2014 and 2013, respectively. Also, the Company earned incentive fees of $2.9 million and $4.4 million, from these affiliated entities for the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014 and December 31, 2013, the Company had incentive fees receivable from these affiliated entities of $3.3 million and $7.9 million, respectively.

- 25 -

16. Guarantees

JMP Securities has agreed to indemnify its clearing broker for losses that the clearing broker may sustain from the accounts of customers introduced by JMP Securities. Should a customer not fulfill its obligation on a transaction, JMP Securities may be required to buy or sell securities at prevailing market prices in the future on behalf of its customer. JMP Securities’ obligation under the indemnification has no maximum amount. All unsettled trades at March 31, 2014 and December 31, 2013 have subsequently settled with no resulting material liability to the Company. For the three months ended March 31, 2014 and 2013, the Company had no material loss due to counterparty failure, and has no obligations outstanding under the indemnification arrangement as of March 31, 2014 and December 31, 2013.

The Company is engaged in various investment banking and brokerage activities whose counterparties primarily include broker-dealers, banks and brokerage or investment banking clients. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company’s policy to review, as necessary, the credit standing of each counterparty with which it conducts business.

17. Litigation

The Company is involved in a number of judicial, regulatory and arbitration matters arising in connection with our business. The outcome of matters the Company has been and currently is involved in cannot be determined at this time, and the results cannot be predicted with certainty. There can be no assurance that these matters will not have a material adverse effect on our results of operations in any future period and a significant judgment could have a material adverse impact on our financial condition, results of operations and cash flows. The Company may in the future become involved in additional litigation in the ordinary course of our business, including litigation that could be material to our business.

The Company reviews the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in liability and the amount of loss, if any, can be reasonably estimated. Generally, given the inherent difficulty of predicting the outcome of matters the Company is involved in, particularly cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution. For these matters, no reserve is established until such time, other than for reasonably estimable legal fees and expenses. Management, after consultation with legal counsel, believes that the currently known actions or threats will not result in any material adverse effect on the Company’s financial condition, results of operations or cash flows.

18. Financial Instruments with Off-Balance Sheet Risk, Credit Risk or Market Risk

The majority of the Company’s transactions, and consequently the concentration of its credit exposure, is with its clearing broker. The clearing broker is also a significant source of short-term financing for the Company, which is collateralized by cash and securities owned by the Company and held by the clearing broker. The Company’s securities owned may be pledged by the clearing broker. The receivable from the clearing broker represents amounts receivable in connection with the trading of proprietary positions.

The Company is also exposed to credit risk from other brokers, dealers and other financial institutions with which it transacts business. In the event that counterparties do not fulfill their obligations, the Company may be exposed to credit risk.

The Company’s trading activities include providing securities brokerage services to institutional clients. To facilitate these customer transactions, the Company purchases proprietary securities positions (“long positions”) in equity securities. The Company also enters into transactions to sell securities not yet purchased (“short positions”), which are recorded as liabilities on the Consolidated Statements of Financial Condition. The Company is exposed to market risk on these long and short securities positions as a result of decreases in market value of long positions and increases in market value of short positions. Short positions create a liability to purchase the security in the market at prevailing prices. Such transactions result in off-balance sheet market risk as the Company’s ultimate obligation to satisfy the sale of securities sold, but not yet purchased may exceed the amount recorded in the Consolidated Statements of Financial Condition. To mitigate the risk of losses, these securities positions are marked to market daily and are monitored by management to assure compliance with limits established by the Company.

In connection with the CLOs, the Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include unfunded commitments to lend and standby letters of credit. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet of the Company.

Unfunded commitments are agreements to lend to a borrower, provided that all conditions have been met. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each borrower’s creditworthiness on a case by case basis.

- 26 -

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a borrower to a third party. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to borrowers. In its Corporate Credit segment, the Company had unfunded commitments of $60.6 million and $40.4 million and standby letters of credit of $1.3 million and $1.8 million at March 31, 2014 and December 31, 2013, respectively. $8.8 million and $8.7 million of the unfunded commitments as of March 31, 2014 and December 31, 2013 relate to commitments traded but not yet closed in CLO II. $34.0 million and $10.4 million of the unfunded commitments as of March 31, 2014 and December 31, 2013 relate to commitments traded but not yet closed in CLO III.

19. Business Segments

The Company’s business results are categorized into the following five business segments: Broker-Dealer, Asset Management, Corporate Credit, Investment Income and Corporate Costs. The Broker-Dealer segment includes a broad range of services, such as underwriting and acting as a placement agent for public and private capital markets raising transactions and financial advisory services in M&A, restructuring and other strategic transactions. The Broker-Dealer segment also includes institutional brokerage services and equity research services to our institutional investor clients. The Asset Management segment includes the management of a broad range of pooled investment vehicles, including the Company’s hedge funds, hedge funds of funds. The Corporate Credit segment includes the management of collateralized loan obligations and small business loans. The Investment Income segment includes income from the Company’s principal investments in public and private securities, as well as any other net interest and income from investing activities. The Corporate Costs segment includes expenses related to JMP Group Inc., the holding company, and JMP Group LLC, and is mainly comprised of corporate overhead expenses and interest expense related to the Company’s credit facility with City National Bank.

Management uses Operating Net Income as a key metric when evaluating the performance of JMP Group’s core business strategy and ongoing operations. This measure adjusts the Company’s net income as follows: (i) reverses non-cash stock-based compensation expense related to historical equity awards granted in prior periods, (ii) recognizes 100% of the cost of deferred compensation in the period for which such compensation was awarded, instead of recognizing such cost over the vesting period as required under GAAP, (iii) excludes the net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Corporation for periods prior to that ended September 30, 2013, (iv) reverses net unrealized gains and losses on strategic equity investments and warrants, (v) excludes unrealized mark-to-market gains or losses on the investment portfolio at HCC LLC, (vi) excludes general loan loss reserves on the CLOs, and (vii) presents revenues and expenses on a basis that deconsolidates HGC, HGC II and HCC LLC. HGC and HGC II are excluded as we own a relatively small percentage of these funds, although they are consolidated. These charges may otherwise obscure the company’s operating income and complicate an assessment of the company’s core business activities. The operating pre-tax net income facilitates a meaningful comparison of the Company’s results in a given period to those in prior and future periods. The revenues and expenses are presented on a basis that deconsolidates the investment funds Harvest manages.

The Company’s segment information for the quarters ended March 31, 2014 and 2013 was prepared using the following methodology:

•

Revenues and expenses directly associated with each segment are included in determining segment operating income.

•

Revenues and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors.

•

Each segment’s operating expenses include: a) compensation and benefits expenses that are incurred directly in support of the segments and b) other operating expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services.

When evaluating the performance of JMP Group's core business strategy and ongoing operations, management also reviewed the Adjusted Operating Net Income through December 31, 2013, which excluded the non-cash gains and losses recognized by JMP Credit Corp due to the sale or payoff of loans originally included in the portfolio acquired by JMP Group in April 2009, as well as the specific reserve for loan losses related to this portfolio of loans. Management believed this metric to be instructive to assess the company's core earnings over time without regard to a relatively volatile revenue stream. Earnings derived from sales or payoffs of acquired loans, while once substantial, are no longer material, as the portfolio of acquired loans is almost entirely liquidated. Therefore, the segments are now based on operating net income. The reconciling items for the quarter ended March 31, 2013 from adjusted operating net income to operating net income include adding back $0.2 million non-cash gains on the acquired loan portfolio, subtracting the specific reserve on the loan from the portfolio of $0.9 million, and adding back the related compensation expense of $0.3 million for the three months ended March 31, 2013.

- 27 -

Segment Operating Results

Management believes that the following information provides a reasonable representation of each segment’s contribution to revenues, income and assets:

(In thousands)	Three Months Ended March 31,
	2014			2013
Broker-Dealer
Non-interest revenues	$	31,849		$	17,372
Total net revenues after provision for loan losses	$	31,849		$	17,372
Non-interest expenses		25,335			15,737
Segment operating pre-tax net income	$	6,514		$	1,635
Segment assets	$	87,374		$	61,114
Asset Management
Non-interest revenues	$	6,224		$	8,159
Total net revenues after provision for loan losses	$	6,224		$	8,159
Non-interest expenses		6,432			7,539
Non-controlling interest		(356	)		-
Segment operating pre-tax net income	$	148		$	620
Segment assets	$	115,026		$	63,731
Corporate Credit
Non-interest revenues	$	1,061		$	884
Total net revenues after provision for loan losses	$	1,061		$	884
Non-interest expenses		1,024			727
Segment operating pre-tax net income	$	37		$	157
Segment assets	$	81,941		$	8,878
Investment Income
Non-interest revenues	$	2,375		$	3,472
Net interest income		3,777			4,289
Provision for loan losses		53			(950	)
Total net revenues after provision for loan losses	$	6,205		$	6,811
Non-interest expenses		1,360			(846	)
Non-controlling interest		150			176
Segment operating pre-tax net income	$	4,695		$	7,481
Segment assets	$	823,041		$	513,237
Corporate Costs
Non-interest expenses		4,239			3,989
Segment operating pre-tax net loss	$	(4,239	)	$	(3,989	)
Segment assets	$	233,367		$	203,204
Eliminations
Non-interest revenues	$	(1,280	)	$	(1,210	)
Total net revenues after provision for loan losses	$	(1,280	)	$	(1,210	)
Non-interest expenses		(1,190	)		(1,139	)
Segment operating pre-tax net loss	$	(90	)	$	(71	)
Segment assets	$	(176,934	)	$	(100,211	)
Total Segments
Non-interest revenues	$	40,229		$	28,677
Net interest income		3,777			4,289
Provision for loan losses		53			(950	)
Total net revenues after provision for loan losses	$	44,059		$	32,016
Non-interest expenses		37,200			26,007
Non-controlling interest		(206	)		176
Segment operating pre-tax net income	$	7,065		$	5,833
Total assets	$	1,163,815		$	749,953

- 28 -

The following tables reconcile the total segments to consolidated net income before income tax expense and total assets as of and for the three months ended March 31, 2014 and 2013.

(In thousands)	As of and Three Months Ended March 31, 2014										As of and Three Months Ended March 31, 2013
	Total Segments			Consolidation Adjustments and Reconciling Items				JMP Consolidated			Total Segments			Consolidation Adjustments and Reconciling Items				JMP Consolidated

Non-interest revenues	$	40,229		$	(5,832	)	(a)	$	34,397		$	28,677		$	(1,339	)	(a)	$	27,338
Net Interest Income		3,777			(17	)	(b)		3,760			4,289			(7,430	)	(b)		(3,141	)
Provision for loan losses		53			(550	)			(497	)		(950	)		1				(949	)
Total net revenues after provision for loan losses	$	44,059		$	(6,399	)		$	37,660		$	32,016		$	(8,768	)		$	23,248
Non-interest expenses		37,200			693		(c )		37,893			26,007			(236	)	(c )		25,771
Noncontrolling interest		(206	)		(5,721	)			(5,927	)		176			(168	)			8
Operating pre-tax net income (loss)	$	7,065		$	(1,371	)	(d)	$	5,694		$	5,833		$	(8,364	)	(d)	$	(2,531	)
Total assets	$	1,163,815		$	-			$	1,163,815		$	749,953		$	-			$	749,953

(a) Non-interest revenue adjustments is comprised of loan sale gains, mark-to-market gains/losses, strategic equity investments and warrants, and fund-related revenues recognized upon consolidation of certain Harvest Funds.

(b) The Net Interest Income adjustment is comprised of the non-cash net amortization of liquidity discounts at JMP Credit, due to scheduled contractual repayments, and amortization expense related to an intangible asset.

(c) Non-interest expense adjustments relate to reversals of stock-based compensation and exclusion of fund-related expenses recognized upon consolidation of certain Harvest Funds.

(d) Reconciling operating pre-tax net income to Consolidated Net Income before income tax expense in the Consolidated Statements of Operations consists of the following:

(In thousands)	Three Months Ended March 31,
	2014			2013
Total Segments operating pre-tax net income	$	7,065		$	5,833
Subtract / (Add back)
Stock options		395			137
Compensation expense - RSUs		853			616
Deferred compensation program accounting adjustment		(596	)		(1,124	)
Net unrealized loss on strategic equity investments and warrants.		174			157
General loan loss reserve for CLOs		545			-
Net amortization of liquidity discounts on loans and asset-backed securities issued		-			8,740
Unrealized mark-to-market gain - HCC		-			(162	)
Consolidated pre-tax net income (loss) attributable to JMP Group Inc.	$	5,694		$	(2,531	)

Income tax expense (benefit)		1,696			(812	)
Consolidated Net Income (Loss) attributable to JMP Group Inc.	$	3,998		$	(1,719	)

20. Summarized Financial Information for Equity Method Investments

The tables below present summarized financial information of the hedge funds which the Company accounts for under the equity method. The financial information below represents 100% of the net assets, net realized and unrealized gains (losses) and net investment income (loss) of such hedge funds as of the dates and for the periods indicated.

(In thousands)	March 31, 2014		December 31, 2013
	Net Assets		Net Assets
Harvest Opportunity Partners II	$	105,231	$	95,362
Harvest Small Cap Partners		344,461		321,714
Harvest Franchise Fund		113,155		114,145
Harvest Agriculture Select		53,818		43,089
Harvest Technology Partners		46,872		42,661

- 29 -

(In thousands)	Three Months Ended March 31,
	2014					2013
	Net Realized and Unrealized Gains (Losses)		Net Investment Income (Loss)			Net Realized and Unrealized Gains (Losses)			Net Investment Income (Loss)
Harvest Opportunity Partners II	$	2,125	$	(100	)	$	3,603		$	(349	)
Harvest Small Cap Partners		19,724		(6,255	)		24,551			(4,631	)
Harvest Franchise Fund		645		(212	)		7,354			(370	)
Harvest Agriculture Select		1,375		(188	)		1,717			(102	)
Harvest Technology Partners		589		(166	)		(1,200	)		(213	)
Harvest Diversified Partners		-		-			671			(153	)

21. Subsequent Events

On April 29, 2014, the board declared a cash dividend of $0.05 per share of common stock for the first quarter of 2014 to be paid on May 30, 2014, to common stockholders of record on May 16, 2014.

On April 30, 2014, the Company entered into an amendment to its Credit Agreement (the “Amendment”) between JMP Group and CNB. The Amendment provides a $25.0 million line of credit with a revolving period of two years. At the end of these two years, any outstanding amounts convert to a term loan. This term loan will be repaid in equal quarterly installments over the following three years. Proceeds for this line of credit will be used to make financial investments, for working capital purposes, for general corporate purposes, as well as a $5.0 million sublimit to issue letters of credit.

Also pursuant to this Amendment, the $15.0 million line of credit held at JMP Securities, which was scheduled to mature May 6, 2014, was increased to $20.0 million and renewed for one year. On May 6, 2015, any existing outstanding amount will convert to a loan maturing the following year. The remaining terms of this line of credit are consistent with those of the existing line of credit.

- 30 -

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read together with the unaudited consolidated financial statements and the related notes included elsewhere in this report. For additional context with which to understand our financial condition and results of operations, see the MD&A for the fiscal year ended December 31, 2013 contained in our Annual Report on Form 10-K (the “2013 10-K”) filed with the SEC on March 13, 2014, as well as the Consolidated Financial Statements and Notes contained therein.

Cautionary Statement Regarding Forward Looking Statements

This MD&A and other sections of this report contain forward looking statements. We make forward-looking statements, as defined by the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, and in some cases, you can identify these statements by forward-looking words such as “if,” “shall,” “may,” “might,” “will likely result,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “intend,” “goal,” “objective,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, 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 that we believe to be reasonable. There are or may be important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the historical or future results, level of activity, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, those discussed under the caption “Risk Factors” in our 2013 10-K. In preparing this MD&A, we presume that readers have access to and have read the MD&A in our 2013 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. We undertake no duty to update any of these forward-looking statements after the date of filing of this report to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.

Overview

JMP Group Inc., together with its subsidiaries (collectively, the “Company”, “we” or “us”), is a full-service investment banking and asset management firm headquartered in San Francisco, California. We have a diversified business model with a focus on small and middle-market companies and provide:

•

investment banking, including corporate finance, mergers and acquisitions and other strategic advisory services, to corporate clients;

•

sales and trading, and related brokerage services to institutional investors;

•

proprietary equity research in our four target industries;

•

asset management products and services to institutional investors, high net-worth individuals and for our own account; and

•

management of collateralized loan obligations.

Components of Revenues

We derive revenues primarily from fees earned from our investment banking business, net commissions on our trading activities in our sales and trading business, asset management fees and incentive fees in our asset management business, and interest income on collateralized loan obligations we manage. We also generate revenues from principal transactions, interest, dividends, and other income.

Investment Banking

We earn investment banking revenues from underwriting securities offerings, arranging private capital market transactions and providing advisory services in mergers and acquisitions and other strategic advisory assignments.

Underwriting Revenues

We earn underwriting revenues from securities offerings in which we act as an underwriter, such as initial public offerings and follow-on equity offerings. Underwriting revenues include management fees, underwriting fees, selling concessions and realized and unrealized net gains and losses on equity positions held in inventory for a period of time to facilitate the completion of certain underwritten transactions. We record underwriting revenues, net of related syndicate expenses, at the time the underwriting is completed. In syndicated underwritten transactions, management estimates our share of transaction-related expenses incurred by the syndicate, and we recognize revenues net of such expense. On final settlement by the lead manager, typically 90 days from the trade date of the transaction, we adjust these amounts to reflect the actual transaction-related expenses and our resulting underwriting fee. We receive a higher proportion of total fees in underwritten transactions in which we act as a lead manager.

Strategic Advisory Revenues

Our strategic advisory revenues primarily include success fees on closed merger and acquisition transactions, as well as retainer fees, earned in connection with advising both buyers’ and sellers’ transactions. We also earn fees for related advisory work and other services such as providing fairness opinions and in valuation analyses. We record strategic advisory revenues when the transactions or the services (or, if applicable, separate components thereof) to be performed are substantially completed, the fees are determinable and collection is reasonably assured.

- 31 -

Private Capital Market and other Revenues

We earn agency capital market and other fees in non-underwritten transactions such as private placements of equity securities, private investments in public equity (“PIPE”) transactions, Rule 144A private offerings and trust preferred securities offerings. We record private placement revenues on the closing date of these transactions.

Since our investment banking revenues are generally recognized at the time of completion of each transaction or the services to be performed, these revenues typically vary between periods and may be considerably affected by the timing of the closing of significant transactions.

Brokerage Revenues

Our brokerage revenues include commissions paid by customers from brokerage transactions in exchange-listed and over-the-counter (“OTC”) equity securities. Commissions are recognized on a trade date basis. Brokerage revenues also include net trading gains and losses that result from market-making activities and from our commitment of capital to facilitate customer transactions. Our brokerage revenues may vary between periods, in part depending on commission rates, trading volumes and our ability to continue to deliver research and other value-added services to our clients. The ability to execute trades electronically, through the Internet and through other alternative trading systems has increased pressure on trading commissions and spreads. We expect this trend toward alternative trading systems and pricing pressures in our brokerage business to continue. We are, to some extent, compensated through brokerage commissions for the value of research and other value- added services we deliver to our clients. These “soft dollar” practices have been the subject of discussion among regulators, the investment banking community and our sales and trading clients. In particular, commission sharing arrangements have been adopted by some large institutional investors. In these arrangements, institutional investors concentrate their trading with fewer “execution” brokers and pay a fixed amount for execution with an additional amount set aside for payments to other firms for research or other brokerage services. Accordingly, we may experience reduced (or eliminated) trading volume with such investors but may be compensated for our research and sales efforts through allocations of the designated amounts. Depending on the extent to which we adopt this practice and depending on our ability to reach arrangements on terms acceptable to us, this trend would likely impair the revenues and profitability of our commission business by negatively affecting both volumes and trading commissions in our commission business.

Asset Management Fees

Asset management fees for hedge funds, hedge funds of funds, private equity funds, HCC LLC (through May 2, 2013), and HCC include base management fees and incentive fees earned from managing our family of investment partnerships and a publicly-traded specialty finance company. Earned base management fees are generally based on the fair value of assets under management or aggregate capital commitments and the fee schedule for each fund and account. We also earn incentive fees based upon the performance of investment funds and accounts. For most of the funds, such fees are based on a percentage of the excess of an investment return over a specified high-water mark or hurdle rate over a defined performance period. For private equity funds, incentive fees are based on a specified percentage of realized gains from the disposition of each portfolio investment in which each investor participates, and we earn after returning contributions by the investors for that portfolio investment and for all other portfolio investments in which each such investor participates that have been disposed of at the time of distribution. Generally, we do not earn management fees on assets calculated on an average assets under management (“AUM”) basis.

As of March 31, 2014 the contractual base management fees earned from each of these investment funds or company ranged between 1% and 2% of assets under management or were 2% of aggregate committed capital. The contractual incentive fees were generally (i) 20%, subject to high-water marks, for the hedge funds; (ii) 5% to 20%, subject to high-water marks or a performance hurdle rate, for the hedge funds of funds; (iii) 20%, subject to high-water marks, for Harvest Growth Capital LLC (“HGC“) and Harvest Growth Capital II LLC (“HGC II”). Our asset management revenues are subject to fluctuations due to a variety of factors that are unpredictable, including the overall condition of the economy and the securities markets as a whole and our core sectors. These conditions can have a material effect on the inflows and outflows of assets under management, and the performance of our asset management funds. For example, a significant portion of the performance-based or incentive revenues that we recognize are based on the value of securities held in the funds we manage. The value of these securities includes unrealized gains or losses that may change from one period to another. As we consolidate HGC, HGC II and HCC LLC (through May 2, 2013), the management and incentive fees earned at HCS from HGC, HGC II, and HCC LLC (through May 2, 2013), are eliminated in consolidation.

Asset management fees for the collateralized loan obligations (“CLOs”) we manage currently consist only of senior and subordinated base management fees. We recognize base management fees for the CLOs on a monthly basis over the period in which the collateral management services are performed. The base management fees for the CLOs are calculated as a percentage of the average aggregate collateral balances for a specified period. As we consolidate CLO I, CLO II, and CLO III, the management fees earned at JMP Credit Advisors LLC (“JMPCA“) from the CLOs are eliminated on consolidation in accordance with accounting principles GAAP. At March 31, 2014, the contractual senior and subordinated base management fees earned from the CLOs were 0.50% of the average aggregate collateral balance for a specified period.

- 32 -

Redemption provisions of our funds require at least 90 days’ advance notice, except for one fund that requires twelve months advance notice. The following tables present certain information with respect to the investment funds managed by HCS, HCAP Advisors, and CLOs managed by JMPCA:

(In thousands)	Assets Under Management ⁽¹⁾ at				Company's Share of Assets Under Management at
	March 31, 2014		December 31, 2013		March 31, 2014		December 31, 2013
Funds Managed by HCS or HCAP Advisors:
Hedge Funds:
Harvest Opportunity Partners II (2)	$	136,080	$	123,481	$	23,739	$	15,847
Harvest Small Cap Partners		344,461		322,883		3,783		1,003
Harvest Franchise Fund		113,155		114,145		3,801		2,909
Harvest Agriculture Select (2)		103,897		90,589		20,880		14,578
Harvest Technology Partners (2)		46,872		42,661		14,309		10,311
Private Equity Funds:
Harvest Growth Capital LLC (3)		33,791		35,130		1,590		1,649
Harvest Growth Capital LLC II (3)		72,296		73,552		1,611		1,748
Funds of Funds:
JMP Masters Fund		53,856		50,686		153		139
REITs:
New York Mortgage Trust		36,455		34,966	N/A		N/A
Loans:
Harvest Capital Credit Corporation		81,712		72,361	N/A		N/A
HCS and HCAP Advisors Totals	$	1,022,575	$	960,454	$	69,866	$	48,184

CLOs Managed by JMPCA:
CLO I (3)		439,047		441,533	N/A		N/A
CLO II (3)		330,558		330,431	N/A		N/A
CLO III (3)		75,755		10,003	N/A		N/A
JMPCA Totals	$	845,360	$	781,967	N/A		N/A

JMP Group Inc. Totals	$	1,867,935	$	1,742,421	$	69,866	$	48,184

(1)	For hedge funds, private equity funds and funds of funds, assets under management represent the net assets of such funds. For NYMT, assets under management represent the portion of the net assets of NYMT that is subject to the incentive fee calculation. For CLOs, assets under management represent the sum of the aggregate collateral balance and restricted cash to be reinvested in collateral, upon which management fees are earned.
(2)	Harvest Opportunity Partners II (“HOP II”) and Harvest Agriculture Select (“HAS”) include managed accounts in which the Company has neither equity investment nor control. These are included as they follow the respective funds' strategies and earn fees.
(3)	HGC, HGC II, HCAP Advisors, CLO I, CLO II and CLO III were consolidated in the Company’s Statements of Financial Condition at both March 31, 2014 and December 31, 2013.

	Funds Managed by HCS
	Hedge Funds			Private Equity Funds			Funds of Funds		Total

AUM at December 31, 2013	$	693,759		$	108,682		$	50,686		853,127
Contributions		40,392			3,424			-		43,816
Redemptions		(9,149	)		-			-		(9,149	)
Appreciation		19,465			(6,019	)		3,170		16,616
AUM at March 31, 2014	$	744,467		$	106,087		$	53,856		904,410

- 33 -

	Funds Managed by HCS
	Hedge Funds			Private Equity Funds			Funds of Funds			Total

AUM at December 31, 2012	$	605,491		$	47,354		$	42,182			695,027
Contributions		71,675			8,163			-			79,838
Redemptions		(30,584	)		-			(500	)		(31,084	)
Distributions from realization event		-			(1,135	)		-			(1,135	)
Appreciation		31,987			(1,031	)		2,064			33,020
AUM at March 31, 2013	$	678,569			53,351			43,746			775,666

AUM related to hedge funds, private equity funds and funds of funds increased $51.3 million, or 6.0%, from $853.1 million at December 31, 2013 to $904.4 million at March 31, 2014. This increase was primarily attributed to capital contributions of $40.4 million and appreciation of $19.5 million related to hedge funds managed by HCS, partially offset by redemptions of $9.1 million.

AUM related to hedge funds, private equity funds and funds of funds increased $80.6 million, or 11.6%, from $695.0 million at December 31, 2012 to $775.7 million at March 31, 2013. This increase was primarily attributed to capital contributions of $71.7 million and appreciation of $32.0 million related to hedge funds managed by HCS, partially offset by $30.6 million of redemptions in these funds.

(In thousands)	Three Months Ended March 31, 2014								Three Months Ended March 31, 2013
	Company's Share of Change in Fair Value			Management Fee		Incentive Fee			Company's Share of Change in Fair Value			Management Fee		Incentive Fee
Hedge Funds:
Harvest Opportunity Partners II (1)	$	433			230		88		$	386		$	322	$	213
Harvest Small Cap Partners		57			1,511		2,425			227			1,350		3,641
Harvest Franchise Fund		14			312		-			176			236		-
Harvest Agriculture Select (1)		597			240		80			395			136		181
Harvest Technology Partners (1)		128			78		-			(290	)		183		-
Harvest Diversified Partners		-			-		-			368			42		55
Private Equity Funds:
Harvest Growth Capital LLC (2)		(63	)		97		-			-			106		30
Harvest Growth Capital II LLC (2)		(240	)		281		-			(20	)		274		-
Funds of Funds:
JMP Masters Fund		14			120		16			8			98		-
REITs:
New York Mortgage Trust		-			-		310			-			-		300
Loans:
Harvest Capital Credit LLC (2)	N/A				-		-		N/A				77		320
Harvest Capital Credit Corporation	N/A				390		(360	)	N/A				-		-
CLOs:
CLO I (2)	N/A				550		-		N/A				583		-
CLO II (2)	N/A				410		-		N/A				-		-
CLO III (2)	N/A				71		-		N/A				-		-
Totals	$	940		$	4,291	$	2,559		$	1,250		$	3,407	$	4,740

(1)	HOP II, HAS and HTP include managed accounts in which the Company has neither equity investment nor control. These are included with the funds, as they follow the respective strategies and earn fees.
(2)	Revenues earned from HGC, HGC II, HCC LLC (through May 2, 2013), CLO I, CLO II (effective April 30, 2013), CLO III (effective December 11, 2013) are consolidated and then eliminated in consolidation in the Company’s Statements of Operations, net of non-controlling interest.

Principal Transactions

Principal transaction revenues includes realized and unrealized net gains and losses resulting from our principal investments, which include investments in equity and other securities for our own account and as the general partner of funds managed by us, warrants we may receive from certain investment banking assignments, as well as limited partner investments in private funds managed by third parties. In addition, we invest a portion of our capital in a portfolio of equity securities managed by HCS and in side-by-side investments in the funds managed by us. In certain cases, we also co-invest alongside our institutional clients in private transactions resulting from our investment banking business. Principal transaction revenues also include unrealized gains and losses on the private equity securities owned by HGC and HGC II, two private equity funds managed by HCS which are consolidated in our financial statements, as well as unrealized gains and losses on the investments in private companies sponsored by HCS and JMP Capital LLC (“JMP Capital”), and unrealized gains and losses on the warrants, options and equity securities owned by HCC LLC (through May 2, 2013).

- 34 -

Gain on Sale, Payoff and Mark-to-market of Loans

Gain on sale, payoff and mark-to-market of loans consists of gains from the sale and payoff of loans collateralizing asset-backed securities at JMP Credit and small business loans at HCC LLC (through May 2, 2013). Gains are recorded when the proceeds exceed the carrying value of the loan. Gain on sale, payoff and mark-to-market of loans also consists of lower of cost or market adjustments arising from loans held for sale and fair value market adjustments of the small business loans. Losses are recorded for the loan held for sale when the carrying value exceeds fair value. Changes to the fair value of the small business loans were recorded to this line item, when HCC LLC was consolidated.

Net Dividend Income

Net dividend income comprises dividends from our investments offset by dividend expense for paying short positions in our principal investment portfolio.

Other Income

Other income includes revenues from equity method investments and revenues from fee-sharing arrangements with, and fees earned to raise capital for third-party investment partnerships, or funds.

Interest Income

Interest income primarily consists of interest income earned on loans collateralizing asset-backed securities issued, small business loans, and loans held for investment. Interest income on loans comprises the stated coupon as a percentage of the face amount receivable as well as accretion of accretable or purchase discounts and deferred fees. Interest income is recorded on the accrual basis in accordance with the terms of the respective loans unless such loans are placed on non-accrual status.

Interest Expense

Interest expense primarily consists of interest expense incurred on asset-backed securities issued and note payable, and the amortization of bond issuance costs. Interest expense on asset-backed securities is the stated coupon payable as a percentage of the principal amount as well as amortization of the liquidity discount which was recorded at the acquisition date of CLO I. Interest expense is recorded on the accrual basis in accordance with the terms of the respective asset-backed securities issued and note payable.

Provision for Loan Losses

Provision for loan losses includes provision for losses recognized on our loan notes and non-revolving credit agreements at JMP Capital (collectively loans held for investment), and on loans collateralizing asset-backed securities (“ABS”) at JMP Credit to record them at their estimated net realizable value. A provision for loan losses is charged to expense to establish the allowance for loan losses. The allowance for loan losses is maintained at a level, in the opinion of management, sufficient to offset estimated losses inherent in the loan portfolio as of the date of the financial statements. The appropriateness of the allowance and the allowance components are reviewed quarterly. The Company’s estimate of each allowance component is based on observable information and on market and third-party data that we believe are reflective of the underlying loan losses being estimated.

A specific reserve is provided for loans that are considered impaired. A loan is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. We measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of the collateral securing the loan if the loan is collateral dependent, depending on the circumstances and our collection strategy. For those loans held by CLO I at the date of acquisition by JMP Credit, and deemed impaired at that date or a subsequent date, allowance for loan losses is calculated considering two additional factors. For loans deemed impaired at the date of acquisition, if there is a further decline in expected future cash flows, this reduction is recognized as a specific reserve in accordance with the guidance above. For those loans deemed impaired subsequent to the acquisition date, if the net realizable value is lower than the current carrying value then the carrying value is reduced and the difference is booked as provision for loan losses. If the total discount from unpaid principal balance to carrying value is larger than the expected loss at the date of assessment, no provision for loan losses is recognized.

In addition, we provide an allowance on a loan-by-loan basis at JMP Credit for loans that were purchased after the CLO I acquisition. We employ internally developed and third-party estimation tools for measuring credit risk (loan ratings, probability of default, and exposure at default), which are used in developing an appropriate allowance for loan losses. We perform periodic detailed reviews of its loan portfolio to identify risks and to assess the overall collectability of loans.

Loans which are deemed to be uncollectible are charged off and the charged-off amount is deducted from the allowance.

Components of Expenses

We classify our expenses as compensation and benefits, administration, brokerage, clearing and exchange fees, travel and business development, communications and technology, professional fees, impairment loss on purchased management contract and other expenses. A significant portion of our expense base is variable, including compensation and benefits, brokerage clearing and exchange fees, travel and business development and communication and technology expenses.

- 35 -

Compensation and Benefits

Compensation and benefits is the largest component of our expenses and includes employees’ base pay, performance bonuses, sales commissions, related payroll taxes, medical and benefits expenses, as well as expenses for contractors, temporary employees and equity-based compensation. Our employees receive a substantial portion of their compensation in the form of individual performance-based bonuses. As is the widespread practice in our industry, we pay bonuses on an annual basis, which for senior professionals typically make up a large portion of their total compensation. Bonus payments may have a greater impact on our cash position and liquidity in the periods in which they are paid than would otherwise be reflected in our Consolidated Statements of Operations. We accrue for the estimated amount of these bonus payments ratably over the applicable service period.

Compensation is accrued using specific ratios of total compensation and benefits to total revenues based on revenue categories, as adjusted if, in management’s opinion, such adjustments are necessary and appropriate to maintain competitive compensation levels.

Administration

Administration expense primarily includes the cost of hosted conferences, non-capitalized systems and software expenditures, insurance, business tax (non-income), office supplies, recruiting, and regulatory fees.

Brokerage, Clearing and Exchange Fees

Brokerage, clearing and exchange fees include the cost of floor and electronic brokerage and execution, securities clearance, and exchange fees. We clear our securities transactions through J.P. Morgan Clearing Corp. Changes in brokerage, clearing and exchange fees fluctuate largely in line with the volume of sales and trading activity.

Travel and Business Development

Travel and business development expense is net of expenses reimbursed by clients.

Communications and Technology

Communications and technology expense primarily relates to communication and information processing as well as the subscription of certain market data.

Professional Fees

Professional fees primarily relate to legal and accounting professional services.

Other Expenses

Other operating expenses primarily include occupancy, depreciation and CLO administration expense at JMP Credit.

Non-controlling Interest

Non-controlling interest for the three months ended March 31, 2013 includes the interest of third parties in CLO I, HGC, HGC II, and HCC LLC, partially-owned subsidiaries consolidated in our financial statements. Non-controlling interest for the three months ended March 31, 2014 also includes the interest of third parties in CLO II and HCAP Advisors, partially-owned subsidiaries consolidated in our financial statements.

HCS currently manages several asset management funds, which are structured as limited partnerships, and is the general partner of each. The Company assesses whether the partnerships meet the definition of a variable interest entities (“VIEs”) in accordance with ASC 810-10-15-14, and whether the Company qualifies as the primary beneficiary. Funds determined not to meet the definition of a VIE are considered voting interest entities for which the rights of the limited partners are evaluated to determine if consolidation is necessary. Such guidance provides that the presumption that the general partner controls the limited partnership may be overcome if the limited partners have substantive kick-out rights. Except for HGC and HGC II, the partnership agreements for these funds provide for the right of the limited partners to remove the general partners by a simple majority vote of the non-affiliated limited partners. Because of these substantive kick-out rights, the Company, as the general partner, does not control these funds, and therefore does not consolidate them except for HGC and HGC II. The Company accounts for its investments in these non-consolidated funds under the equity method of accounting.

The limited liability company agreements of HGC and HGC II do not provide for the right of the members to remove the manager by a simple majority vote of the non-affiliated members and therefore the manager (with a minority interest in the limited liability company) is deemed to control the funds. As a result, we consolidated HGC from its inception on April 1, 2010 and HGC II from its inception on October 1, 2012.

On August 6, 2010, the Company transferred 109 subordinated notes of CLO I to certain employees in exchange for their interests in JMP Credit. As a result of the aforementioned transfer, we own approximately 94% of the subordinated notes of CLO I.

On April 30, 2013, entities sponsored by JMP Group Inc. closed on a $343.8 million CLO. The senior notes offered in this transaction (the “Secured Notes”) were issued by CLO II, a special purpose Cayman vehicle, and co-issued in part by JMP Credit Advisors CLO II LLC, a special purpose Delaware vehicle, and were backed by a diversified portfolio of broadly syndicated leveraged loans. The Company, through a wholly-owned subsidiary, manages CLO II and from issuance through December 31, 2013 owned $17.3 million, or 72.8%, of the subordinated notes of the Issuer (the “Subordinated Notes”). In the first quarter of 2014, the Company repurchased $6.0 million of the subordinated notes, increasing its ownership to 98.0%.

- 36 -

HCC LLC launched on August 18, 2011 to make direct investments in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments, in privately-held U.S. small to mid-size companies. The Company and affiliates owned approximately 59% of HCC LLC at December 31, 2012. The Company consolidated HCC LLC into its consolidated financial statements. In 2013, the outstanding limited liability company units of HCC LLC were converted into a number of shares of HCC common stock. On May 2, 2013, HCC priced its initial pubic offering, which reduced the Company’s ownership of HCC to 11.6%. At such date, the Company no longer consolidated HCC.

HCAP Advisors was formed on December 18, 2012. HCAP Advisors appointed JMP Group LLC as its Manager effective May 1, 2013, and began offering investment advisory services. The Company owns 51% equity interest in the entity.

- 37 -

Results of Operations

The following table sets forth our results of operations for the three months ended March 31, 2014 and 2013 and is not necessarily indicative of the results to be expected for any future period.

(In thousands)	Three Months Ended March 31,						Change from 2013 to 2014
	2014			2013				$		%
Revenues
Investment banking	$	25,053		$	12,107		$	12,946			106.9	%
Brokerage		6,656			5,194			1,462			28.1	%
Asset management fees		5,544			6,751			(1,207	)		-17.9	%
Principal transactions		(3,693	)		1,917			(5,610	)		N/A
Gain on sale, payoff and mark-to-market of loans		380			1,089			(709	)		-65.1	%
Net dividend income		235			(8	)		243			N/A
Other income		222			288			(66	)		-22.9	%
Non-interest revenues		34,397			27,338			7,059			25.8	%

Interest income		8,588			8,158			430			5.3	%
Interest expense		(4,828	)		(11,299	)		6,471			-57.3	%
Net interest (expense) income		3,760			(3,141	)		6,901			219.7	%

Provision for loan losses		(497	)		(949	)		452			-47.6	%

Total net revenues after provision for loan losses		37,660			23,248			14,412			62.0	%

Non-interest expenses
Compensation and benefits		31,376			19,605			11,771			60.0	%
Administration		1,722			1,331			391			29.4	%
Brokerage, clearing and exchange fees		925			887			38			4.3	%
Travel and business development		851			958			(107	)		-11.2	%
Communication and technology		948			853			95			11.1	%
Professional fees		807			1,024			(217	)		-21.2	%
Other		1,264			1,113			151			13.6	%
Total non-interest expenses		37,893			25,771			12,122			47.0	%
Loss before income tax expense		(233	)		(2,523	)		2,290			90.8	%
Income tax expense (benefit)		1,696			(812	)		2,508			N/A
Net loss		(1,929	)		(1,711	)		(218	)		12.7	%
Less: Net (loss) income attributable to non-controlling interest		(5,927	)		8			(5,935	)		N/A
Net income (loss) attributable to JMP Group Inc.	$	3,998		$	(1,719	)	$	5,717			332.6	%

- 38 -

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Overview

Total net revenues after provision for loan losses increased $14.4 million, or 62.0%, from $23.2 million for the quarter ended March 31, 2013 to $37.7 million for the quarter ended March 31, 2014, driven by increases in non-interest revenues of $7.1 million and net interest income of $6.9 million.

Non-interest revenues increased $7.1 million, or 25.8%, from $27.3 million for the quarter ended March 31, 2013 to $34.4 million in the same period in 2013. This increase was primarily driven by a $12.9 million increase in investment banking revenues, partially offset by a $5.6 million decline in principal transactions revenues.

Net interest income increased $6.9 million, or 219.7%, from $3.1 million net interest expense for the quarter ended March 31, 2013 to $3.8 million net interest income for the same period in 2014. This increase in net interest income is primarily attributed to an increase in net interest earned at JMP Credit, partially offset by $1.0 million interest expense related to the bond issued in January 2014.

Provision for loan losses decreased $0.4 million from $0.9 million for the quarter ended March 31, 2013 to $0.5 million for the quarter ended March 31, 2014. The decrease was driven by a specific reserve from one non-accrual loan held at JMP Credit recorded in the quarter ended March 31, 2013, partially offset by general reserves recorded in connection with the loan portfolio underlying CLO III which closed in the fourth quarter of 2013.

Total non-interest expenses increased $12.1 million, or 47.0%, from $25.8 million for the quarter ended March 31, 2013 to $37.9 million for the quarter ended March 31, 2014, primarily due to an increase in compensation and benefits of $11.8 million.

Net income attributable to JMP Group Inc. increased $5.7 million, or 332.6%, from a $1.7 million loss after income tax benefit of $0.8 million for the quarter ended March 31, 2013 to $4.0 million net income after income tax expense of $1.7 million for the quarter ended March 31, 2014.

Operating Net Income (Non-GAAP Financial Measure)

Management uses Operating Net Income as a key, non-GAAP metric when evaluating the performance of JMP Group’s core business strategy and ongoing operations, as management believes that this metric appropriately illustrates the operating results of JMP Group’s core operations and business activities. Operating Net Income is derived from our segment reported results and is the measure of segment profitability on an after-tax basis used by management to evaluate our performance. This non-GAAP measure is presented to enhance investors’ overall understanding of our current financial performance. Additionally, management believes that Operating Net Income is a useful measure because it allows for a better evaluation of the performance of JMP Group’s ongoing business and facilitates a meaningful comparison of the company’s results in a given period to those in prior and future periods.

However, Operating Net Income should not be considered a substitute for results that are presented in a manner consistent with GAAP. A limitation of the non-GAAP financial measures presented is that, unless otherwise indicated, the adjustments concern gains, losses or expenses that JMP Group generally expects to continue to recognize, and the adjustment of these items should not always be construed as an inference that these gains or expenses are unusual, infrequent or non-recurring. Therefore, management believes that both JMP Group’s GAAP measures of its financial performance and the respective non-GAAP measures should be considered together. Operating Net Income may not be comparable to a similarly titled measure presented by other companies.

Operating Net Income is a non-GAAP financial measure that adjusts the Company’s GAAP net income as follows:

(i)

reverses non-cash stock-based compensation expense recognized under GAAP related to historical equity awards granted in prior periods, as management generally evaluates performance by considering the full expense of equity awards granted in the period in which such compensation was awarded, even if the expense of that award will be recognized in future periods under GAAP;

(ii)

recognizes 100% of the cost of deferred compensation, including non-cash stock-based compensation expense, in the period for which such compensation was awarded, instead of recognizing such cost over the vesting period as required under GAAP, in order to match compensation expense with the actual period upon which the compensation was based;

(iii)

excludes the non-cash net amortization of liquidity discounts on loans held and asset-backed securities issued by JMP Credit Corporation, due to scheduled contractual principal repayments, which is not representative of the Company’s core operating results or core business activities, for periods prior to that ended September 30, 2013;

(iv)

reverses net non-cash unrealized gains and losses on strategic equity investments and warrants;

- 39 -

(v)

excludes non-cash unrealized mark-to-market gains or losses on the investment portfolio at HCC, due to its adoption of investment company accounting in preparation for its pending initial public offering as a business development company;

(vi)

presents revenues and expenses on a basis that deconsolidates HGC, HGC II and HCC LLC. HGC and HGC II are investment funds that HCS manages; we own a relatively small percentage of these funds, even though they are consolidated under GAAP;

(vii)

excludes general loan loss reserves on the CLOs; and

(viii)

assumes a combined federal, state and local income tax rate of 38% for the quarters ended March 31, 2014 and 2013.

Discussed below is our Operating Net Income by segment. This information is reflected in a manner utilized by management to assess the financial operations of the Company's various business lines.

	Three Months Ended March 31, 2014
(In thousands)	Broker-Dealer		Asset Management			Corporate Credit		Operating Platforms		Investment Income		Corporate Costs			Elimin-ations			Total Segments
Revenues
Investment banking	$	25,143	$	-		$	-	$	25,143	$	-	$	-		$	(90	)	$	25,053
Brokerage		6,656		-			-		6,656		-		-			-			6,656
Asset management related fees		50		6,224			1,061		7,335		-		-			(1,190	)		6,145
Principal transactions		-		-			-		-		1,760		-			-			1,760
Gain on sale, payoff and mark-to-market of loans		-		-			-		-		380		-			-			380
Net dividend income		-		-			-		-		235		-			-			235
Net interest income		-		-			-		-		3,777		-			-			3,777
Provision for loan losses		-		-			-		-		53		-			-			53
Adjusted net revenues		31,849		6,224			1,061		39,134		6,205		-			(1,280	)		44,059

Non-interest expenses
Non-interest expenses		25,335		6,432			1,024		32,791		1,360		4,239			(1,190	)		37,200

Less: Non-controlling interest		-		(356	)		-		(356)		150		-			-			(206)

Operating pre-tax net income		6,514		148			37		6,699		4,695		(4,239	)		(90	)		7,065

Income tax expense (assumed rate of 38%)		2,475		56			14		2,545		1,785		(1,611	)		(34	)		2,685
Operating net income (loss)	$	4,039	$	92		$	23	$	4,154	$	2,910	$	(2,628	)	$	(56	)	$	4,380

- 40 -

	Three Months Ended March 31, 2013
(In thousands)	Broker-Dealer		Asset Management		Corporate Credit		Operating Platforms		Investment Income			Corporate Costs			Elimin-ations			Total Segments
Revenues
Investment banking	$	12,178	$	-	$	-	$	12,178	$	-		$	-		$	(70	)	$	12,108
Brokerage		5,194		-		-		5,194		-			-			-			5,194
Asset management related fees		-		8,159		884		9,043		-			-			(1,146	)		7,897
Principal transactions		-		-		-		-		2,224			-			6			2,230
Gain on sale, payoff and mark-to-market of loans		-		-		-		-		999			-			-			999
Net dividend income		-		-		-		-		249			-			-			249
Net interest income		-		-		-		-		4,289			-			-			4,289
Provision for loan losses		-		-		-		-		(950	)		-			-			(950)
Adjusted net revenues		17,372		8,159		884		26,415		6,811			-			(1,210	)		32,016

Non-interest expenses
Non-interest expenses		15,737		7,539		727		24,003		(846	)		3,989			(1,139	)		26,007

Less: Non-controlling interest		-		-		-		-		176			-			-			176

Operating pre-tax net income		1,635		620		157		2,412		7,481			(3,989	)		(71	)		5,833

Income tax expense (assumed rate of 38%)		621		236		60		917		2,842			(1,516	)		(27	)		2,216
Operating net income (loss)	$	1,014	$	384	$	97	$	1,495	$	4,639		$	(2,473	)	$	(44	)	$	3,617

The following table reconciles the operating net income to Total Segments operating pre-tax net income, to consolidated pre-tax net income (loss) attributable to JMP Group, and to consolidated net income (loss) attributable to JMP Group, for the three months ended March 31, 2013 and 2014.

(In thousands)	Three Months Ended March 31,
	2014			2013
Operating net income	$	4,380		$	3,617
Addback of Income tax expense (assumed rate of 38%)		2,685			2,216
Total Segments operating pre-tax net income	$	7,065		$	5,833
Subtract / (Add back)
Stock options		395			137
Compensation expense - RSUs		853			616
Deferred compensation program accounting adjustment		(596	)		(1,124	)
Net unrealized loss on strategic equity investments and warrants.		174			157
General loan loss reserve for the CLOs		545			-
Net amortization of liquidity discounts on loans and asset-backed securities issued		-			8,740
Unrealized mark-to-market gain - HCC		-			(162	)
Consolidated pre-tax net income (loss) attributable to JMP Group Inc.	$	5,694		$	(2,531	)

Income tax expense (benefit)		1,696			(812	)
Consolidated Net Income (Loss) attributable to JMP Group Inc.	$	3,998		$	(1,719	)

When evaluating the performance of JMP Group's core business strategy and ongoing operations, management also reviewed the Adjusted Operating Net Income through December 31, 2013, which excluded the non-cash gains and losses recognized by JMP Credit Corp due to the sale or payoff of loans originally included in the portfolio acquired by JMP Group in April 2009, as well as the provision for loan losses related to this portfolio of loans. Adjustments derived from sales or payoffs of acquired loans, while once substantial, are no longer material, as the portfolio of acquired loans is almost entirely liquidated. Therefore, the analysis below is based on operating net income. The adjusted operating net income, after a 38% tax rate, was $3.9 million for the three months ended March 31, 2013. The reconciling items for the quarter ended March 31, 2013 from adjusted operating net income to operating net income include adding back $0.2 million non-cash gains on the acquired loan portfolio, subtracting the specific reserve on the loan from the portfolio of $0.9 million, adding back the related compensation expense of $0.3 million, and adding back the related tax expense of $0.1 million for the three months ended March 31, 2013.

- 41 -

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013

Revenues

Investment Banking

Investment banking revenues increased $13.0 million, or 106.9%, from $12.1 million for the quarter ended March 31, 2013 to $25.1 million for the same period in 2014. As a percentage of total net revenues after provision for loan losses, investment banking revenues increased from 52.1% for the quarter ended March 31, 2013 to 66.5% for the quarter ended March 31, 2014.

Our segment reported investment banking revenues, earned in our Broker-Dealer segment, increased $13.0 million from $12.1 million for the quarter ended March 31, 2013 to $25.1 million for the same period in 2014. Public equity underwriting revenues increased $10.6 million, or 119.0%, from $8.9 million for the quarter ended March 31, 2013 to $19.5 million for the quarter ended March 31, 2014. We executed 33 public equity underwriting transactions in both quarters ended March 31, 2013 and March 31, 2014. We acted as a lead manager on 10 transactions in the quarter ended March 31, 2014 compared to seven in the same period in 2013. The increase was attributed to our role as a lead in more transactions, in addition to an increase in average revenues per transaction. Our strategic advisory revenues increased $1.9 million, or 133.1%, from $1.4 million for the quarter ended March 31, 2013 to $3.3 million for the quarter ended March 31, 2014. We executed three strategic advisory transactions in the quarter ended March 31, 2014 compared to one in the quarter ended March 31, 2013. Private capital markets and other transaction revenues increased $0.6 million, or 380.8%, from $0.1 million for the quarter ended March 31, 2013 to $0.7 million for the same period in 2014. We executed one transaction related to private capital markets and other transactions in the quarter ended March 31, 2014 compared to zero in the same period in 2013. Our debt and convertible revenues were $1.6 million for both the quarters ended March 31, 2013 and 2014. While we executed six debt and convertible transactions in the quarter ended March 31, 2014 compared to ten in the same period in 2013, the average debt and convertible revenues per deal increased 58.9% from $164.8 million to $261.8 million.

Brokerage Revenues

Brokerage revenues earned in our Broker-Dealer segment increased $1.5 million, or 28.1%, from $5.2 million for the quarter ended March 31, 2013 to $6.7 million for the quarter ended March 31, 2014. The increase was mainly the result of increased volume. Brokerage revenues decreased as a percentage of total net revenues after provision for loan losses, from 22.3% for the quarter ended March 31, 2013 to 17.7% for the quarter ended March 31, 2014. On an adjusted basis, brokerage revenues were 16.2% and 15.1% for the quarters ended March 31, 2013 and 2014, respectively, as a percentage of adjusted net revenue after provision for loan losses.

Asset Management Fees

(In thousands)	Three Months Ended March 31,
	2014			2013
Base management fees:
Fees reported as asset management fees	$	2,984		$	2,365
Fees earned at HGC, HGC II and HCC LLC		379			508
Total base management fees		3,363			2,873

Incentive fees:
Fees reported as asset management fees	$	2,560		$	4,386
Fees earned at HGC, HGC II and HCC LLC		-			350
Total incentive fees		2,560			4,736

Other fee income:
Fundraising and other income:	$	222		$	288
Total other fee income		222			288

Asset management related fees:
Fees reported as asset management fees	$	5,544		$	6,751
Fees reported as other income		222			288
Fees earned at HGC, HGC II and HCC LLC		379			858
Total Segment asset management related fee revenues	$	6,145		$	7,897

Consolidation adjustment		(379	)		(858	)

Adjusted total asset management related fees:	$	5,766		$	7,039

Fees reported as asset management fees were $6.8 million and $5.5 million for the quarters ended March 31, 2013 and 2014, respectively. As a percentage of total net revenues after provision for loan losses, asset management revenues decreased from 29.0% for the quarter ended March 31, 2013 to 14.7% for the quarter ended March 31, 2014. Fees reported as other income decreased $0.1 million, or 22.9% from $0.3 million for the quarter ended March 31, 2013 to $0.2 million for the quarter ended March 31, 2014. As a percentage of total net revenues after provision for loan losses, other income decreased from 1.2% for the quarter ended March 31, 2013 to 0.6% for the same period in 2014.

- 42 -

Total segment asset management related fees include base management fees and incentive fees for our funds, HCC and CLOs under management, as well as other income from fee-sharing arrangements with, and fees earned to raise capital for, third-party or equity-method investment partnerships or funds. Adjusted asset management related fees are a non-GAAP financial measure that adjusts our total segment asset management related fees by reversing the elimination of those fees in the consolidation of HGC, HGC II, HCC LLC (through May 2, 2013) and HCAP Advisors (effective May 1, 2013). Adjusted asset management related fees are reconciled to the GAAP measure, total segment asset management fee revenues, in the table above. We believe that presenting adjusted asset management related fees is useful to investors as a means of assessing the performance of JMP Group's combined asset management activities, including its fundraising and other services for third parties. We believe that adjusted asset management-related fee revenues provide useful information by indicating the relative contributions of base management fees and performance-related incentive fees, thus facilitating a comparison of those fees in a given period to those in prior and future periods. We also believe that asset management-related fee revenue is a more meaningful measure than standalone asset management fees as reported, because asset management-related fee revenues represent the combined impact of JMP Group's various asset management activities on the Company's total net revenues.

Total segment asset management related fee revenue decreased $1.8 million from $7.9 million for the quarter ended March 31, 2013 to $6.1 million for the quarter ended March 31, 2014. The decrease was attributed to declines in incentive fees, partially offset by an increase in base management fees. Total incentive fees decreased $2.1 million from $4.7 million for the quarter ended March 31, 2013 to $2.6 million for the same period in 2014. The decrease in incentive fees was driven by a decrease of $1.2 million related to HSCP, in addition to a decline of $0.6 million earned at HCC LLC and HCAP Advisors from $0.3 million earned in March 31, 2013 to a $0.3 million reversal in the same period in 2014. Total base management fee increased $0.5 million from $3.1 million for the quarter ended March 31, 2013 to $3.6 million for the same period in 2014. The increase was driven by increases of $0.4 million in management fees from HCAP Advisors, which was created subsequent to the first quarter of 2013. On an adjusted basis, adjusted asset management related fees were 24.7% and 13.9% for the quarters ended March 31, 2013 and 2014, respectively, as a percentage of adjusted net revenues after provision for loan losses.

Principal Transactions

Principal transaction revenues decreased $5.6 million from $1.9 million for the quarter ended March 31, 2013 to a $3.7 million loss for the same period in 2014. As a percentage of total net revenues after provision for loan losses, principal transaction revenues were 8.3% for the quarter ended March 31, 2013 and negative 9.8% for the quarter ended March 31, 2014.

Total segment principal transaction revenues decreased $0.4 million from $2.2 million for the quarter ended March 31, 2013 to $1.8 million for the same period in 2014. Total segment principal transaction revenues are a non-GAAP financial measure that aggregates our segment reported principal transaction revenues across each segment. We believe that presenting total segment principal transaction revenues is useful to investors as a means of assessing the performance of JMP Group’s combined investment activities. The principal transaction revenues for both 2013 and 2014 were based in our Investment Income segment. Total segment principal transaction revenues are reconciled to the GAAP measure, total principal transaction revenues, in the table below.

	Three Months Ended March 31,
(In thousands)	2014			2013

Equity and other securities excluding non-controlling interest	$	843		$	640
Warrants and other investments		(25	)		350
Investment partnerships		942			1,240
Total Segment principal transaction revenues		1,760			2,230
Operating adjustment addbacks		(174	)		268
Non-controlling interest in HGC, HGC II and HCC LLC (through May 2, 2013)		(5,279	)		(581	)
Total principal transaction revenues	$	(3,693	)	$	1,917

The decrease primarily reflects reduced revenue from investment partnerships and warrants and other investments, partially offset by increases in equity and other securities. Revenues from investment partnerships decreased $0.3 million from $1.2 million for the quarter ended March 31, 2013 to $0.9 million for the quarter ended March 31, 2014. Revenues from warrants and other investments decreased by $0.4 million from $0.4 million for the quarter ended March 31, 2013 to a loss of $25 thousand for the quarter ended March 31, 2014. On an adjusted basis, as a percentage of total net revenues after provision for loan losses, principal transaction revenues decreased from 7.0% for the quarter ended March 31, 2013 to 4.2% for the quarter ended March 31, 2014. Revenues from equity and other securities increased $0.2 million from $0.6 million for the quarter ended March 31, 2013 to $0.8 million for the same period in 2014, driven primarily by a $0.1 million increase in unrealized gains in our principal investment portfolio.

Gain on Sale and Payoff of Loans

Gain on sale, payoff and mark-to-market of loans decreased $0.7 million, from $1.1 million for the quarter ended March 31, 2013 to $0.4 million for the quarter ended March 31, 2014, respectively. At JMP Credit, during the quarter ended March 31, 2014, 42 loans were sold, paid off or were terminated, resulting in a total net gain of $0.4 million. Of the total net gain, $0.3 million related to two terminated commitments. $0.1 million was related to 28 loan payoffs, where the borrowers repaid the loans at a premium to our carrying value. These gains were partially offset by a $69 thousand loss related to 12 loans, six of which were sold at a discount to our carrying value. While we expect further gains from loan payoffs in future periods, these revenues are highly unpredictable as we are not actively marketing the loans collateralized by asset-backed securities for sale. As a percentage of total net revenues after provision for loan losses, gain on sale, payoff and mark-to-market of loans decreased from 4.7% for the quarter ended March 31, 2013 to 1.0% for the quarter ended March 31, 2014.

Gain on sale, payoff and mark-to-market of loans was earned in our Corporate Credit segment. On a segment reporting basis, the gain on sale, payoff and mark-to-market of loans also excludes unrealized mark-to-market gains or losses on the investment portfolio at HCC LLC (through May 2, 2013). Our segment reported gain on sale, payoff and mark-to-market of loans in the Corporate Credit segment decreased $0.6 million, from $1.0 million for the quarter ended March 31, 2013 to $0.4 million for the quarter ended March 31, 2014. Gain on sale, payoff and mark-to-market of loans decreased from 3.1% for the quarter ended March 31, 2013 to 0.9% for the quarter ended March 31, 2014 as a percentage of total segment adjusted net revenues.

- 43 -

Net Dividend Income/Loss

Net dividend income was $0.2 million for the quarter ended March 31, 2014 and a loss of $8 thousand for the quarter ended March 31, 2013. For the quarter ended March 31, 2014, net dividend income primarily related to dividends from our HCC investment.

Net Interest Income/Expense

(In thousands)	Three Months Ended March 31,
	2014			2013
CLO I loan contractual interest income	$	4,012		$	4,940
CLO I ABS issued contractual interest expense		(1,016	)		(1,121	)
Net CLO I contractual interest		2,996			3,819

CLO II loan contractual interest income	$	3,715		$	-
CLO I fee amortization
CLO II ABS issued contractual interest expense		(1,680	)		-
Net CLO II contractual interest		2,035			-

Bond Payable interest expense		(1,585	)		(629	)

Other interest income		331			1,099

Total Segment net interest income	$	3,777		$	4,289

CLO I loan liquidity discount accretion		-			504
CLO I ABS liquidity discount amortization		-			(9,243	)
Net CLO I liquidity discount amortization		-			(8,739	)

HCC LLC interest income		-			1,786
HCC LLC interest expense		-			(477	)
Net HCC LLC interest income		-			1,309

Other interest income adjustment		(17	)		-

Total net interest income (expense)	$	3,760		$	(3,141	)

Net interest income increased $6.9 million, or 219.7% from $3.1 million net interest expense for the quarter ended March 31, 2013 to $3.8 million net interest income for the quarter ended March 31, 2014. The net interest income increase was driven primarily by the CLO I liquidity discount amortization included in the quarter ended March 31, 2013 and the CLO II interest earned in the quarter ended March 31, 2014. CLO II launched subsequent to the first quarter of 2013. These increases in net interest income were partially offset by additional bond interest expense from the 2014 bond issuance, and the reduced interest income from HCC LLC due to its deconsolidation in the second quarter of 2013. As a percentage of total net revenues after provision for loan losses, net interest income was 13.5% for the quarter ended March 31, 2013 and 10.0% for the quarter ended March 31, 2014.

Total segment net interest income decreased from $4.3 million for the quarter ended March 31, 2013 to $3.8 million for the quarter ended March 31, 2014. Our total segment net interest income excludes net amortization of liquidity discounts on loans and asset-backed securities issued and interest earned at HCC LLC (through May 2, 2013). Net interest income is earned in our Investment Income segment, and largely reflects net CLO I and CLO II contractual interest. Total segment net interest income is a non-GAAP financial measure that aggregates our segment reported net interest income (expense) across each segment. We believe that presenting total segment net interest income is useful to investors as a means of assessing the performance of JMP Group’s combined credit activities. Total segment net interest income is reconciled to the GAAP measure, total net interest expense, in the table above. As a percentage of total segment adjusted net revenues, net interest income decreased from 13.4% for the quarter ended March 31, 2013 to 8.6% for the quarter ended March 31, 2014.

- 44 -

The following table sets forth contractual interest income and expense related to CLO loans and ABS issued and their weighted average contractual interest rates:

(In thousands)	Three Months Ended March 31, 2014
	Interest Income (Expense)			Average CLO Loan (CLO ABS Issued) Balance			Weighted Average Contractual Interest Rate			Weighted Average LIBOR			Spread to Weighted Average LIBOR
CLO I loan contractual interest income	$	4,012		$	405,259			3.96	%		0.24	%		3.72	%
CLO I ABS issued contractual interest expense		(1,016	)		(416,783	)		1.10	%		0.24	%		0.86	%
CLO II loan contractual interest income		3,715			325,862			4.56	%		0.24	%		4.32	%
CLO II ABS issued contractual interest expense		(1,680	)		(319,679	)		2.10	%		0.24	%		1.86	%
Net CLO contractual interest	$	5,031		$	N/A			N/A			N/A			N/A

(In thousands)	Three Months Ended March 31, 2013
	Interest Income (Expense)			Average CLO Loan (CLO ABS Issued) Balance			Weighted Average Contractual Interest Rate			Weighted Average LIBOR			Spread to Weighted Average LIBOR
CLO I loan contractual interest income	$	4,940		$	416,494			4.75	%		0.30	%		4.45	%
CLO I ABS issued contractual interest expense		(1,121	)		(431,003	)		1.04	%		0.30	%		0.74	%
Net CLO contractual interest	$	3,819		$	N/A			N/A			N/A			N/A

Contractual interest of $4.0 million was earned on the performing loans held by our CLO I for the quarter ended March 31, 2014. The annualized weighted average contractual interest rate on the performing loans was 3.96% with a spread to weighted average LIBOR of 3.72% for the quarter ended March 31, 2014. Interest expense related to CLO I ABS issued was $1.0 million for the quarter ended March 31, 2013. The annualized weighted average contractual interest rate on the CLO I ABS issued during the quarter was 1.10% with a spread to weighted average LIBOR of 0.86%. Contractual interest of $3.7 million was earned on the performing loans held by our CLO II for the quarter ended March 31, 2014. The annualized weighted average contractual interest rate on the performing loans was 4.56% with a spread to weighted average LIBOR of 4.32% for the quarter ended March 31, 2014. Interest expense related to CLO II ABS issued was $1.7 million for the quarter ended March 31, 2014. The annualized weighted average contractual interest rate on the CLO II ABS issued during the quarter was 2.10% with a spread to weighted average LIBOR of 1.86%.

Contractual interest of $4.9 million was earned on the performing loans held by our CLO I for the quarter ended March 31, 2013. The annualized weighted average contractual interest rate on the performing loans was 4.75% with a spread to weighted average LIBOR of 4.45% for the quarter ended March 31, 2013. Interest expense related to ABS issued was $1.1 million for the quarter ended March 31, 2013. The annualized weighted average contractual interest rate on the ABS issued during the quarter was 1.04% with a spread to weighted average LIBOR of 0.74%.

Provision for Loan Losses

Provision for loan losses decreased $0.4 million, or 47.6%, from $0.9 million for the quarter ended March 31, 2013 to $0.5 million for the same period in 2014. As a percent of net revenues after provision for loan losses, provision for loan losses were 4.1% for the quarter ended March 31, 2013 and 1.3% for the quarter ended March 31, 2014.

Total segment provision for loan losses decreased from $0.9 million for the quarter ended March 31, 2013 to a $0.1 million reversal for the quarter ended March 31, 2014. Total segment provision for loan losses is a non-GAAP financial measure that aggregates our segment reported provision for loan losses across each segment. Our total segment provision for loan losses in 2014 and 2013 was solely recognized in our Investment Income segment. As a percent of total segment adjusted net revenues, segment provision for loan losses were 3.0% and 0.1% for the quarters ended March 31, 2013 and 2014, respectively.

Expenses

Non-Interest Expenses

Compensation and Benefits

Compensation and benefits, which includes employee payroll, taxes and benefits, performance-based cash bonus and commissions, as well as equity-based compensation to our employees and managing directors, increased $11.8 million, or 60.0%, from $19.6 million for the quarter ended March 31, 2013 to $31.4 million for the quarter ended March 31, 2014.

Employee payroll, taxes and benefits, and consultant fees were $9.6 million for both the quarters ended March 31, 2013 and 2014.

Performance-based bonus and commission increased $10.8 million, or 120.0%, from $9.0 million for the quarter ended March 31, 2013 to $19.8 million for the quarter ended March 31, 2014. The increase was primarily due to the increase in total net revenues after provision for loan losses from $23.2 million for the quarter ended March 31, 2013 to $37.7 million for the same period in 2014.

Equity-based compensation was $0.8 million and $1.6 million for the quarters ended March 31, 2013 and 2014, respectively. The increase is partially due to $0.7 million of performance RSU expense in the three months ended March 31, 2014, related to performance RSUs granted in 2014.

- 45 -

Compensation and benefits as a percentage of revenues decreased from 84.3% of total net revenues after provision for loan losses for the quarter ended March 31, 2013 to 83.3% for the same period in 2014. Approximately $5.3 million of the unrealized loss at HGC, HGC II for the quarter ended March 31, 2014 and $0.3 million of the unrealized loss at HGC, HGC II and HCC for the quarter ended March 31, 2013 was attributable to non-controlling interest holders and therefore, did not have associated performance-based bonus expense, resulting in the higher percentages for these quarters.

Our segment reported compensation and benefits, which includes 100% of deferred compensation expense and excludes RSU expense, increased $10.7 from $20.0 for the quarter ended March 31, 2013 to $30.7 million for the quarter ended March 31, 2014. As a percent of total segment net revenues, compensation and benefits were 62.4% and 69.7% for the quarters ended March 31, 2013 and 2014, respectively.

Administration

Administration expense increased $0.4 million, from $1.3 million for the quarter ended March 31, 2013 to $1.7 million for the quarter ended March 3, 2014. The increase was attributed to a conference held in the first quarter of 2014 that was not held in the first quarter in 2013. As a percentage of total net revenues after provision for loan losses, administration expense decreased from 5.7% for the quarter ended March 31, 2013 to 4.6% for the same period in 2014.

Brokerage, Clearing and Exchange Fees

Brokerage, clearing and exchange fees were $0.9 million for both quarters ended March 31, 2013 and 2014. As a percentage of total net revenues after provision for loan losses, our brokerage, clearing and exchange fees decreased from 3.8% for the quarter ended March 31, 2013 to 2.5% for the same period in 2014.

Travel and Business Development

Travel and business development expense decreased from $1.0 million for the quarter ended March 31, 2013 to $0.9 million for the quarter ended March 31, 2014. As a percentage of total net revenues after provision for loan losses, travel and business development expense decreased from 4.1% for the quarter ended March 31, 2013 to 2.3% for the same period in 2014.

Communications and Technology

Communications and technology expenses were $0.9 million for the quarters ended March 31, 2013 and 2014. As a percentage of total net revenues after provision for loan losses, communications and technology expense decreased from 3.7% for the quarter ended March 31, 2013 to 2.5% for the same period in 2014.

Professional Fees

Professional fees were $1.0 million and $0.8 million for the quarters ended March 31, 2013 and 2014, respectively. As a percentage of total net revenues after provision for loan losses, professional fees decreased from 4.4% for the quarter ended March 31, 2013 to 2.1% for the same period in 2014.

Other Expenses

Other expenses increased $0.2 million, from $1.1 million for the quarter ended March 31, 2013 to $1.3 million for the quarter ended March 31, 2014. As a percentage of total net revenues after provision for loan losses, other expenses were 4.8% and 3.4% for the quarters ended March 31, 2013 and 2014, respectively.

Net Income Attributable to Non-controlling Interest

Net income attributable to non-controlling interest decreased from $8 thousand for the quarter ended March 31, 2013 to a $5.9 million loss for the quarter ended March 31, 2014. Non-controlling interest for the quarter ended March 31, 2014 includes the interest of third parties in CLO I, CLO II, HGC, HGC II, and HCAP Advisors, partially-owned subsidiaries consolidated in our financial statements. Non-controlling interest for the quarter ended March 31, 2013 includes the interest of third parties in CLO I, HCC LLC, HGC and HGC II, partially-owned subsidiaries consolidated in our financial statements.

Provision for Income Taxes

For the quarters ended March 31, 2013 and 2014, we recorded income tax benefit of $0.8 million and tax expense of $1.7 million, respectively. The effective tax rates for the quarters ended March 31, 2013 and 2014 were 33.66% and 731.13%, respectively. The difference in the effective tax rate was primarily attributable to the income associated with HGC, HGC II and HCC LLC which are consolidated for financial reporting purposes but not for tax purposes.

Our operating net income assumes a combined federal, state and local income tax rate of 38% for both quarters ended March 31, 2013 and 2014. Segment income tax expense increased $0.5 million from $2.2 million for the quarter ended March 31, 2013 to $2.7 million for the quarter ended March 31, 2014.

- 46 -

Financial Condition, Liquidity and Capital Resources

In the section that follows, we discuss the significant changes in the components of our balance sheet, cash flows and capital resources and liquidity for the three months ended March 31, 2014 to demonstrate where our capital is invested and the financial condition of the Company.

Overview

As of March 31, 2014, we had net liquid assets of $27.0 million, consisting of cash and cash equivalents, proceeds from short sales on deposit, receivable from clearing broker, marketable securities owned, and general partner investments in hedge funds managed by HCS, net of marketable securities sold but not yet purchased, accrued compensation, deferred compensation paid in January 2014, note payable and non-controlling interest. We have satisfied our capital and liquidity requirements primarily through the net proceeds from the initial public offering, the January 2013 issuance of the 2013 Senior Notes, the January 2014 issuance of the 2014 Senior Notes, and internally generated cash from operations. Most of our financial instruments, other than loans collateralizing asset-backed securities issued, loans held for investment and asset-backed securities issued, are recorded at fair value or amounts that approximate fair value. At March 31, 2014 and December 31, 2013, we had Level 3 assets (financial instruments measured on a recurring basis whose fair value was determined using unobservable inputs that are not corroborated by market data) of $108.4 million and $112.1 million, respectively, which represented 9.3% and 10.0% of total assets, respectively. Level 3 assets decreased by $3.7 million, due to unrealized loss of $6.3 million, partially offset by the purchased new assets of $2.8 million.

Liquidity Considerations Related to CLOs

On April 7, 2009, we invested $4.0 million of cash and granted $3.0 million original par amount, with a $2.3 million estimated fair value, of contingent consideration (a zero coupon note) to acquire 100% of the membership interests and net assets of $7.5 million of CLO I. In December 2009, we repurchased the contingent consideration for $1.8 million. As we own substantially all of the subordinated securities of the CLO, in accordance with the authoritative guidance under GAAP on accounting for consolidation of variable interest entities, we are the primary beneficiary and are required to consolidate all of the assets and liabilities of the CLO securitization structure even though it is a bankruptcy remote entity with no recourse to us.

Our maximum exposure to loss of capital on the CLOs is the original April 7, 2009 investment of $4.0 million plus the $1.8 million paid to repurchase the contingent consideration related to the CLO I acquisition, $23.3 million related to CLO II, and $25.0 million investment related to CLO III plus any earnings retained in the CLOs since the acquisition or inception dates. However, for U.S. federal tax purposes, the CLOs are treated as a disregarded entity such that the taxable income earned in the CLO is taxable to us. If the CLOs are in violation of certain coverage tests, mainly any of its over-collateralization ratios, residual cash flows otherwise payable to us as owners of the subordinated notes would be required to be used to repay indebtedness senior to us in the securitization, or, for CLO II, to buy additional collateral. This could require us to pay income tax on earnings prior to the residual cash flow distributions to us.

The CLOs must comply with certain asset coverage tests, such as tests that restrict the amount of discounted obligations and obligations rated “CCC” or lower it can hold. During any time the CLO exceeds such a limit, our ability, as the manager of CLO I, to sell assets and reinvest available principal proceeds into substitute assets is restricted. In addition, defaulted obligations, discounted assets (those purchased below 85% of the par value for CLO I and generally below 80% of the par value for CLO II) and assets rated “CCC” or lower in excess of applicable limits in the CLOs investment criteria are not given full par credit for purposes of calculation of the CLO over-collateralization (“OC”) tests. We were in compliance with all OC tests on the determination dates since February 2010. However, we have been in violation and may be in the future. If CLOs were to violate the Class F test, or any more senior tests, we would be required to pay down the most senior notes with the residual cash flows until the violation was cured. In the most extreme case, if the CLO were in violation of the most senior OC test, the Class A note holders would have the ability to declare an event of default and cause an acceleration of all principal and interest outstanding on the notes.

For financial reporting purposes, the loans and asset-backed securities of the CLOs are consolidated on our balance sheet. The loans are reported at their cost adjusted for amortization of liquidity discount and credit reserves, both of which were recorded at the CLO I acquisition date, purchase discounts and allowance for loan losses. The asset-backed securities are recorded net of liquidity discount only. At March 31, 2014, we had $783.3 million of loans collateralizing asset-backed securities, net, $44.5 million of restricted cash and $1.6 million of interest receivable funded by $713.5 million of asset-backed securities issued, net, and interest payable of $1.9 million. These assets and liabilities represented 71.3% of total assets and 76.9% of total liabilities respectively, reported on our Consolidated Statement of Financial Condition at March 31, 2014.

- 47 -

The tables below summarize the loans held by the CLOs grouped by range of outstanding balance, industry and Moody’s Investors Services, Inc. rating category as of March 31, 2014.

(Dollars in thousands)			As of March 31, 2014
Range of Outstanding Balance			Number of Loans		Maturity Date			Total Principal
$0	-	$500		30	11/2015	-	3/2021	$	11,842
$500	-	$2,000		266	1/2015	-	2/2022		360,346
$2,000	-	$5,000		109	12/2014	-	3/2021		322,661
$5,000	-	$10,000		9	11/2016	-	12/2020		57,189
+$10,001				4	5/2015	-	5/2018		40,423
Total				418				$	792,461

- 48 -

(Dollars in thousands)	As of March 31, 2014
Industry	Number of Loans		Outstanding Balance		% of Outstanding Balance
Aerospace & Defense		15	$	23,252		2.9%
Advertising, Printing & Publishing		2		2,500		0.3%
Automobile		15		31,889		4.0%
Banking		5		9,038		1.1%
Banking, Finance, Insurance & Real Estate		14		27,124		3.4%
Beverage, Food & Tobacco		23		45,436		5.7%
Broadcasting & Entertainmt.		3		5,989		0.8%
Cargo Transport		3		5,691		0.7%
Capital Equipment		1		1,990		0.3%
Chemicals, Plastics and Rubber		15		38,890		4.9%
Construction & Building		10		16,170		2.0%
Consumer Goods: Durable		7		9,775		1.2%
Consumer Goods: Non-durable		5		7,518		0.8%
Containers, Packaging and Glass		9		14,973		1.9%
Diversified Natural Resources, Precious Metals and Minerals		1		1,103		0.1%
Diversified/Conglomerate Mfg		8		6,141		0.8%
Diversified/Conglomerate Service		16		27,057		3.4%
Energy: Electricity		5		7,980		1.0%
Energy: Oil & Gas		2		3,066		0.4%
Ecological		5		5,396		0.7%
Electronics		12		23,231		2.9%
Environmental Industries		7		8,663		1.1%
Farming & Agriculture		1		1,478		0.2%
Finance		5		10,887		1.4%
Food, Beverage & Tobacco		1		500		0.1%
Forest Products & Paper		3		3,919		0.5%
Grocery		2		2,463		0.3%
Healthcare, Education & Childcare		39		88,697		11.2%
High Tech Industries		21		42,747		5.4%
Home and Office Furnishings, Housewares and Durable Consumer Products		2		5,638		0.7%
Hotels, Motels, Inns and Gaming		21		45,156		5.7%
Insurance		2		4,634		0.6%
Leisure , Amusement, Motion Pictures & Entertainment		10		21,356		2.7%
Machinery (Non-Agriculture,Non-Construction & Non-Electronic)		2		2,487		0.3%
Media, Advertising, Printing & Publishing		1		1,000		0.1%
Media: Broadcasting & Subscription		9		15,637		2.0%
Media: Diversified & Production		6		12,291		1.6%
Metals & Mining		4		7,641		1.0%
Mining, Steel, Iron and Non-Precious Metals		1		2,793		0.4%
Oil & Gas		4		24,684		3.1%
Personal &Non-Durable Consumer Products		6		7,393		0.9%
Personal and Non-Durable Consumer Products (mfg only)		1		489		0.1%
Personal Transportation		2		2,989		0.4%
Personal, Food & Misc Services		8		12,028		1.5%
Printing & Publishing		3		10,732		1.4%
Retail Store		22		40,162		5.1%
Services: Business		18		24,117		3.0%
Services: Consumer		9		21,489		2.7%
Telecommunications		17		28,702		3.6%
Textiles & Leather		2		3,844		0.5%
Transportation: Consumer		3		6,120		0.8%
Utilities		6		11,020		1.4%
Utilities: Electric		1		1,500		0.2%
Utilities: Oil & Gas		1		1,996		0.3%
Wholesale		2		3,000		0.4%
		418		792,461		100%

- 49 -

(Dollars in thousands)	As of March 31, 2014
Moody's Rating Category	Number of Loans		Outstanding Balance		% of Outstanding Balance
Baa2		1	$	2,000		0.3%
Baa3		2		13,824		1.7%
Ba1		7		20,613		2.6%
Ba2		28		69,504		8.8%
Ba3		56		136,093		17.2%
B1		108		203,941		25.7%
B2		169		269,642		34.0%
B3		40		63,578		8.0%
Caa1		5		11,372		1.4%
Caa2		1		1,500		0.2%
Ca		1		394		0.1%
Total		418	$	792,461		100%

Other Liquidity Considerations

As of March 31, 2014, our indebtedness consists of our bonds payable. We have no outstanding balances on our revolving lines of credit with City National Bank (“CNB”), related to JMP Group LLC (“JMPG LLC”), our wholly-owned subsidiary, or HGC II, also defined below.

In January 2013, we raised approximately $46.0 million from the sale of 8.00% Senior Notes (“2013 Senior Notes”). In January 2014, we raised an additional approximate $48.3 million from the sale of 7.25% Senior Notes (“2014 Senior Notes”). The 2013 Senior Notes will mature on January 15, 2023 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 15, 2016, at a redemption price equal to the principal amount redeemed plus accrued and unpaid interest. The 2013 Senior Notes bear interest at a rate of 8.00% per year, payable quarterly on January 15, April 15, July 15 and October 15 of each year. The 2014 Senior Notes will mature on January 15, 2021, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 15, 2017, at a redemption price equal to the principal amount redeemed plus accrued and unpaid interest. These 2014 Senior Notes bear interest at a rate of 7.25% per year, payable quarterly on January 15, April 15, July 15 and October 15 of each year, beginning April 15, 2014.

As of March 31, 2014 (after taking into account any payments under the Credit Agreement that day), JMPG LLC had no outstanding indebtedness under the Credit Agreement with CNB.

The Revolving Line of Credit has a maximum principal balance of the lesser of (i) $30.0 million, and (ii) $58.5 million minus (a) the principal amount of the Term Loan, and (b) the principal amount of the Broker/Dealer Line of Credit (as defined below) then outstanding. Under the Credit Agreement, CNB has agreed to issue certain letters of credit in an amount not exceeding $2.5 million, the stated amounts of which will be a reduction to the availability of the Revolving Line of Credit and drawings thereunder may be converted into drawings under the Revolving Line of Credit. The Revolving Line of Credit will remain available through April 30, 2014. On such date, any outstanding amount converts into a term loan (the “Converted Term Loan”). The Converted Term Loan will be repaid in quarterly installments of 3.75% of such term loan for the first two years, 5.00% of such term loan for the next two years, and the remainder due at maturity on August 24, 2017.

The Credit Agreement provides that the proceeds of the CNB Loans are subject to the following restrictions: (i) the Initial Term Loan and up to $5.0 million of the Revolving Line of Credit Loans may not be used for any purpose other than to fund certain permitted investments and acquisitions and to fund JMPG LLC’s working capital needs in the ordinary course of its business; (ii) all other proceeds of the Revolving Line of Credit may not be used for any purpose other than to make investments in HCS and by HCS to make investments in loans that are made to persons that are not affiliates of borrower; and (iii) the Term Loan may not be used for any purpose other than to make equity investments in CLOs and by CLOs to make certain permitted investments in collateralized loan obligations.

The Credit Agreement includes minimum fixed charge and interest charge coverage ratios applicable to us and our subsidiaries, a minimum net worth covenant applicable to us and our subsidiaries and a minimum liquidity covenant applicable to JMPG LLC and its subsidiaries. As of March 31, 2014, we were in compliance with all of these financial covenants. The Credit Agreement also includes an event of default for a “change of control” that tests, in part, the composition of our ownership and an event of default if two or more of the members of the Executive Committee fail to be involved actively on an ongoing basis in the management of JMPG LLC or any of its subsidiaries.

The CNB Loans are guaranteed by HCS and secured by a lien on substantially all assets of JMPG LLC and HCS.

Separately, under a Revolving Note and Cash Subordination Agreement, dated as of April 8, 2011, by and between CNB and JMP Securities, as amended, JMP Securities has a subordinated revolving line of credit with CNB (the “Broker/Deal Line of Credit”). Draws on the Broker/Deal Line of Credit bear interest at the rate of prime. The Broker/Deal Line of Credit matures on May 6, 2015. There were no borrowings on this line of credit as of March 31, 2014. JMPG LLC has guaranteed the obligations under the Broker/Deal Line of Credit pursuant to a General Continuing Guaranty dated as of April 8, 2011.

- 50 -

On November 22, 2013, HGC II entered into a line of credit of $3.0 million with CNB. Draws on the line of credit bear interest at the rate of prime plus 0.5% per annum, paid quarterly. The line of credit will be available through December 1, 2015 or fifteen days prior to the expiration of the commitment period of HGC II unless renewed. Proceeds for this line of credit are used to purchase investments, prior to capital calls from HGC II investors. The Company had no outstanding balance on this line of credit as of March 31, 2014.

The timing of bonus compensation payments to our employees may significantly affect our cash position and liquidity from period to period. While our employees and managing directors are generally paid semi-monthly during the year, bonus compensation, which makes up a larger portion of total compensation, is generally paid once a year during the first two months of the following year. In the first two months of 2014, we paid out $49.0 million of cash bonuses for 2013, excluding employer payroll tax expense.

The Company currently intends to declare quarterly cash dividends on all outstanding shares of common stock. The Company’s board of directors declared a quarterly cash dividend of $0.045 per share of common stock in March 2014. The dividends were paid in April 2014 for the fourth quarter of 2013.

During the three months ended March 31, 2014, the Company repurchased 4,656 shares of the Company’s common stock at an average price of $7.04 per share, for an aggregate purchase price of $33 thousand. The repurchased were deemed to have been repurchased in connection with employee stock plans, whereby the Company’s shares were issued on a net basis to employees for the payment of applicable statutory withholding taxes and therefore such withheld shares are deemed to be purchased by the Company.

We had total restricted cash of $75.6 million comprised primarily of $59.5 million of restricted cash at JMP Credit on March 31, 2014. This balance was comprised of $6.6 million in interest received from loans in CLO I, and $53.0 million in principal cash. The interest and fees will be restricted until the next payment date to note holders of the CLOs. The principal restricted cash will be used to buy additional loans.

Because of the nature of our investment banking and sales and trading businesses, liquidity is important to us. Accordingly, we regularly monitor our liquidity position, including our cash and net capital positions. We believe that our available liquidity and current level of equity capital, combined with the net proceeds to us from the initial public offering and funds anticipated to be provided by our operating activities, will be adequate to meet our liquidity and regulatory capital requirements for at least the next twelve months. If circumstances required it, we could improve our liquidity position by discontinuing repurchases of the Company“s common stock, halting cash dividends on our common stock and reducing cash bonus compensation paid.

JMP Securities, our wholly-owned subsidiary and a registered securities broker-dealer, is subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital, as defined, and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. SEC regulations also provide that equity capital may not be withdrawn or cash dividends paid if certain minimum net capital requirements are not met. JMP Securities had net capital of $32.0 million and $59.1 million, which were $31.0 million and $58.1 million in excess of the required net capital of $1.0 million at March 31, 2014 and December 31, 2013, respectively. JMP Securities’ ratio of aggregate indebtedness to net capital was 0.45 to 1 and 0.16 to 1 at March 31, 2014 and December 31, 2013, respectively.

A condensed table of cash flows for the three months ended March 31, 2014 and 2013 is presented below.

(Dollars in thousands)	Three Months Ended March 31,						Change from 2013 to 2014
	2014			2013				$		%
Cash flows used in operating activities	$	(30,375	)	$	(29,197	)	$	(1,178	)		-4.0	%
Cash flows used in investing activities		(66,548	)		(35,445	)		(31,103	)		-87.8	%
Cash flows provided by financing activities		72,693			39,018			33,675			86.3	%
Total cash flows	$	(24,230	)	$	(25,624	)	$	1,394			5.4	%

Cash Flows for the Three Months Ended March 31, 2014

Cash decreased by $24.2 million during the three months ended March 31, 2014, as a result of cash used in operating activities and investing activities, partially offset by cash provided by financing activities.

Our operating activities used $30.4 million of cash from the net loss of $1.9 million, adjusted for the cash used by operating assets and liabilities of $31.8 million, and provided by non-cash revenue and expense items of $3.3 million. The cash used by the change in operating assets and liabilities included a decrease in accrued compensation of $34.2 million, an increase in receivables of $15.5 million and an increase in marketable securities of $2.2 million, partially offset by a decrease in restricted cash and other assets of $18.8 million.

Our investing activities used $66.5 million of cash primarily due to funding of loans collateralizing ABS of $127.9 million and purchases of other investments of $23.3 million, partially offset by cash provided sales and payoff of loans collateralizing ABS of $60.6 million and sales of investments of $20.0 million.

Our financing activities provided $72.7 million of cash primarily due to $50.4 million proceeds from the CLO III warehouse credit facility, $48.3 million proceeds from the bond issuance, partially offset by the $15.0 million repayment of a term loan, and $6.0 million purchase of subsidiary shares.

Cash Flows for the Three Months Ended March 31, 2013

Cash decreased by $25.6 million during the three months ended March 31, 2013, as a result of cash used in operating activities and in investing activities, partially offset by cash provided by financing activities.

- 51 -

Our operating activities used $29.2 million of cash from the net loss of $1.7 million, adjusted for the cash used in operating assets and liabilities of $28.1 million and provided by non-cash revenue and expense items of $0.6 million. The cash used by the change in operating assets and liabilities included an increase in other assets of $14.2 million, a decrease in accrued compensation and other liabilities of $6.7 million, an increase in receivables of $4.8 million, and an increase in marketable securities sold, but not yet purchased of $3.5 million.

Our investing activities used $35.4 million of cash primarily due to funding of loans collateralizing ABS of $46.2 million, purchases of other investments of $42.0 million, partially offset by cash provided by sales and payoff of loans collateralizing ABS of $38.3 million, and sales of loans collateralizing ABS of $7.6 million.

Our financing activities provided $39.0 million of cash primarily due to the $46.0 million proceeds from the bond issuance and contributions of non-controlling interest holders of $7.3 million, partially offset by the repayment on line of credit of $6.0 million and the repayment of notes payable of $3.9 million.

Contractual Obligations

As of March 31, 2014, our aggregate minimum future commitment on our leases was $17.9 million. See Note 13 of the Notes to the consolidated financial statements for more information. In January 2014, the Company issued a $42.0 million bond, payable in 2021, with annual interest payments of $2.4 million in 2014, and subsequent annual interest payments of $3.2 million, from 2015 through 2021. Our remaining contractual obligations have not materially changed from those reported in our 2013 10-K.

Off-Balance Sheet Arrangements

In connection with the CLOs, the Company had unfunded commitments to lend of $60.6 million and $40.4 million and standby letters of credit of $1.3 million and $1.8 million as of March 31, 2014 and December 31, 2013, respectively. The funds for the unfunded commitments to lend and the cash collateral supporting these standby letters of credit are included in restricted cash on the Consolidated Statement of Financial Position as of March 31, 2014. These commitments do not extend to JMP Group Inc. See Note 18 of the Notes to the consolidated financial statements for more information on the financial instruments with off-balance sheet risk in connection with the CLOs.

We had no other material off-balance sheet arrangements as of March 31, 2014. However, as described below under “Item 3. Quantitative and Qualitative Disclosures About Market Risk,” through indemnification provisions in our clearing agreements with our clearing broker, customer activities may expose us to off-balance sheet credit risk, which we seek to mitigate through customer screening and collateral requirements.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and of revenues and expenses during the reporting periods. We base our estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. The use of different estimates and assumptions could produce materially different results. For example, if factors such as those incorporated by reference to Part II, Item 1A “Risk Factors” cause actual events to differ from the assumptions we used in applying the accounting policies, our results of operations, financial condition and liquidity could be adversely affected.

On an ongoing basis, we evaluate our estimates and assumptions, particularly as they relate to accounting policies that we believe are most important to the presentation of our financial condition and results of operations. We regard an accounting estimate or assumption to be most important to the presentation of our financial condition and results of operations where:

•

the nature of the estimates or assumptions is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and

•

the impact of the estimates or assumptions on our financial condition or operating performance is material.

- 52 -

Using the foregoing criteria, we consider the following to be our critical accounting policies:

●

Valuation of Financial Instruments

●

Asset Management Investment Partnerships

●

Loans Collateralizing Asset-backed Securities Issued

●

Allowance for Loan Losses

●

Asset-backed Securities Issued

●

Legal and Other Contingent Liabilities

●

Income Taxes

Our significant accounting policies are described further in the “Critical Accounting Policies and Estimates” section and Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements in our 2013 10-K.

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Market risk represents the risk of loss that may result from the change in value of a financial instrument due to fluctuations in its market price. Market risk may be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads. Our exposure to market risk is directly related to our role as a financial intermediary in customer trading and to our market making and investment activities. Market risk is inherent in financial instruments.

Even though we trade in equity securities as an active participant in both listed and OTC markets and we make markets in approximately 900 stocks, we typically maintain very few securities in inventory overnight to minimize market risk. In addition, we act as agent rather than principal whenever we can and may use a variety of risk management techniques and hedging strategies in the ordinary course of our trading business to manage our exposures. Historically, in connection with our principal investments in publicly-traded equity securities, we have engaged in short sales of equity securities to offset the risk of purchasing other equity securities. In 2012, we engaged in a forward contract derivative to secure the acquisition of certain private equity securities. In the future, we may utilize other hedging strategies such as equity derivative trades.

In connection with our sales and trading business, management evaluates the amount of risk in specific trading activities and determines our tolerance for such activities. Management monitors risks in its trading activities by establishing limits for the trading desk and reviewing daily trading results, inventory aging, and securities concentrations. Typically, market conditions are evaluated and transaction details and securities positions are reviewed. These activities seek to ensure that trading strategies are within acceptable risk tolerance parameters. Activities include price verification procedures, position reconciliations and reviews of transaction bookings. We believe these procedures, which stress timely communications between traders, trading management and senior management, are important elements of the risk management process.

Equity Price and Liquidity Risk

Equity price and liquidity risk represents the potential loss in value due to adverse changes in the level of market activity and volatility of equity prices. We are exposed to equity price and liquidity risk through our trading activities in both listed and OTC equity markets and security positions in our principal investment portfolio. We attempt to reduce the risk of loss inherent in our inventory of equity securities by establishing position limits, monitoring inventory turnover and entering into hedging transactions designed to mitigate our market risk profile.

Our marketable securities owned include long positions in equity securities that were recorded at a fair value of $31.5 million as of March 31, 2014. Our marketable securities sold but not yet purchased consist of short positions in equity securities and were recorded at a fair value of $14.5 million as of March 31, 2014. The net potential loss in fair value for our marketable equity securities portfolio as of March 31, 2014, using a hypothetical 10% decline in prices, is estimated to be approximately $1.7 million. In addition, as of March 31, 2014, we have invested $66.7 million of our own capital in our funds, which are invested primarily in publicly traded equity securities. The net potential loss in fair value for our investments at March 31, 2014, using a hypothetical 10% decline in the funds’ investment portfolios, is estimated to be approximately $6.7 million. A 10% decrease in the fair value of our investment in the equity securities in HGC, HGC II and JMP Capital is immaterial to the Company’s results of operations due to the impact of the non-controlling interest holders. As of March 31, 2014, our interest in HGC and HGC II was 4.71% and 2.23%, respectively.

Interest Rate Risk

Interest rate risk represents the potential loss from adverse changes in market interest rates. As we may hold U.S. Treasury securities and other fixed income securities and may incur interest-sensitive liabilities from time to time, we are exposed to interest rate risk arising from changes in the level and volatility of interest rates and in the shape of the yield curve.

- 53 -

As of March 31, 2014, approximately 82.3% of our combined CLO portfolios had LIBOR floors with a weighted average floor of 1.00%. Many of the loans in CLO portfolios have variable interest rates indexed to LIBOR and subject to a LIBOR floor, which provides additional income during periods when LIBOR rates are below the floor levels. Loans with a LIBOR floor pay an interest rate of LIBOR plus the applicable margin so long as LIBOR remains above the specified floor level. If, however, LIBOR falls below the floor, the interest rate is the floor level plus the applicable margin. The asset backed securities issued by our CLOs typically have variable interest rates indexed to LIBOR, but do not have LIBOR floors. Accordingly, in a low interest rate environment, the equity holders of our CLOs benefit from a so called LIBOR floor benefit. If the LIBOR increases above the applicable LIBOR floors, the variable interest payments on the CLO asset backed securities will also increase, and the LIBOR floor benefit to us will decrease. This would diminish the return on equity of our CLOs that we hold, which could have an adverse impact on our results of operations.

Credit Risk

Our broker-dealer subsidiary places and executes customer orders. The orders are then settled by an unrelated clearing organization that maintains custody of customers’ securities and provides financing to customers.

Through indemnification provisions in our agreement with our clearing organization, customer activities may expose us to off-balance-sheet credit risk. We may be required to purchase or sell financial instruments at prevailing market prices in the event a customer fails to settle a trade on its original terms or in the event cash and securities in customer margin accounts are not sufficient to fully cover customer obligations. We seek to control the risks associated with brokerage services for our customers through customer screening and selection procedures as well as through requirements that customers maintain margin collateral in compliance with governmental and self-regulatory organization regulations and clearing organization policies.

Credit risk also includes the risk that we will not fully collect the principal we have invested in loans held for investment and loans collateralizing asset-backed securities issued due to borrower defaults. While we feel that our origination and underwriting of these loans will help to mitigate the risk of significant borrower defaults on these loans, we cannot assure you that all borrowers will continue to satisfy their payment obligations under these loans, thereby avoiding default.

Inflation Risk

Because our assets are generally liquid in nature, they are not significantly affected by inflation. However, the rate of inflation affects such expenses as employee compensation and communications charges, which may not be readily recoverable in the prices of services we offer. To the extent inflation results in rising interest rates and has other adverse effects on the securities markets, it may adversely affect our combined financial condition and results of operations in certain businesses.

ITEM 4.

Controls and Procedures

Our management, with the participation of the Chairman and Chief Executive Officer (the principal executive officer) and the Chief Financial Officer (the principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chairman and Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that 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.

PART II—OTHER INFORMATION

ITEM 1.

Legal Proceedings

We are involved in a number of judicial, regulatory and arbitration matters arising in connection with our business. The outcome of matters we have been and currently are involved in cannot be determined at this time, and the results cannot be predicted with certainty. There can be no assurance that these matters will not have a material adverse effect on our results of operations in any future period and a significant judgment could have a material adverse impact on our financial condition, results of operations and cash flows. We may in the future become involved in additional litigation in the ordinary course of our business, including litigation that could be material to our business. Management, after consultation with legal counsel, believes that the currently known actions or threats against us will not result in any material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A.

Risk Factors

The risk factors included in our 2013 10-K continue to apply to us, and describe risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the forward-looking statements contained in this Quarterly Report. There have not been any material changes from the risk factors previously described in our 2013 10-K.

- 54 -

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth the information with respect to purchases made by or on behalf of JMP Group Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the quarter ended March 31, 2014.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)

January 1, 2014 to January 31, 2014		-	$	0.00		-		1,112,908
February 1, 2014 to February 28, 2014		4,656	$	7.04		4,656		1,108,252
March 1, 2014 to March 31, 2014		-	$	0.00		-		1,108,252
Total		4,656				4,656

(1)	The Company’s board of directors authorized the repurchase of 1.3 million shares through December 31, 2014.

ITEM 3.

Defaults Upon Senior Securities

None.

ITEM 4.

Mine Safety Disclosures

Not Applicable.

ITEM 5.

Other Information

ITEM 6.

Exhibits

See Exhibit Index.

- 55 -

SIGNATURES

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.

Date: May 1, 2014


JMP Group Inc.

By:		/s/ J OSEPH A. J OLSON
Name:		Joseph A. Jolson
Title:		Chairman and Chief Executive Officer

By:		/s/ R AYMOND S. J ACKSON
Name:		Raymond S. Jackson
Title:		Chief Financial Officer

- 56 -

EXHIBIT INDEX

Exhibit Number		Description

4.6		Second Supplemental Indenture dated as of January 29, 2014, between JMP Group Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K filed on January 30, 2014).

10.27		Form of Restricted Stock Unit Award Agreement

10.28		Form of Stock Option Award Agreement

10.29		Form of Deferred Restricted Stock Unit Agreement

10.30		Second Amended and Restated Credit Agreement, dated as of April 30, 2014

10.31		Amendment Number Five to Resolving Note and Cash Subordination Agreement and Revolving Note, dated as of April 30, 2014

31.1		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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.

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.

101		The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL), include: (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes (furnished herewith).

- 57 -

Exhibit 10.27

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

NOTICE OF Restricted Stock Unit AWARD

Grantee’s Name and Address:

You, the above-named “Grantee,” have been granted an award of Restricted Stock Units (the “Award”), subject to the terms and conditions of this Notice of Restricted Stock Unit Award (the “Notice”) and the JMP Group Inc. (“JMP” or the “Company”) Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”), and the Restricted Stock Unit Agreement (the “RSU Agreement”) attached hereto. Unless otherwise provided in this Notice or the RSU Agreement, the undefined capitalized terms used in this Notice shall have the same meaning as those defined in the Plan.

Award Number

Date of Award

Total Number of Restricted Stock Units Awarded (the “Units”)

Vesting Schedule :

Except to the extent expressly set forth herein, the Units will “vest” on ____________ (the “Vesting Date”), provided that the Grantee does not incur a Separation from Service prior to the Vesting Date, and subject to any conditions and limitations set forth in this Notice, the RSU Agreement and the Plan.

Any issuance of stock or other satisfaction of this Notice and RSU Agreement upon vesting shall be net of any gains or losses and subject to income tax and all other legally required or permitted payroll withholdings in accordance with the terms of the Plan, this Notice and the RSU Agreement.

Further, vesting shall cease or accelerate (e.g., a Change of Control), in the manner set forth in Exhibit A attached hereto.

As of the earlier of the date of the Grantee’s Separation from Service or the date the Grantee violates the covenants set forth in Exhibit A , any unvested Units, after giving effect to any acceleration required by Exhibit A , shall be forfeited and deemed reconveyed to the Company, and the Company shall thereafter be the legal and beneficial owner of such reconveyed Units and shall have all rights and interest in or related thereto without further action by the Grantee.

In the event of the Grantee’s change in status from employee to consultant or director or in the event the Grantee commences a leave of absence, the determination of whether such change in status or leave of absence results in a Separation from Service will be determined in accordance with Section 409A.

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Award is to be governed by the terms and conditions of this Notice and the attached RSU Agreement.

	JMP GROUP INC., a Delaware corporation



	By:	Raymond Jackson
	Title:	Chief Financial Officer

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE UNITS GRANTED IN THIS AWARD ARE SUBJECT TO VESTING AND ARE NOT EARNED UNTIL AND UNLESS ALL CONDITIONS SET FORTH IN THIS NOTICE, THE RSU AGREEMENT AND THE PLAN ARE SATISFIED. THE UNITS SHALL VEST, IF AT ALL, AS SPECIFICALLY PROVIDED HEREIN (AND NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THIS AWARD). THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE’S EMPLOYMENT STATUS IS AT WILL. THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE RSU AGREEMENT OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE COMPENSATION OR CONTINUATION OF THE GRANTEE’S EMPLOYMENT BY, OR SERVICES ON BEHALF OF, THE COMPANY OR A RELATED ENTITY (AS DEFINED IN THE PLAN), NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S EMPLOYMENT BY, OR SERVICES ON BEHALF OF, THE COMPANY OR A RELATED ENTITY AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.

Grantee Acknowledges and Agrees :

The Grantee understands that receipt of any potential compensation under this Notice and the attached RSU Agreement is subject to the Grantee’s receipt of paper copies of the Plan, this Notice and the RSU Agreement or Grantee's consent to access copies of such documents in electronic form on the Company’s Employee Access website at www.employease.com or otherwise. Grantee hereby represents that he or she has access to the Company’s Employee Access website or has received copies of the Notice, the RSU Agreement, and the Plan, via either paper or electronic copies, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all of the terms and provisions hereof and thereof. Grantee acknowledges that he or she has reviewed this Notice, RSU Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and RSU Agreement, and fully understands all provisions of this Notice, the RSU Agreement and the Plan.

The Grantee further agrees and acknowledges that this Award is a non-elective arrangement pursuant to Section 409A.

The Grantee further acknowledges that, from time to time, the Company may be in a “blackout period” and/or subject to applicable federal securities laws that could subject the Grantee to liability for engaging in any transaction involving the sale of the Company’s Shares. The Grantee further acknowledges and agrees that, prior to the sale of any Shares acquired under this Award, it is the Grantee’s responsibility to determine whether or not such sale of Shares will subject the Grantee to liability under insider trading rules or other applicable federal securities laws.

Grantee hereby agrees that all questions of interpretation and administration relating to this Notice, the RSU Agreement and the Plan shall be resolved by the Administrator in accordance with Section 7(h) of the RSU Agreement. Grantee further agrees to notify the Company upon any change in the residence address on the signature page of this Notice.

Date:
			Grantee’s Signature


			Grantee’s Printed Name


			Address


			City, State & Zip

Award Number: ____

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

1. Issuance of Units . JMP Group Inc., a Delaware corporation (the “Company”), hereby issues to the Grantee (the “Grantee”) named in the Notice of Restricted Stock Unit Award (the “Notice”) an award (the “Award”) of the Total Number of Restricted Stock Units Awarded as set forth in the Notice (the “Units”), subject to the Notice, this Restricted Stock Unit Agreement (the “RSU Agreement”) and the terms and provisions of the JMP Group Inc. Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference. Unless otherwise provided herein, the undefined capitalized terms used in this RSU Agreement shall have the same meaning ascribed thereto in the Plan.

2. Conversion of Units and Issuance of Shares .

(a) General . Subject to Sections 2(b) and (c), one share of Common Stock shall be issuable for each Unit subject to the Award (the “Shares”) upon vesting. Within ten (10) business days after either the Vesting Date or the date vesting accelerates in accordance with Exhibit A , or as soon as administratively feasible, the Company will transfer the appropriate number of Shares to the Grantee after satisfaction of any required tax or other withholding obligations. Notwithstanding the foregoing, the relevant number of Shares shall be issued in accordance with Treasury Regulation Section 1.409A-3(d), as may be amended from time to time. Any fractional Unit remaining after the Award is fully vested shall be discarded and shall not be converted into a fractional Share. Notwithstanding the foregoing, the Company may, in its sole discretion, make a cash payment in lieu of the issuance of the Shares in an amount equal to the value of one share of Common Stock multiplied by the number of then vested Units subject to the Award.

(b) Delay of Conversion . The conversion of the Units into the Shares under Section 2(a) above shall be delayed in the event the Company reasonably anticipates that the issuance of the Shares would constitute a violation of federal securities laws or other Applicable Law. If the conversion of the Units into the Shares is delayed by the provisions of this Section 2(b), the conversion of the Units into the Shares shall occur at the earliest date at which the Company reasonably anticipates issuing the Shares will not cause a violation of federal securities laws or other Applicable Law. For purposes of this Section 2(b), the issuance of Shares that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not considered a violation of Applicable Law.

(c) Delay of Issuance of Shares . The Company shall delay the issuance of any Shares under this Section 2 to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified employees” of certain publicly-traded companies); in such event, any Shares to which the Grantee would otherwise be entitled during the six (6) month period following the date of the Grantee’s Separation from Service will be issuable on the first business day following the expiration of such six (6) month period.

3. Transfer Upon Death . The Grantee may designate one or more beneficiaries of the Units in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator. The terms of the Units shall be binding upon the executors, administrators, heirs, successors and transferees of the Grantee.

4. Grantee Covenants . In consideration for the Grantee's Award of Units under the Notice and RSU Agreement, the Grantee shall be subject to the Grantee Covenants set forth in Exhibit A attached hereto. The duration of the non-solicitation and garden leave Grantee Covenants shall be extended by the length of time of any litigation relating to the enforcement of these clauses.

5. Taxes .

(a) Tax Liability. The Grantee is ultimately liable and responsible for all taxes owed by the Grantee in connection with the Award (including any dividend equivalents (as noted hereinbelow)), regardless of any action the Company or any Related Entity takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the Company nor any Related Entity makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award, the subsequent sale of Shares issuable pursuant to the Award or the receipt of any dividends or dividend equivalents. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate the Grantee’s tax liability. The Grantee does not have the discretion to direct the Company to withhold any amount in excess of the minimum statutory tax withholding requirements, to make any such excess tax payments on behalf of the Grantee, or to withhold or pay any amount in satisfaction of the Grantee’s other tax liabilities.

(b) Payment of Withholding Taxes . Prior to any event in connection with the Award (e.g., vesting) that the Company determines may result in any tax withholding obligation, whether United States federal, state, local or non-U.S., including any employment tax obligation (the “Tax Withholding Obligation”), the Grantee must arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company. Under no circumstances will the Company be obligated to withhold any amount in excess of the minimum Tax Withholding Obligation, or to withhold or pay any additional amount in satisfaction of the Grantee’s other tax liabilities.

(i) By Share Withholding. Notwithstanding anything herein to the contrary, unless the Grantee elects to satisfy the Grantee’s Tax Withholding Obligation with respect to the issuance of this Award and/or the Shares in accordance with subsection (ii) below, the Grantee authorizes the Company to, and the Company shall, withhold from, or reduce, the whole number of Shares subject to this Award sufficient to satisfy the minimum applicable Tax Withholding Obligation. The Grantee acknowledges that the reduced or withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation at the time of grant of this Award or upon issuance of the Shares. Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the reduction or withholding of Shares described above.

(ii) By Check, Wire Transfer or Other Means . At any time not less than five (5) business days (or such fewer number of business days as determined by the Administrator) before any Tax Withholding Obligation arises, the Grantee may elect to satisfy the Grantee’s Tax Withholding Obligation by delivering to the Company an amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified check payable to the Company, or (z) such other means as specified or approved from time to time by the Administrator (e.g., supplemental withholding of taxes from the Grantee’s wages).

(c) Stop-Transfer Notices . In order to ensure compliance with the terms of this Section 5, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. The Company may issue a “stop transfer” instruction if the Grantee fails to satisfy any Tax Withholding Obligations.

6. Dividend Equivalents . In the event the Company declares a cash or stock dividend on its Common Stock prior to the earlier of the Vesting Date or the date unvested Units are forfeited and the Grantee has not incurred a Separation from Service, dividend equivalents will be payable to the Grantee in cash in respect of any outstanding Units, with the value of such dividend equivalents measured by the per share dividend paid with respect to the Company’s Common Stock. Any dividend equivalents that become payable to the Grantee in accordance with the preceding sentence shall be paid to the Grantee, after deduction for the Grantee’s Tax Withholding Obligation with respect to such dividend equivalents, as soon as administratively feasible after the date the Company has paid a cash or stock dividend on its Common Stock, but in no event later than January 31 ^st of the year following the calendar year in which the dividend was paid. For purposes of clarity, if the Grantee’s incurs a Separation from Service for any or no reason, the Grantee will have no further rights to receive dividend equivalents (regardless of any rights that the Grantee may have to continue to vest in Units subject to the Award following the Grantee’s Separation from Service pursuant to Exhibit A ), and no additional dividend equivalents will be paid to the Grantee with respect to dividends declared or paid on or after the date of the Grantee’s Separation from Service.

7. Miscellaneous Provisions.

(a) Entire Agreement; Severability; Blue Pencil . The Notice, this RSU Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Should any provision of the Plan, the Notice and this RSU Agreement be determined to be illegal or unenforceable, only such provision or provisions shall be invalid and will not invalidate the remaining provisions. The other provisions shall remain effective and shall remain enforceable, and if possible, the invalid term shall be revised, or a new valid term provided, to preserve the original intent of the parties. If any court determines that any of the covenants and agreements, or any part thereof, is invalid or unenforceable because of the duration or scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable to the maximum extent permitted by applicable law. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

(b) Governing Law . These agreements are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties.

(c) Specific Enforcement . Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of the Notice, this RSU Agreement and the Plan would be inadequate and, in recognition of this fact, any party to the Notice, this RSU Agreement and the Plan, without posting any bond, and in addition to all other remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

(d) Limitation of Rights . Nothing in the Notice, this RSU Agreement and the Plan or in any related instrument shall be treated as a contract of employment within the meaning of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., or shall be construed as evidence of any agreement or understanding, express or implied, that the Company will (a) employ any person in any particular position or level of compensation, (b) offer any person initial or continued participation or awards in any commission, bonus or other compensation program, or (c) continue any person’s employment with the Company.

(e) Waiver; Amendment . No provision of the Notice and this RSU Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective. No provision of the Notice and this RSU Agreement may be amended or otherwise modified except by an instrument in writing executed by the Company with approval of the Executive Committee.

(f) Counterparts; Effectiveness . The Notice and this RSU Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. The Notice and RSU Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

(g) Construction . The captions used in the Notice and this RSU Agreement are inserted for convenience and shall not be deemed a part of the Award for construction or interpretation. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

(h) Administration and Interpretation . Any question or dispute regarding the administration or interpretation of the Notice, the Plan or this RSU Agreement shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding on all persons.

(i) Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing from time to time to the other party.

(j) Amendment and Delay to Meet the Requirements of Section 409A . The Grantee acknowledges that the Company, in the exercise of its sole discretion and without the consent of the Grantee, may amend or modify this RSU Agreement in any manner and delay the issuance of any Shares issuable pursuant to this RSU Agreement to the minimum extent necessary to meet the requirements of Section 409A as the Company deems appropriate or advisable.

[ Intentionally left blank ]

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and RSU Agreement and agree that the Grantee’s Award is to be governed by the terms and conditions of the Notice, this RSU Agreement and the Plan.

JMP GROUP INC.,
a Delaware corporation

By:

Raymond Jackson

Title:

Chief Financial Officer


____________________________________ ( Signature )	_____________________________________ ( Date )


_____________________________________ ( Printed Name ) _____________________________________ _____________________________________ (Print Residence Address Above)

EXHIBIT A

Except as otherwise specifically set forth herein, vesting shall cease upon the date the Grantee’s employment terminates for any reason, whether the decision to terminate is made by the Company or the Grantee.

Death or Total Disability : In the event of the Grantee’s death or Total Disability prior to the Vesting Date, unvested Units shall accelerate and shall immediately be vested.

Change in Control Events: In the event of a Change in Control occurring prior to the Vesting Date, the vesting requirements described herein shall terminate and be of no further effect and unvested Units shall be vested immediately prior to the effective date of such Change in Control. For the avoidance of doubt, the Award shall remain subject to vesting in the event of any Corporate Transaction that is not a Change in Control and Section 11(b) of the Plan shall not apply to this Award.

Defined Terms: The following terms shall be defined as follows:

(i) “ Affiliate ” and “ Associate ” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

(ii) “ Change in Control ” means a change in ownership or control of the Company effected through either of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or (ii) a change in the composition of the Board over a period of twelve (12) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors); provided that, the transaction must also constitute a “change in the ownership or effective control, or in the ownership of a substantial portion of the assets” (as defined in Section 409A) of the Company.

(iii) “ Common Stock ” means the common stock of the Company.

(iv) “ Continuing Directors ” means members of the Board who either (i) have been Board members continuously for a period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

(v) “ Corporate Transaction ” means any of the following transactions, provided, however, that the Company shall determine under parts (v) and (vi) whether multiple transactions are related, and its determination shall be final, binding and conclusive: (i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than forty percent (40%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger; or (v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.

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

(vii) “ Separation from Service ” means the Grantee’s death, retirement or other voluntary or involuntary termination of employment or service with the Company and its Related Entities (as determined in accordance with Code Section 409A(2)(A)(i) and Treasury regulation section 1.409A-1(h), as each may be amended from time to time).

(viii) “ Total Disability ” shall mean a disability within the meaning of Code Section 409A(a)(2)(C) and Treasury regulation section 1.409A-3(i)(4), as each may be amended from time to time. The determination of whether a Grantee is Disabled shall be made by the Company in its sole discretion.

(ix) “ Section 409A ” means Section 409A of the Code, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.

Grantee Covenants: As a condition to the Grantee's receipt of this Award, the Grantee agrees to be subject to the following covenants (the “Grantee Covenants”):

(a) Confidential Information . The Grantee hereby acknowledges that unauthorized disclosure of Confidential Information to third parties outside the Company will cause the Company substantial, immediate and irreparable harm. For purposes hereof, “Confidential Information” means non-public information concerning the Company and its clients, including without limitation, information concerning the Company’s and its clients’ businesses, strategies, operations, financial affairs, organizational and personnel matters, policies and procedures. Confidential Information may have been or be provided in written or electronic form or orally. Further, and without prejudice to or limitation on any other confidentiality obligations imposed by agreement or by law, the Grantee hereby undertakes to use and protect Confidential Information in accordance with the restrictions placed on its use and/or disclosure. Without limiting the foregoing, except as authorized by the Company or as required by applicable law, the Grantee may not disclose or allow disclosure of any Confidential Information, or of any information derived therefrom, in whatever form, to any person unless such person is a director, officer, partner, employee, attorney or agent of the Company and, in the Grantee’s reasonable good faith judgment, has a need to know the Confidential Information or information derived therefrom in furtherance of the business of the Company. The Grantee may not take or use Confidential Information for his or her own purposes, or purposes of third parties, either directly or indirectly, including, without limitation, for the purpose of furthering current or future employment outside the Company or for outside activities, personal gain or profit. The Company reserves the right to avail itself of all legal or equitable remedies, including preliminary injunction and restraining order, to prevent impermissible use of Confidential Information and/or to recover damages incurred as a result of such use of Confidential Information. The foregoing obligations will survive, and remain binding and enforceable notwithstanding any termination of the Grantee’s employment with the Company and any settlement of the financial rights and obligations arising from the Grantee’s employment with the Company. Without limiting the foregoing, the existence of, and any information concerning, any dispute between the Grantee and the Company shall constitute Confidential Information except that the Grantee may disclose information concerning such dispute to the arbitrator or other trier of fact who is considering such dispute, or to the Grantee’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

(b) Solicitation of Employees . The Grantee hereby agrees that during the Grantee’s employment and for a period of one year following the termination of his or her employment, Grantee will not, in any manner, directly or indirectly, Solicit any person who is an Employee to resign from the Company. For purposes hereof, the term “Solicit” means any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising, encouraging or requesting any person or entity, in any manner, to take or refrain from taking any action.

(c) Garden Leave . To the extent permitted by applicable law, the Grantee hereby agrees that during the Coverage Period, the Executive Committee may, in its sole and absolute discretion, continue Grantee’s employment, pay the Grantee’s base salary or draw, as applicable, and require that the Grantee refrain from engaging in any other employment or business activities until the Executive Committee determines the Client relationships are transferred to the Company. The Grantee may continue to participate in any benefit plan for which he or she continues to be eligible, subject to the payment of necessary premiums and the terms and conditions of the applicable benefit plans. The Grantee will not receive or participate in any incentive pay or bonus arrangements. During the Coverage Period, the Grantee will not be required to perform any duties for the Company. During the Coverage Period, the Company may, in its sole discretion, deny or restrict the Grantee’s access to the Company’s clients, customers, premises, Confidential Information and telephone and computer systems. For purposes hereof, the term “Coverage Period” means, at the discretion of the Executive Committee, either the 90-day period beginning on the date on which notice of the Grantee’s termination of employment is delivered to or by the Company or the 90-day period beginning on the date of termination of the Grantee’s employment. The Company may, in its sole discretion, elect not to invoke, or to shorten, the duration of, the Coverage Period. If the Company elects to terminate the Coverage Period early, the Company will not continue to pay, or provide benefits to, the Grantee. In the event of any breach of this provision by the Grantee, the Company will have no obligation to continue providing compensation or benefits to Grantee. Grantee acknowledges that a breach of his or her obligations hereunder would cause irreparable damage to the Company and monetary damages alone would be an insufficient remedy for such a breach. Therefore, the Company, in addition to any other rights or remedies that it may have, will be entitled to a preliminary or temporary injunctive order restraining Grantee from violating or continuing to violate such obligations. Nothing contained herein shall alter Grantee’s at-will employment status with the Company. In addition, nothing contained herein shall defer the date upon which the Grantee is deemed to have incurred a Separation from Service for purposes of the Award or otherwise defer the date upon which Shares would be issued for vested Units in the absence of the garden leave.

(d) Reasonable Scope . Grantee acknowledges and agrees that the Grantee Covenants and agreements contained herein are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the trade secrets, Confidential Information, Client relationships, goodwill, and other legitimate business interests of the Company.

(e) Extended Duration of Covenants . The duration of the non-solicitation and garden leave clauses set forth in subsections (b) – (c) shall be extended by the length of time of any litigation relating to the enforcement of these clauses; provided, however, that nothing contained herein shall defer the date upon which Shares would be issued for vested Units in the absence of such litigation except to the extent permitted by Section 409A.

Exhibit 10.28

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION AWARD

Grantee’s Name and Address:

You (the “Grantee”) have been granted an option to purchase shares of Common Stock, subject to the terms and conditions of this Notice of Stock Option Award (the “Notice”), the JMP Group Inc. Amended and Restated Equity Incentive Plan (the “Plan”) and the attached Stock Option Award Agreement (the “Option Agreement”). Unless otherwise defined herein, the capitalized and undefined terms used in this Notice and the Option Agreement shall have the same meaning as defined in the Plan.

Award Number

Date of Award

Vesting Commencement Date

Exercise Price per Share

Total Number of Shares Subject to the Option (the “Shares”)

Type of Option:		Incentive Stock Option
		Non-Qualified Stock Option

Expiration Date:

Vesting Criteria :

Subject to the Grantee’s Continuous Service through and including___________, and the other limitations set forth in this Notice, the Plan and the Option Agreement, the Option shall vest in full and may be exercised, in whole or in part, from and after ____________, and prior to ____________ 11:59 P.M. Pacific Time, so long as the Thirty Day Average Price equals or exceeds the Threshold Price, at any time during the Applicable Period, for thirty (30) consecutive Trading Days:

THRESHOLD PRICE	APPLICABLE PERIOD
$_____	Between (and inclusive of) the Vesting Commencement Date and ___________
$____	Between (and inclusive of) ____________, and _____________
$_________	Between (and inclusive of) __________, and ___________

For purposes of this Notice and the Option Agreement, “Thirty Day Average Price” shall mean, as of any date, the volume-weighted average price of the Company’s Common Stock for the last thirty (30) consecutive Trading Days, as determined after market close on the thirtieth (30 ^th ) such consecutive Trading Day.

For purposes of this Notice and the Option Agreement, a “Trading Day” means a day on which the New York Stock Exchange is open for business and trades of Company Common Stock can or do occur .

The Threshold Prices shall be subject to adjustment for changes in capitalization as provided in Section 10 of the Plan.

For purposes of clarity, if the stock price reaches the applicable Threshold Price in November or December of a calendar year and the thirty (30) consecutive Trading Day period during which such price must be maintained straddles two calendar years, the Option will fully vest if the Threshold Price is so maintained and the Grantee will not be required to achieve the Threshold Price attributable to the second calendar year. For example, if the stock price on ______________ is $______, the Option will fully vest in early ____ if the Thirty Day Average Price is equal to or greater than $____ during such period (even though the period ended in ____).

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option is to be governed by the terms and conditions of this Notice, the Plan, and the Option Agreement.

	JMP Group Inc., a Delaware corporation


	By:	Raymond Jackson
	Title:	Chief Financial Officer

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY IN THE MANNER SET FORTH HEREIN (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE’S CONTINOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE RIGHT OF THE COMPANY, OR THE RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES, TO TERMINATE THE GRANTEE’S CONTINOUS SERVICE, WITH OR WITHOUT CAUSE , AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S STATUS IS AT WILL.

The Grantee acknowledges receipt of a copy of the attached Option Agreement and the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan and the Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands all provisions of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all questions of interpretation and administration relating to this Notice, the Plan and the Option Agreement shall be resolved by the Administrator in accordance with Section 13 of the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Notice.

Date:
			Grantee’s Signature


			Grantee’s Printed Name


			Address


			City, State & Zip

Award Number:

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

1. Grant of Option. JMP Group Inc., a Delaware corporation (the “Company”), hereby grants to the Grantee (the “Grantee”) named in the Notice of Stock Option Award (the “Notice”), an option (the “Option”) to purchase the Total Number of Shares of Common Stock subject to the Option (the “Shares”) set forth in the Notice, at the Exercise Price per Share set forth in the Notice (the “Exercise Price”), subject to the terms and provisions of the Notice, this Stock Option Award Agreement (the “Option Agreement”) and the Company’s Amended and Restated Equity Incentive Plan (the “Plan”), which are incorporated herein by reference.

If designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, the Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market Value of the Shares subject to options designated as Incentive Stock Options which become exercisable for the first time by the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the shares subject to such options shall be determined as of the grant date of the relevant option.

2. Exercise of Option.

(a) Right to Exercise . The Option shall be exercisable if vested in accordance with the Notice and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan, provided that, with respect to Section 11(b) relating to the acceleration of the Option in the event of a Change in Control (as defined in Annex 1 attached hereto), Annex 1 shall apply. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares.

(b) Method of Exercise . The Option shall be exercisable by delivery of an exercise notice (a form of which is attached hereto as Exhibit A), or by such other procedure as specified from time to time by the Administrator, which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Administrator. The exercise notice shall be delivered to the Company in person, by certified mail, or by such other method (including electronic transmission) as determined from time to time by the Administrator, accompanied by payment of the Exercise Price and all applicable income and employment taxes required to be withheld. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price and all applicable withholding taxes, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(d) below to the extent such procedure is available to the Grantee at the time of exercise and such an exercise would not violate any Applicable Law.

(c) Taxes . No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt of Shares. Upon exercise of the Option, the Company or the Grantee’s employer may offset or withhold (from any amount owed by the Company or the Grantee’s employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax withholding obligations. Furthermore, in the event of any determination that the Company has failed to withhold a sum sufficient to pay all withholding taxes due in connection with the Option, the Grantee agrees to pay the Company the amount of such deficiency in cash within five (5) days after receiving a written demand from the Company to do so, whether or not the Grantee is an employee of the Company at that time.

(d) Section 16(b) . Notwithstanding any provision of this Option Agreement to the contrary, if a sale within the applicable time periods set forth in Sections 5, 6 or 7 herein of Shares acquired upon the exercise of the Option would subject the Grantee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such Shares by the Grantee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Grantee’s termination of Continuous Service, or (iii) the date on which the Option expires.

3. Method of Payment . Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further, that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law:

(a) cash;

(b) check;

(c) surrender of Shares held for the requisite period, if any, necessary to avoid a charge to the Company’s earnings for financial reporting purposes, or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised;

(d) payment through a “net exercise” such that, without the payment of any funds, the Grantee may exercise the Option and receive the net number of Shares equal to (i) the number of Shares as to which the Option is being exercised, multiplied by (ii) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined by the Administrator) less the Exercise Price per Share, and the denominator of which is such Fair Market Value per Share (the number of net Shares to be received shall be rounded down to the nearest whole number of Shares); or

(e) payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

4. Restrictions on Exercise . The Option may not be exercised if the issuance of the Shares subject to the Option upon such exercise would constitute a violation of any Applicable Laws. If the exercise of the Option within the applicable time periods set forth in Section 5, 6 and 7 of this Option Agreement is prevented by the provisions of this Section 4, the Option shall remain exercisable until one (1) month after the date the Grantee is notified by the Company that the Option is exercisable, but in any event no later than the Expiration Date set forth in the Notice.

5. Termination of Continuous Service . In the event the Grantee’s Continuous Service terminates prior to January 1, 2017, at any time or for any reason, , the Grantee’s right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantee’s Continuous Service. In the event of the Grantee’s change in status from Employee, Director or Consultant to any other status of Employee, Director or Consultant, the Option shall remain in effect and the Option shall continue to vest in accordance with the Notice; provided, however, that with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director or Consultant, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. To the extent that the Option was unvested as of December 31, 2016, or if the Grantee does not exercise the vested Option prior to December 31, 2019, 11:59 P.M. Pacific Time, the Option shall terminate.

6. Disability of Grantee . In the event the Grantee’s Continuous Service terminates as a result of his or her Disability prior to January 1, 2017, the Option may continue to vest, subject to the Grantee’s continued compliance with the Grantee Covenants set forth in Annex 1. In the event Grantee does not breach any of said covenants prior to January 1, 2017, or the Grantee’s Continuous Service terminates on or after January 1, 2017 due to his or her Disability, Grantee may exercise the Option, if otherwise vested as of said date, at any time prior to December 31, 2019, 11:59 P.M. Pacific Time; provided, however, that if such Disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested as of December 31, 2016, or if the Grantee does not exercise the vested Option prior to December 31, 2019, 11:59 P.M. Pacific Time, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.

7. Death of Grantee . In the event of the termination of the Grantee’s Continuous Service as a result of his or her death prior to January 1, 2017, the Option may continue to vest. Regardless of when his or her death occurs, the person who acquired the right to exercise the Option pursuant to Section 8 may exercise the Option, if vested, prior to December 31, 2019, 11:59 P.M. Pacific Time. To the extent that the Option was unvested as of December 31, 2016, or if the vested Option is not exercised prior to December 31, 2019, 11:59 P.M. Pacific Time, the Option shall terminate .

8. Transferability of Option . The Option, if an Incentive Stock Option, may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The Option, if a Non-Qualified Stock Option, may not be transferred in any manner other than by will or by the laws of descent and distribution, provided, however, that a Non-Qualified Stock Option may be transferred during the lifetime of the Grantee to the extent and in the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries of the Grantee’s Incentive Stock Option or Non-Qualified Stock Option in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator. Following the death of the Grantee, the Option, to the extent provided in Section 7, may be exercised (a) by the person or persons designated under the deceased Grantee’s beneficiary designation or (b) in the absence of an effectively designated beneficiary, by the Grantee’s legal representative or by any person empowered to do so under the deceased Grantee’s will or under the then applicable laws of descent and distribution. The terms of the Option shall be binding upon the executors, administrators, heirs, successors and transferees of the Grantee.

9. Term of Option . The Option must be exercised no later than the Expiration Date set forth in the Notice or such earlier date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised.

10. Tax Consequences . The Grantee may incur tax liability as a result of the Grantee’s purchase or disposition of the Shares. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

11. Entire Agreement: Governing Law . The Notice, the Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Notice, the Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties. Should any provision of the Notice, the Plan or this Option Agreement be determined to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

12. Construction . The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

13. Administration and Interpretation . Any question or dispute regarding the administration or interpretation of the Notice, the Plan or this Option Agreement shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding on all persons.

14. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing from time to time to the other party.

END OF AGREEMENT

EXHIBIT A

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

EXERCISE NOTICE

JMP GROUP INC.

Attention: Secretary

600 Montgomery Street, Suite 1100

San Francisco, CA 94111

1. Exercise of Option . Effective as of today, ______________, ___ the undersigned (the “Grantee”) hereby elects to exercise the Grantee’s option to purchase ___________ shares of the Common Stock (the “Shares”) of JMP Group, Inc. (the “Company”) under and pursuant to the Company’s Amended and Restated Equity Incentive Plan (the “Plan”) and the Stock Option Award Agreement (the “Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated ______________, ________. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice.

2. Representations of the Grantee . The Grantee acknowledges that the Grantee has received, read and understood the Notice, the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

3. Rights as Stockholder . Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.

4. Delivery of Payment . The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(e) of the Option Agreement.

5. Tax Consultation . The Grantee understands that the Grantee may incur taxes as a result of the Grantee’s purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in connection with the purchase or disposition of the Shares and that the Grantee is not relying on the Company for any tax advice.

6. Taxes . The Grantee agrees to satisfy all applicable foreign, federal, state and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In the case of an Incentive Stock Option, the Grantee also agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from the date the Shares were transferred to the Grantee.

7. Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns.

8. Construction . The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

9. Administration and Interpretation . The Grantee hereby agrees that any question or dispute regarding the administration or interpretation of this Exercise Notice shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding on all persons.

10. Governing Law; Severability . This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

11. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

12. Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.

13. Entire Agreement . The Notice, the Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.

Submitted by:	Accepted by:

GRANTEE:	JMP GROUP INC.

	By: _________________________

___________________ (Signature)	Title: _______________________

Address:	Address:

__________________________ __________________________	600 MONTGOMERY STREET, SUITE 1100 SAN FRANCISCO, CA 94111

ANNEX 1

Change in Control Events: Notwithstanding anything to the contrary set forth in the Option Agreement, in the event a Change in Control occurs prior to the date the Vesting Criteria (set forth in the Notice) are satisfied, the vesting requirements described in the Notice shall terminate and be of no further effect and the Option shall vest immediately prior to the effective date of such Change in Control. For the avoidance of doubt, if the Award is Assumed or Replaced, the Award shall remain subject to the Vesting Criteria (set forth in the Notice) in the event of any Corporate Transaction that is not a Change in Control and Section 11(b) of the Plan shall not apply to this Award.

Defined Terms: The following terms shall be defined as follows:

(i) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

(ii) “Change in Control” means a change in ownership or control of the Company effected through either of the following transactions: (i) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or (ii) a change in the composition of the Board over a period of twelve (12) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors); provided that, the transaction must also constitute a “change in the ownership or effective control, or in the ownership of a substantial portion of the assets” (as defined in Section 409A) of the Company.

(iii) “Common Stock” means the common stock of the Company.

(iv) “Continuing Directors” means members of the Board who either (i) have been Board members continuously for a period of at least twelve (12) months or (ii) have been Board members for less than twelve (12) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

(v) “Corporate Transaction” means any of the following transactions, provided, however, that the Company shall determine under parts (v) and (vi) whether multiple transactions are related, and its determination shall be final, binding and conclusive: (i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company; (iii) the complete liquidation or dissolution of the Company; (iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than forty percent (40%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger; or (v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.

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

(vii) “Separation from Service” means the Grantee’s death, retirement or other termination of employment or service with the Company and its Related Entities (as determined in accordance with Code Section 409A(2)(A)(i) and Treasury regulation section 1.409A-1(h), as each may be amended from time to time). A Separation of Service shall constitute a termination of the Grantee’s Continuous Service.

(viii) “Disability” shall mean a disability within the meaning of Code Section 409A(a)(2)(C) and Treasury regulation section 1.409A-3(i)(4), as each may be amended from time to time. The determination of whether a Grantee is Disabled shall be made by the Company in its sole discretion.

(ix) “Section 409A” means Section 409A of the Code, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.

Grantee Covenants: As a condition to the Grantee's receipt of this Award, the Grantee agrees to be subject to the following covenants (the “Grantee Covenants”):

(a) Confidential Information. The Grantee hereby acknowledges that unauthorized disclosure of Confidential Information to third parties outside the Company will cause the Company substantial, immediate and irreparable harm. For purposes hereof, “Confidential Information” means non-public information concerning the Company and its clients, including without limitation, information concerning the Company’s and its clients’ businesses, strategies, operations, financial affairs, organizational and personnel matters, policies and procedures. Confidential Information may have been or be provided in written or electronic form or orally. Further, and without prejudice to or limitation on any other confidentiality obligations imposed by agreement or by law, the Grantee hereby undertakes to use and protect Confidential Information in accordance with the restrictions placed on its use and/or disclosure. Without limiting the foregoing, except as authorized by the Company or as required by applicable law, the Grantee may not disclose or allow disclosure of any Confidential Information, or of any information derived therefrom, in whatever form, to any person unless such person is a director, officer, partner, employee, attorney or agent of the Company and, in the Grantee’s reasonable good faith judgment, has a need to know the Confidential Information or information derived therefrom in furtherance of the business of the Company. The Grantee may not take or use Confidential Information for his or her own purposes, or purposes of third parties, either directly or indirectly, including, without limitation, for the purpose of furthering current or future employment outside the Company or for outside activities, personal gain or profit. The Company reserves the right to avail itself of all legal or equitable remedies, including preliminary injunction and restraining order, to prevent impermissible use of Confidential Information and/or to recover damages incurred as a result of such use of Confidential Information. The foregoing obligations will survive, and remain binding and enforceable notwithstanding any termination of the Grantee’s employment with the Company and any settlement of the financial rights and obligations arising from the Grantee’s employment with the Company. Without limiting the foregoing, the existence of, and any information concerning, any dispute between the Grantee and the Company shall constitute Confidential Information except that the Grantee may disclose information concerning such dispute to the arbitrator or other trier of fact who is considering such dispute, or to the Grantee’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

(b) Solicitation of Employees. The Grantee hereby agrees that during the Grantee’s employment and for a period of one year following the termination of his or her employment, Grantee will not, in any manner, directly or indirectly, solicit any person who is an Employee to resign from the Company. For purposes hereof, the term “Solicit” means any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising, encouraging or requesting any person or entity, in any manner, to take or refrain from taking any action.

(c) Garden Leave. To the extent permitted by applicable law, the Grantee hereby agrees that during the Coverage Period, the Executive Committee may, in its sole and absolute discretion, continue Grantee’s employment, pay the Grantee’s base salary or draw, as applicable, and require that the Grantee refrain from engaging in any other employment or business activities until the Executive Committee determines the Client relationships are transferred to the Company. The Grantee may continue to participate in any benefit plan for which he or she continues to be eligible, subject to the payment of necessary premiums and the terms and conditions of the applicable benefit plans. The Grantee will not receive or participate in any incentive pay or bonus arrangements. During the Coverage Period, the Grantee will not be required to perform any duties for the Company. During the Coverage Period, the Company may, in its sole discretion, deny or restrict the Grantee’s access to the Company’s clients, customers, premises, Confidential Information and telephone and computer systems. For purposes hereof, the term “Coverage Period” means, at the discretion of the Executive Committee, either the 90-day period beginning on the date on which notice of the Grantee’s termination of employment is delivered to or by the Company or the 90-day period beginning on the date of termination of the Grantee’s employment. The Company may, in its sole discretion, elect not to invoke, or to shorten, the duration of, the Coverage Period. If the Company elects to terminate the Coverage Period early, the Company will not continue to pay, or provide benefits to, the Grantee. In the event of any breach of this provision by the Grantee, the Company will have no obligation to continue providing compensation or benefits to Grantee. Grantee acknowledges that a breach of his or her obligations hereunder would cause irreparable damage to the Company and monetary damages alone would be an insufficient remedy for such a breach. Therefore, the Company, in addition to any other rights or remedies that it may have, will be entitled to a preliminary or temporary injunctive order restraining Grantee from violating or continuing to violate such obligations. Nothing contained herein shall alter Grantee’s at-will employment status with the Company. In addition, nothing contained herein shall defer the date upon which Shares would be issued upon exercise of the Option in the absence of the garden leave or otherwise extend the term of the Option beyond the Expiration Date.

(d) Reasonable Scope. Grantee acknowledges and agrees that the Grantee Covenants and agreements contained herein are reasonable and valid in geographic, temporal and subject matter scope and in all other respects, and do not impose limitations greater than are necessary to protect the trade secrets, Confidential Information, Client relationships, goodwill, and other legitimate business interests of the Company.

(e) Extended Duration of Covenants. The duration of the non-solicitation and garden leave clauses set forth in subsections (b) – (c) shall be extended by the length of time of any litigation relating to the enforcement of these clauses; provided, however, that nothing contained herein shall defer the date upon which Shares would be issued upon exercise of the Option or otherwise extend the term of the Option beyond the Expiration Date.

Exhibit 10.29

JMP GROUP INC.

AMENDED AND RESTATED EQUITY INCENTIVE PLAN

NOTICE OF DEFERRED Restricted Stock Unit AWARD

Grantee’s Name and Address:

You, the above-named “Grantee,” have been granted an award of Restricted Stock Units (the “Award”), subject to the terms and conditions of this Notice of Deferred Restricted Stock Unit Award (the “Notice”), the JMP Group Inc. (“JMP” or the “Company”) Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”), the JMP 2013 Compensation Program Election Form and Participation Agreement executed by you, together with all other agreements described therein (collectively, the “Program Agreements”) and the Restricted Stock Unit Agreement (the “RSU Agreement”) attached hereto. Unless otherwise provided in this Notice or the RSU Agreement, the undefined capitalized terms used in this Notice shall have the same meaning as those defined in the Plan.

Award Number

Date of Award

Total Number of Restricted Stock Units Awarded (the “Units”)

Vesting Schedule :

Except to the extent expressly set forth herein and in the Program Agreements, subject to the Grantee then being employed by the Company or any of its affiliated employer entities at the relevant vesting dates (set forth below) and any conditions and limitations set forth in this Notice, the RSU Agreement, the Plan or the Program Agreements, the Units will “vest” in accordance with the following schedule (the “Vesting Schedule”).

50% of the Units shall vest on _____________, and the remaining 50% of the Units shall vest on ______________.

Further, vesting shall cease (e.g., termination of employment for Cause (as defined in the Program Agreements)) or accelerate (e.g., a Change of Control (as defined in the Program Agreements)), in the manner set forth in the Program Agreements.

Any unvested Units shall be forfeited and deemed reconveyed to the Company, and the Company shall thereafter be the legal and beneficial owner of such reconveyed Units and shall have all rights and interest in or related thereto without further action by the Grantee.

In the event of the Grantee’s change in status from employee to consultant or director, the determination of whether such change in status results in a termination of continuous service will be determined in accordance with Section 409A of the Internal Revenue Code (the “Code”).

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Award is to be governed by the terms and conditions of this Notice, the attached RSU Agreement, the Plan and the Program Agreements.

JMP GROUP INC.,
a Delaware corporation

By:

Raymond Jackson

Title:

Chief Financial Officer

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE UNITS GRANTED IN THIS AWARD ARE SUBJECT TO VESTING AND ARE NOT EARNED UNTIL AND UNLESS ALL CONDITIONS SET FORTH IN THIS NOTICE, THE PLAN, THE RSU AGREEMENT AND THE PROGRAM AGREEMENTS ARE SATISFIED. THE UNITS SHALL VEST, IF AT ALL, AS SPECIFICALLY PROVIDED HEREIN (AND NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THIS AWARD). THE GRANTEE ACKNOWLEDGES THAT THE GRANTEE’S EMPLOYMENT STATUS IS AT WILL. THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE RSU AGREEMENT, THE PLAN OR PROGRAM AGREEMENTS SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE COMPENSATION OR CONTINUATION OF THE GRANTEE’S EMPLOYMENT BY, OR SERVICES ON BEHALF OF, THE COMPANY OR ANY OF ITS AFFILIATED EMPLOYER ENTITIES OR ANY OTHER RELATED ENTITY (AS DEFINED IN THE PLAN), NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S EMPLOYMENT BY, OR SERVICES ON BEHALF OF, THE COMPANY OR ANY OF ITS AFFILIATED EMPLOYER ENTITIES OR ANY OTHER RELATED ENTITY AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.

Grantee Acknowledges and Agrees :

The Grantee understands that receipt of any potential compensation under this Notice and the attached RSU Agreement is subject to the Grantee’s receipt of paper copies of the Plan and the Program Agreements or Grantee's consent to access copies of such documents in electronic form on the Company’s Employee Access website at www.employease.com or otherwise. Grantee hereby represents that he or she has access to the Company’s Employee Access website or has received a copies of the Notice, the RSU Agreement, the Plan and the Program Agreements, via either paper or electronic copies, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all of the terms and provisions hereof and thereof. Grantee acknowledges that he or she has reviewed this Notice, RSU Agreement, the Plan and the Program Agreements in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice and RSU Agreement and fully understands all provisions of this Notice, the RSU Agreement, the Plan and the Program Agreements.

The Grantee further agrees and acknowledges that this Award is a non-elective arrangement pursuant to Section 409A of the Code.

Grantee hereby agrees that all questions of interpretation and administration relating to this Notice, the RSU Agreement, the Plan and the Program Agreements shall be resolved by the Administrator in accordance with Section 7(h) of the RSU Agreement. Grantee further agrees to notify the Company upon any change in the residence address on the signature page of this Notice.

Date:
			Grantee’s Signature


			Grantee’s Printed Name


			Address


			City, State & Zip

Award Number: ____

JMP GROUP INC.

AMENDED AND RESATED EQUITY INCENTIVE PLAN

DEFERRED RESTRICTED STOCK UNIT AGREEMENT

1. Issuance of Units . JMP Group Inc., a Delaware corporation (the “Company”), hereby issues to the Grantee (the “Grantee”) named in the Notice of Deferred Restricted Stock Unit Award (the “Notice”) an award (the “Award”) of the Total Number of Restricted Stock Units Awarded as set forth in the Notice (the “Units”), subject to the Notice, this Restricted Stock Unit Agreement (the “RSU Agreement”), the JMP 2013 Compensation Program Election Form and Participation Agreement executed by the Grantee, together with all other agreements described therein (collectively, the “Program Agreements”) and the terms and provisions of the JMP Group Inc. Amended and Restated Equity Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference. Unless otherwise provided herein, the undefined capitalized terms used in this RSU Agreement shall have the same meaning ascribed thereto in the Plan.

2. Conversion of Units and Issuance of Shares .

(a) General . Subject to Sections 2(b) and (c), one share of Common Stock shall be issuable for each Unit subject to the Award (the “Shares”) upon vesting. Within ten (10) business days after a vesting date or acceleration of vesting, or as soon as administratively feasible, the Company will transfer the appropriate number of Shares to the Grantee after satisfaction of any required tax or other withholding obligations. Notwithstanding the foregoing, the relevant number of Shares shall be issued no later than sixty (60) days following the date on which the Award vests. Any fractional Unit remaining after the Award is fully vested shall be discarded and shall not be converted into a fractional Share. Notwithstanding the foregoing, the Company may, in its sole discretion, make a cash payment in lieu of the issuance of the Shares in an amount equal to the value of one share of Common Stock multiplied by the number of then vested Units subject to the Award.

(c) Delay of Issuance of Shares . The Company shall have the authority to delay the issuance of any Shares under this Section 2 to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain “specified employees” of certain publicly-traded companies); in such event, any Shares to which the Grantee would otherwise be entitled during the six (6) month period following the date of the Grantee’s termination of Continuous Service will be issuable on the first business day following the expiration of such six (6) month period.

4. Grantee Covenants . In consideration for the Grantee's Award of Units under the Notice and RSU Agreement, the Grantee shall be subject to the Participation Covenants (as defined in the Program Agreements).

The duration of the non-solicitation andgarden leave Participation Covenants shall be extended by the length of time of any litigation relating to the enforcement of these clauses.

5. Taxes .

(a) Tax Liability. The Grantee is ultimately liable and responsible for all taxes owed by the Grantee in connection with the Award, regardless of any action the Company or any Related Entity takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the Company nor any Related Entity makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate the Grantee’s tax liability. The Grantee does not have discretion to direct the Company to withhold any amount in excess of the minimum statutory tax withholding requirements, to make any such excess tax payments on behalf of the Grantee, or to withhold or pay any amount in satisfaction of the Grantee’s other tax liabilities.

(i) By Share Withholding. The Grantee authorizes the Company, upon the exercise of its sole discretion, to withhold from those Shares issuable to the Grantee the whole number of Shares sufficient to satisfy the minimum applicable Tax Withholding Obligation. The Grantee acknowledges that the withheld Shares may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation. Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of Shares described above.

(ii) By Sale of Shares . Unless the Grantee determines to satisfy the Tax Withholding Obligation by some other means in accordance with clause (iii) below, the Grantee’s acceptance of this Award constitutes the Grantee’s instruction and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to, upon the exercise of Company’s sole discretion, sell on the Grantee’s behalf a whole number of Shares from those Shares issuable to the Grantee as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the minimum applicable Tax Withholding Obligation. Such Shares will be sold on the day such Tax Withholding Obligation arises (e.g., a vesting date) or as soon thereafter as practicable. The Grantee will be responsible for all brokers' fees and other costs of sale, and the Grantee agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale. To the extent the proceeds of such sale exceed the Grantee’s minimum Tax Withholding Obligation, the Company agrees to pay such excess in cash to the Grantee. The Grantee acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the Grantee’s minimum Tax Withholding Obligation. Accordingly, the Grantee agrees to pay to the Company or any Related Entity as soon as practicable, including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sale of Shares described above.

(iii) By Check, Wire Transfer or Other Means . At any time not less than five (5) business days (or such fewer number of business days as determined by the Administrator) before any Tax Withholding Obligation arises (e.g., a vesting date), the Grantee may elect to satisfy the Grantee’s Tax Withholding Obligation by delivering to the Company an amount that the Company determines is sufficient to satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified check payable to the Company, or (z) such other means as specified from time to time by the Administrator.

Notwithstanding the foregoing, the Company or a Related Entity also may satisfy any Tax Withholding Obligation by offsetting any amounts (including, but not limited to, salary, bonus and severance payments) payable to the Grantee by the Company and/or a Related Entity.

6. Dividend Equivalents . In the event the Company pays any cash or stock dividends on its Common Stock during the period commencing on the Date of Award and ending on December 31, 2014, and the Grantee’s Continuous Service (as defined in the Plan) has not been terminated or interrupted during calendar year 2014, dividend equivalents will be payable to the Grantee in cash in respect of fifty percent (50%) of the Units subject to this RSU Agreement, with the value of such dividend equivalents measured by the per share dividend paid with respect to the Company’s Common Stock during such period, and which payment shall be made on or before January 15, 2015. Further, in the event the Company pays any cash or stock dividends on its Common Stock during the period commencing January 1, 2015, and ending on December 31, 2015, and the Grantee’s Continuous Service has not been terminated or interrupted during calendar year 2015, dividend equivalents will be payable to the Grantee in cash in respect of his or her remaining outstanding Units, with the value of such dividend equivalents measured by the per share dividend paid with respect to the Company’s Common Stock during said period, and which payment shall be made on or before January 15, 2016. Any dividend equivalents that become payable to the Grantee in accordance with the preceding two sentences shall be paid to the Grantee after deduction for the Grantee’s Tax Withholding Obligation with respect to such dividend equivalents. For purposes of clarity, if the Grantee’s Continuous Service is terminated or interrupted at any time prior to December 31, 2014, for any or no reason, including but not limited to an involuntary termination without Cause or a voluntary termination due to Grantee’s complete cessation of employment of any kind or becoming employed or otherwise engaged in activities outside the financial services, investment banking and/or asset management industry, the Grantee will have no further rights to receive any dividend equivalents in respect of calendar year 2014 or 2015 (regardless of any rights that the Grantee may have to continue to vest in Units following any such termination or other event), and no additional dividend equivalents will be paid to the Grantee with respect to dividends declared or paid during 2014 or 2015 prior or subsequent to the date Grantee’s Continuous Service was terminated or interrupted.

7. Miscellaneous Provisions.

(a) Entire Agreement; Severability; Blue Pencil . The Notice, this RSU Agreement, the Plan and the Program Agreements constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest except by means of a writing signed by the Company and the Grantee. Should any provision of the Plan, Program Agreements or the Notice and RSU Agreement be determined to be illegal or unenforceable, only such provision or provisions shall be invalid and will not invalidate the remaining provisions. The other provisions shall remain effective and shall remain enforceable, and if possible, the invalid term shall be revised, or a new valid term provided, to preserve the original intent of the parties. If any court determines that any of the covenants and agreements, or any part thereof, is invalid or unenforceable because of the duration or scope of such provision, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, in its reduced form, such provision shall then be enforceable to the maximum extent permitted by applicable law. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

(c) Specific Enforcement . Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of the Notice, this RSU Agreement, the Plan and the Program Agreements would be inadequate and, in recognition of this fact, any party to the Notice, this RSU Agreement, the Plan and the Program Agreements, without posting any bond, and in addition to all other remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

(d) Limitation of Rights . Nothing in the Notice, this RSU Agreement, the Plan and the Program Agreements or in any related instrument shall cause the 2012 Revised Compensation Program to be treated as a contract of employment within the meaning of the Federal Arbitration Act, 9 U.S.C. § 1 et seq., or shall be construed as evidence of any agreement or understanding, express or implied, that the Company will (a) employ any person in any particular position or level of compensation, (b) offer any person initial or continued participation or awards in any commission, bonus or other compensation program, or (c) continue any person’s employment with the Company.

[ Intentionally left blank ]

JMP GROUP INC.,
a Delaware corporation

By:

Raymond Jackson

Title:

Chief Financial Officer


____________________________________ ( Signature )	_____________________________________ ( Date )


_____________________________________ ( Printed Name ) _____________________________________ _____________________________________ (Print Residence Address Above)

Exhibit 10.30

════════════════════════════════════════════════════

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of April 30, 2014

by and among

JMP GROUP LLC,

as Borrower,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

CITY NATIONAL BANK,

as Administrative Agent and Lead Arranger

════════════════════════════════════════════════════

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 30, 2014, is entered into by and among JMP GROUP LLC, a Delaware limited liability company (“ Borrower ”), the lenders identified on the signature pages hereof (such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), and CITY NATIONAL BANK , a national banking association (“ CNB ”), as administrative agent for the Lenders and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “ Agent ”) and as lead arranger.

W I T N E S S E T H

WHEREAS , CNB and Borrower are parties to that certain Amended and Restated Credit Agreement, dated as of October 11, 2012 (as amended, supplemented, or otherwise modified from time to time prior to the date hereof, the “ Existing Credit Agreement ”); and

WHEREAS , CNB and Borrower desire to amend and restate the Existing Credit Agreement in its entirety subject to the terms and conditions set forth herein, it being understood that no repayment of the obligations under the Existing Credit Agreement is being effected hereby, but merely an amendment and restatement in accordance with the terms hereof;

NOW, THEREFORE , in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree to amend and restate the Existing Credit Agreement in its entirety as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

1.1 Definitions .

For purposes of this Agreement (as defined below), the following initially capitalized terms shall have the following meanings:

“ Acquisition ” means (a) any Stock Acquisition, or (b) any Asset Acquisition.

“ Affiliate ” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by,” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of that Person, whether through the ownership of voting securities, by contract, or otherwise.

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

“ Agent-Related Persons ” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

“ Agent’s Account ” means the Deposit Account of Agent identified on Schedule A-1 .

“ Agent’s Liens ” means the Liens granted by Borrower or its Subsidiaries to Agent under this Agreement or the other Loan Documents.

“ Agreement ” means this Credit Agreement among Borrower, Lenders, and Agent, together with all exhibits and schedules hereto, including the Disclosure Statement.

“ Amended and Restated Guaranty ” means that certain Amended and Restated General Continuing Guaranty, dated as of even date herewith, executed and delivered by Harvest in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers, in respect of the obligations of Borrower owing to the Lender Group and the Bank Product Providers under this Agreement and the other Loan Documents.

“ Asset ” means any interest of a Person in any kind of property or asset, whether real, personal, or mixed real and personal, or whether tangible or intangible.

“ Asset Acquisition ” means any purchase or other acquisition by Borrower or a Guarantor of all or a material portion of the assets of any other Person or of a business line of such Person.

“ Assignee ” has the meaning set forth in Section 9.1(a) .

“ Assignment and Acceptance ” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1 .

“ Authorized Person ” means any officer or employee of Borrower.

“ Availability ” means, as of any date of determination, the amount that Borrower is entitled to borrow as Revolving Loans under Section 2.1 of this Agreement (after giving effect to the then outstanding Revolver Credit Facility Usage).

“ Available Increase Amount ” means, as of any date of determination, an amount equal to the result of (a) $25,000,000 minus (b) the aggregate principal amount of Increases to the Revolving Credit Facility Commitment previously made pursuant to Section 2.19 of this Agreement.

" Bank Product " means any one or more of the following financial products or accommodations extended to Borrower or its Subsidiaries by a Bank Product Provider: (a) Credit Card Services, (b) Cash Management Services, or (c) transactions under Hedge Agreements.

“ Bank Product Agreements ” means those agreements entered into from time to time by Borrower or its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

“ Bank Product Obligations ” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by Borrower or its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that Borrower or its Subsidiaries are obligated to reimburse to Agent or any Lender as a result of Agent or such Lender purchasing participations from, or executing indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to Borrower or its Subsidiaries.

" Bank Product Provider " means CNB or any of its Affiliates.

“ Bankruptcy Code ” means Title 11 of the United States Code, as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith.

“ Base LIBOR Rate ” means the ICE Benchmark Administration definition (or any successor or substitute to such definition) of the London InterBank Offered Rates as made available by Bloomberg LP (or such other successor to or substitute for such definition or such service as may be designated by Agent) for the applicable monthly period upon which the Interest Period is based for the LIBOR Rate Loan selected by Borrower and as quoted by Agent, in the case of an initial LIBOR Rate Loan or a conversion of a Base Rate Loan to a LIBOR Rate Loan, on the Business Day Borrower requests a LIBOR Rate Loan or, in the case of a continuation of an existing LIBOR Rate Loan, on the last Business Day of an expiring Interest Period.

“ Base Rate ” means the greatest of (a) the Federal Funds Rate plus ½%, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of 1 month and shall be determined on a daily basis), plus 1 percentage point, and (c) the rate most recently announced by Agent at its principal office in Los Angeles, California as its “Prime Rate”.

“ Base Rate Borrowing ” means any Borrowing designated by Borrower as a Base Rate Borrowing or any Borrowing which, pursuant to Section 2.7(a) , is deemed to be converted to a Base Rate Loan.

“ Base Rate Loan ” means any Loan bearing interest at the Base Rate.

“ Borrower ” shall have meaning set forth in the introduction to this Agreement.

“ Borrowing ” means a borrowing under the Revolving Credit Facility consisting of a Revolving Loan made by the Lenders (or Agent on behalf thereof) to Borrower.

“ Broker/Dealer Credit Facility ” means the credit facility evidenced by the Note Agreement.

“ Business Day ” means a day when major commercial banks are open for business in California, other than Saturdays or Sundays.

“ Capital Expenditures ” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed.

“ Capitalized Lease Obligations ” means the aggregate amount which, in accordance with GAAP, is required to be reported as a liability on the balance sheet of Person at such time in respect of such Person’s interest as lessee under a capitalized lease.

“ Cash Equivalents ” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Rating Group ("S&P") or Moody’s Investors Service, Inc. ("Moody's"), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000, (e) demand deposit accounts maintained with (i) CNB or (ii) any bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $1,000,000,000, and (f) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (e) above.

“ Cash Management Services ” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

“ Change of Control Event ” means the occurrence of any of the following: (a) any Person or two or more Persons acting in concert, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the 1934 Act, as then in effect), directly or indirectly, of Securities of JMPG (or other securities convertible into such Securities) representing 35% or more of the combined voting power of all Securities of JMPG entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of JMPG; (b) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power, directly or indirectly, to direct or cause the direction of the management or policies of JMPG, whether through the ownership of voting securities, by contract or otherwise or to exercise control over the Securities of such Person entitled to vote for members of the Board of Directors of JMPG on a fully-diluted basis (and taking into account of such Securities that such Person or group has the right to acquire pursuant to any option right) representing 35% or more of the combined voting power of such Securities; (c) JMPG ceases to own, directly or indirectly, and control 100% of the aggregate outstanding Securities of Borrower; (d) Borrower ceases to own, directly or indirectly, and control 100% of the aggregate voting power of the outstanding Securities of JMP Securities or any Guarantor; or (e) a Change of Executive Event; provided , however , that the acquisition by Ultimate Parent of the Securities of JMPG (or other securities convertible into such Securities) representing 100% of the combined voting power of all Securities of JMPG entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of JMPG shall not constitute a Change of Control Event, so long as, concurrently therewith, each shareholder of JMPG exchanges its shares in JMPG for an equal number of shares in Ultimate Parent.

“ Change of Executive Event ” means the failure of three or more of Joseph A. Jolson, Carter Mack, Craig Johnson, Mark Lehmann, and Kent Ledbetter to be actively involved on an ongoing basis in the management of Borrower or any of its Subsidiaries.

“ Closing Date ” means the first date when all of the conditions precedent set forth in Section 3.1 have been satisfied.

“ CLO Entity ” means the entity identified as the “CLO Entity” on the Disclosure Statement delivered pursuant to Section 3.1(a) formed for the sole purpose of investing in collateralized loan obligation assets and in other activities incident thereto.

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

“ Collateral ” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by Borrower or any Guarantor upon which a Lien is granted under any of the Loan Documents.

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.

“ Contingent Obligation ” means, as to any Person and without duplication of amounts, any written obligation of such Person guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person) any Debt, noncancellable lease, dividend, reimbursement obligations relating to letters of credit, or any other obligation that pertains to Debt, a noncancellable lease, a dividend, or a reimbursement obligation related to letters of credit (each, a “primary obligation”) of any other Person (“primary obligor”) in any manner, whether directly or indirectly, including any written obligation of such Person, irrespective of whether contingent, (a) to purchase any such primary obligation, (b) to advance or supply funds (whether in the form of a loan, advance, stock purchase, capital contribution, or otherwise) (i) for the purchase, repurchase, or payment of any such primary obligation or any Asset constituting direct or indirect security therefor, or (ii) to maintain working capital or equity capital of the primary obligor, or otherwise to maintain the net worth, solvency, or other financial condition of the primary obligor, or (c) to purchase or make payment for any Asset, securities, services, or noncancellable lease if primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation.

“ Contractual Obligation ” means, as applied to any Person, any provision of any material indenture, mortgage, deed of trust, contract, undertaking, agreement, or other material instrument to which that Person is a party or by which any of its Assets is subject.

“ Control Agreement ” means a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by Borrower, Agent, and the applicable securities intermediary with respect to a Securities Account or bank with respect to a Deposit Account.

“ Credit Card Services ” means any credit card services including (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) credit card processing services, (c) debit cards, or (d) stored value cards.

“ Daily Balance ” means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.

“ Debt ” means, with respect to any Person, (a) all obligations for such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations of such Person in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations of such Person to pay the deferred purchase price of Assets or services, exclusive of trade payables that are due and payable in the ordinary and usual course of such Person’s business, (d) all Capitalized Lease Obligations of such Person, (e) all obligations or liabilities of others secured by a Lien on any Asset owned by such Person, irrespective of whether such obligation or liability is assumed, to the extent of the lesser of such obligation or liability or the fair market value of such Asset, and (f) all Contingent Obligations of such Person.

“ Defaulting Lender ” means any Lender that (a) has failed to fund any amounts required to be funded by it under this Agreement on the date that it is required to do so under this Agreement, (b) notified Borrower, Agent, or any Lender in writing that it does not intend to comply with all or any portion of its funding obligations under this Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements generally (as reasonably determined by Agent) under which it has committed to extend credit, (d) failed, within one Business Day after written request by Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund any amounts required to be funded by it under this Agreement, (e) otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it under this Agreement within one Business Day of the date that it is required to do so under this Agreement, unless the subject of a good faith dispute, or (f) (i) becomes or is insolvent or has a parent company that has become or is insolvent, or (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“ Defaulting Lender Rate ” means (a) for the first three days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Base Rate Loans.

“ Deposit Account ” means any deposit account (as that term is defined in the Code).

“ Designated Account ” means account number 432-654-168 of Borrower maintained with CNB, or such other deposit account of Borrower (located within the United States) designated, in writing, and from time to time, by Borrower to Agent.

“ Disclosure Statement ” means that certain statement, executed and delivered by a Responsible Officer of Borrower, that sets forth information regarding or exceptions to the representations, warranties, and covenants made by Borrower herein, as amended from time to time to the extent permitted hereby.

“ Distribution ” has the meaning ascribed thereto in Section 6.5 hereof.

“ Dollars ” and “ $ ” mean United States of America dollars or such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts in the United States of America.

“ Earn-Out Arrangements ” shall mean payments required to be made in connection with a Permitted Acquisition which obligations are subordinated to the Obligations on terms satisfactory to Agent (it being understood that the subordination provisions set forth on Schedule E-1 shall be deemed to be satisfactory to Agent).

“ EBITDA ” means, with respect to JMPG and its Subsidiaries for any period, the Net Income, minus extraordinary gains, plus extraordinary losses, interest expense, income taxes, depreciation, amortization, other non-cash expenses, and expenses of Permitted Acquisitions not to exceed $1,500,000 per Permitted Acquisition and $2,500,000 in the aggregate during any fiscal year, in each case for such period determined in accordance with GAAP; provided however, any Net Income attributable to the CLO Entity shall only be included for the purposes of calculating EBITDA to the extent of any distributions by the CLO Entity to a Loan Party.

" Eurocurrency Reserve Requirement " means the sum (without duplication) of the rates (expressed as a decimal) of reserves (including, without limitation, any basic, marginal, supplemental, or emergency reserves) that are required to be maintained by banks during the Interest Period under any regulations of the Federal Reserve Board, or any other governmental authority having jurisdiction with respect thereto, applicable to funding based on so-called "Eurocurrency Liabilities", including Regulation D (12 C.F.R. §224).

“ Eurodollar Business Day ” means any Business Day on which major commercial banks are open for international business (including dealings in Dollar deposits) in New York, New York and London, England.

“ Event of Default ” shall have the meaning set forth in Article VII of this Agreement.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended or supplemented from time to time, and any successor statute, and all of the rules and regulations issued or promulgated in connection therewith.

“ Excluded Fund ” means any fund or investment company managed, directly or indirectly, by Borrower or its Subsidiaries.

“ Excluded Subsidiary ” means each Subsidiary identified on the Disclosure Statement and each other Person identified on a Compliance Certificate as an Excluded Subsidiary and that is deemed an Excluded Subsidiary in accordance with the provisions of Section 5.7(b) .

“ Existing Credit Agreement ” has the meaning ascribed to such term in the recitals to this Agreement.

“ Existing Credit Agreement Closing Date ” means August 3, 2006.

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System or any successor thereto.

“ Fee Letter ” means that certain fee letter between Borrower and Agent, dated as of even date herewith, in form and substance satisfactory to Agent.

“ Final Payment Date ” means April 30, 2019.

“ Final Revolving Commitment Termination Date ” means the earlier to occur of (a) April 30, 2016; or (b) such earlier date on which the Revolving Loans shall become due and payable in accordance with the terms of this Agreement and the other Loan Documents.

“ FINRA ” means the Financial Industry Regulatory Authority.

“ Fixed Charge Coverage Ratio ” means, with respect to JMPG and its Subsidiaries for the twelve month period ending on any date, the ratio of (i) EBITDA for such period minus Capital Expenditures made by JMPG and its Subsidiaries (to the extent not already incurred in a prior period) or incurred during such period, to (ii) Fixed Charges for such period; provided however, any amounts attributable to the CLO Entity shall be excluded for the purposes of determining Fixed Charge Coverage Ratio.

“ Fixed Charges ” means, with respect to JMPG and its Subsidiaries for any period, the sum, without duplication, of (a) Interest Expense during such period, (b) principal payments required to be paid in respect of Debt (other than intercompany debt) of JMPG and its Subsidiaries during such period, (c) an amount equal to the total outstanding balance of the Revolving Loans (as at the last day of such period) divided by 5, and (d) all federal, state, and local income taxes accrued for such period.

“ Focus Reports ” means the Financial Operational Combined Uniform Single reports filed with FINRA.

“ Foreign Subsidiary ” means any Subsidiary of Borrower that is not organized under the laws of any state of the United States or the District of Columbia.

“ Funding Date ” means the date on which a Loan occurs.

“ GAAP ” means generally accepted accounting principles in the United States of America in effect from time to time.

“ Governing Documents ” means, with respect to any Person, the certificate or articles of incorporation or formation, by-laws or operating agreement, partnership agreement or other organizational or governing documents of such Person.

“ Governmental Authority ” means any federal, state, local, or other governmental department, commission, board, bureau, agency, central bank, court, tribunal, or other instrumentality, domestic or foreign.

“ Guarantors ” means (a) Harvest and (b) each other Person who from time to time guarantees the Obligations of Borrower under this Agreement, and “ Guarantor ” means any one of them.

“ Guaranty ” means each guaranty, in form and substance satisfactory to Agent, executed and delivered by any Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Product Providers, pursuant to Section 5.7 or otherwise, and “ Guaranties ” means all of the foregoing Guaranties.

“ Harvest ” means Harvest Capital Strategies LLC, a Delaware limited liability company, formerly known as JMP Asset Management LLC.

“ Harvest Broker/Dealer Guaranty ” means that certain General Continuing Guaranty, dated as of even date herewith, executed and delivered by Harvest in favor of CNB in respect of the obligations of JMP Securities owing to CNB under the Note Agreement.

“ Highest Lawful Rate ” means the maximum non-usurious interest rate, as in effect from time to time, that may be charged, contracted for, reserved, received, or collected by Agent in connection with this Agreement, or the other Loan Documents.

“ Increase ” has the meaning specified therefor in Section 2.19 .

“ Increase Date ” has the meaning specified therefor in Section 2.19 .

“ Increase Joinder ” has the meaning specified therefor in Section 2.19 .

“ Indemnified Liabilities ” shall have the meaning set forth in Section 8.2 of this Agreement.

“ Indemnitee ” shall have the meaning set forth in Section 8.2 of this Agreement.

“ Immaterial Subsidiary ” means a Subsidiary having assets with a book value equal to $25,000 or less.

“ Insolvency Proceeding ” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“ Intercompany Subordination Agreement ” means a subordination agreement executed and delivered by Borrower, the Guarantors and Agent, the form and substance of which is satisfactory to Agent.

“ Interest Coverage Ratio ” means, with respect to JMPG and its Subsidiaries for the twelve month period ending on any date, the ratio of (A) EBITDA for such period to (B) Interest Expense for such period, provided however, any amounts attributable to the CLO Entity shall be excluded for the purposes of determining Interest Coverage Ratio.

“ Interest Expense ” means, for any period, the aggregate of the interest expense of JMPG and its Subsidiaries (other than interest expense arising from intercompany loans) for such period, determined on a consolidated basis in accordance with GAAP.

“ Interest Payment Date ” means, in the case of Base Rate Loans, the first date of each fiscal quarter and, in the case of LIBOR Rate Loans, the last day of the applicable Interest Period.

“ Interest Period ” means the period commencing on the date each LIBOR Rate Loan is made (including the date a Base Rate Loan is converted to a LIBOR Rate Loan, or a LIBOR Rate Loan is renewed as a LIBOR Rate Loan, which, in the latter case, will be the last day of the expiring Interest Period) and ending on the date which is one (1), two (2) or three (3) months thereafter, as selected by Borrower; provided , however , that if such date is not a Eurodollar Business Day, the Interest Period shall be extended to the next Eurodollar Business Day, provided , further , however , that no Interest Period may extend beyond the Final Payment Date.

“ Investment ” means, as applied to any Person, any direct or indirect purchase or other acquisition by that Person of, or beneficial interest in, stock, instruments, bonds, debentures or other securities of any other Person, or any direct or indirect loan, advance, or capital contribution by such Person to any other Person, including all indebtedness and accounts receivable due from that other Person that did not arise from sales or the rendition of services to that other Person in the ordinary and usual course of such Person’s business, and deposit accounts (including certificates of deposit), and any transfer of cash, Cash Equivalents or any other Assets to any Person.

“ Issuer Document ” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by Borrower in favor of Issuing Bank relating to such Letter of Credit.

“ Issuing Bank ” means CNB in its capacity as the issuing bank with respect to the Letters of Credit.

“ JMP Broker/Dealer Guaranty ” means that certain General Continuing Guaranty, dated as of April 8, 2011, executed by Borrower in favor of CNB in respect of the Debt evidenced by the Broker/Dealer Credit Facility, as such guaranty may be amended, restated, supplemented, or otherwise modified from time to time.

“ JMP Securities ” means JMP Securities LLC, a Delaware limited liability company.

“ JMPCC ” means JMP Credit Corporation, a Delaware corporation.

“ JMPG ” means JMP Group, Inc., a Delaware corporation.

“ L/C Disbursement ” means a payment made by Issuing Bank to a beneficiary of a Letter of Credit pursuant to such Letter of Credit.

“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“ Lender ” and “ Lenders ” have the respective meanings set forth in the preamble to this Agreement, shall include Issuing Bank, and shall also include any other Person made a party to this Agreement in accordance with the provisions of Section 9.1 .

“ Lender Group ” means, individually and collectively, each of the Lenders (including Issuing Bank) and Agent, or any one or more of them.

“ Lender Group Expenses ” means all (a) costs or expenses (including taxes) required to be paid by Borrower or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by Agent, (b) fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with Borrower, including: (i) fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the United States Patent and Trademark Office, the United States Copyright Office, or, if required, the department of motor vehicles), filing, recording, publication, and (ii) if an Event of Default has occurred and is continuing, costs of appraisal (including periodic collateral appraisals or business valuations), (c) charges paid or incurred by Agent resulting from the dishonor of checks, (d) costs and expenses paid or incurred by Agent or any Lender to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (e) fees and expenses of Agent (including internal allocations of costs) related to collateral or financial examinations of the books of Borrower, (f) costs and expenses of third party claims or any other suit paid or incurred by Agent or any Lender in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents, (g) Agent’s costs and expenses (including reasonable attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents, and (h) Agent’s and each Lender’s reasonable costs and expenses (including attorneys, accountants, consultants, and other third party advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other third party advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning Borrower or any of its Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought.

“ Lender-Related Person ” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“ Letter of Credit ” has the meaning set forth in Section 2.18(a) .

“ Letter of Credit Fee ” has the meaning set forth in Section 2.18(d) .

“ Letter of Credit Usage ” means, as of any date of determination, the undrawn amount of outstanding Letters of Credit.

“ LIBOR Prepayment Fee ” has the meaning set forth in Section 2.9 hereof.

" LIBOR Rate " means the rate per year (rounded upward to the next one-sixteenth (1/16th) of one percent (0.0625%), if necessary) determined by Agent to be the quotient of (a) the Base LIBOR Rate divided by (b) one minus the Eurocurrency Reserve Requirement for the Interest Period; which is expressed by the following formula:

Base LIBOR Rate

1 - Eurocurrency Reserve Requirement

“ LIBOR Rate Borrowing ” means any Borrowing designated by Borrower as a LIBOR Rate Borrowing.

“ LIBOR Rate Loan ” means any Loan bearing interest at the LIBOR Rate.

“ Lien ” means any lien, mortgage, pledge, assignment (including any assignment of rights to receive payments of money), security interest, charge, or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest).

“ Liquidity ” means, as of any date of determination, the sum of (a) Loan Parties’ and their Subsidiaries’ cash, (b) Cash Equivalents of the Loan Parties and their Subsidiaries, (c) Marketable Securities of the Loan Parties and their Subsidiaries, (d) any investments by a Loan Party in funds that are managed by Borrower or its Subsidiaries and which invest primarily in cash, Cash Equivalents and Marketable Securities so long as such Person may withdraw such investments in immediately available funds upon 30 days prior notice, (e) the Securities of the CLO Entity owned by any Loan Party; provided that (i) such Loan Party Entity shall execute and deliver to Agent a pledge agreement or supplement, together with appropriate financing statements and other documents, all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent first priority Lien on such Securities), and any other documentation, including one or more opinions of counsel reasonably satisfactory to Agent, which, in Agent’s opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above and (ii) Borrower is able to source an indicative bid on the value of such Securities from an independent third party source acceptable to Agent, and (f) any investments in loans held by any Loan Party, to the extent that quotes for the loans can be obtained from two independent dealers acceptable to Agent. For purposes of determining the amount of Liquidity for the Loan Parties and their Subsidiaries, the value as described in clauses (a), (b) and (c) above is deemed to be equal to the fair market value thereof, and the value as described in clause (e) and (f) above is deemed to be the lowest bid or quotation obtained by Borrower with respect to the loans described above.

“ Loan ” or “ Loans ” means a Revolving Loan.

“ Loan Account ” has the meaning set forth in Section 2.12 .

“ Loan Documents ” means this Agreement, the Bank Product Agreements, the Control Agreements (if any), the Guaranties, the JMP Broker/Dealer Guaranty, the Amended and Restated Guaranty, the Harvest Broker/Dealer Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the Security Agreements, the Stock Pledge Agreement, the Trademark Security Agreement, the Reaffirmation Agreement, the Note, the Note Agreement, and any and all other documents, agreements or instructions that have been or are entered into by Borrower, any Guarantor or JMP Securities, and Agent and/or the Lenders in connection with the transactions contemplated by this Agreement or the Note Agreement.

“ Loan Parties ” means Borrower and the Guarantors, and “ Loan Party ” means any one of them.

“ Margin Securities ” means “margin stock” as that term is defined in Regulation U of the Federal Reserve Board.

“ Marketable Securities ” means any equity securities listed on a securities exchange that has registered with the SEC under Section 6 of the Securities Exchange Act of 1934.

“ Material Adverse Effect ” means (a) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) a material impairment of Borrower’s or any Guarantor’s ability to perform its obligations under the Loan Documents or of Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of Agent’s Liens with respect to the Collateral.

“ Maximum Revolver Amount ” means $25,000,000.

“ Net Income ” means, with respect to any Person for any period, the net income (loss) of such Person for such period, determined in accordance with GAAP.

“ Net Worth ” means, as of any date of determination, the result of (a) JMPG’s and its Subsidiaries’ total Assets, minus (b) JMPG’s and such Subsidiaries’ total liabilities (including any contingent liabilities and guaranties), in each case determined in accordance with GAAP; provided, however , that any liability representing the minority interest in any Subsidiary shall be excluded from clause (b) for the purposes of determining “Net Worth”.

“ Non-Defaulting Lender ” means each Lender other than a Defaulting Lender.

“ Note ” means that certain promissory note issued on April 8, 2011 by JMP Securities in favor of CNB in the original principal amount of $20,000,000.

“ Note Agreement ” means that certain Revolving Note and Cash Subordination Agreement, dated as of April 8, 2011, by and between CNB and JMP Securities, as amended, restated, supplemented, or otherwise modified from time to time.

“ Obligations ” means (a) all Loans, debts, principal, interest, premiums, LIBOR Prepayment Fees, liabilities (including all amounts charged to Borrower’s Loan Account pursuant hereto), contingent reimbursement obligations with respect to outstanding Letters of Credit, obligations (including indemnification obligations), fees (including the Letter of Credit Fee), charges, costs, expenses (including Lender Group Expenses) (including any portion of any of the foregoing that accrues after the commencement of an Insolvency Proceeding, whether or not allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, covenants, and duties of any kind and description owing by Borrower to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“ Obligors ” means Borrower and each Guarantor, and “ Obligor ” means any one of them.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Original Credit Agreement ” has the meaning set forth in the recitals to this Agreement.

“ Original Loan Documents ” means the “Loan Documents” as defined in the Original Credit Agreement.

“ Originating Lender ” has the meaning set forth in Section 9.1(e) .

“ Post-Increase Revolver Lenders ” has the meaning specified therefor in Section 2.19 of this Agreement.

“ Pre-Increase Revolver Lenders ” has the meaning specified therefor in Section 2.19 of this Agreement.

“ Participant ” has the meaning set forth in Section 9.1(e) .

“ Permitted Acquired Indebtedness ” means Debt that is assumed in connection with a Permitted Acquisition so long as (a) such Debt is either unsecured or is secured only by the assets of the Permitted Acquisition and is not secured by the assets of Borrower or any other Guarantor), (b) such Debt is recourse only to the entity that is acquired pursuant to the Permitted Acquisition and it not recourse to, or guaranteed by, Borrower or any other Guarantor, (c) such Debt exists at the time the assets are acquired and is not created in anticipation of such Permitted Acquisition, and (d) such Debt does not exceed $10,000,000 in the aggregate at any time.

“ Permitted Acquisition ” means any Acquisition so long as:

(a) the consideration is payable in cash (except for any Earn-Out Arrangements, Seller Notes or Permitted Acquired Indebtedness) or in Securities of JMPG, Ultimate Parent, Borrower or one of its Subsidiaries.

(b) no Default or Event of Default has occurred and is continuing as of the date of consummation of the proposed Acquisition or would result therefrom,

(c) the assets being acquired (or in the case of a Stock Acquisition, the assets of the Person being acquired) (i) are useful in the businesses performed by Borrower as of the date of this Agreement, and (ii) shall be located within (x) the United States, or (y) any other developed country; provided, however that the aggregate consideration (including Earn-Out Arrangements, Seller Notes and Permitted Acquired Indebtedness) payable in connection with Acquisitions described in this clause (c)(ii)(y) shall not exceed $5,000,000 in any fiscal year or $10,000,000 in the aggregate since the Existing Credit Agreement Closing Date,

(d) (i) if the aggregate amount of all consideration paid in connection with such Acquisition (including the aggregate amount of all Earn-Out Arrangements, Seller Notes and Debt assumed in connection therewith) is equal to or greater than $5,000,000, Borrower has provided Agent with written confirmation, supported by reasonably detailed calculations, that on a pro forma basis, Borrower will be in compliance with each of the financial covenants in Section 6.14 hereof after giving effect to such Acquisition and as of the last day of each quarter during the 12 month period following the date of such Acquisition, and (ii) if the aggregate amount of all consideration paid in connection with such Acquisition (including the aggregate amount of all Earn-Out Arrangements, Seller Notes and Debt assumed in connection therewith) is less than $5,000,000, the chief executive officer or the chief financial officer of Borrower shall have delivered to Agent a certificate stating that on a pro forma basis Borrower will be in compliance with each of the financial covenants in Section 6.14 hereof after giving effect to such Acquisition and as of the last day of each quarter during the 12 month period following the date of such Acquisition,

(e) (i) promptly following a request therefor, Agent has received copies of such information or documents relating to such Acquisition as Agent shall have reasonably requested, including the acquisition agreement, related contracts and instruments and all opinions (to the extent that an opinion is delivered to Borrower in connection with such Acquisition), certificates, lien search results and other documents reasonably requested by Agent and, to the extent that the aggregate amount of consideration (including Earn-Out Arrangements, Seller Notes and Permitted Acquired Indebtedness) payable in connection with such Acquisition is greater than or equal to $10,000,000, each such opinion shall also be addressed to the Lender Group or accompanied by a written authorization from the firm or Persons delivering such opinion stating that the Lender Group may rely on such opinion as though it were addressed to them, and (ii) within 30 days after the consummation of such Acquisition, Agent shall have received certified copies of the agreements, instruments and documents in connection with such Acquisition, which shall be substantively identical to the documents provided pursuant to subclause (i) of this clause (e), subject to any applicable provisions of Section 5.7 ,

(f) in the case of a Stock Acquisition, the Securities are being acquired by Borrower or any of its Subsidiaries, and in the case of an Asset Acquisition, the subject assets are being acquired by Borrower or any of its Subsidiaries,

(g) any Debt or Liens assumed in connection with the proposed Acquisition are otherwise permitted under Section 6.1 or 6.2 , respectively and no additional Debt or other liabilities shall be incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrower and its Subsidiaries after giving effect to such Acquisition, except to the extent expressly permitted by the terms of this Agreement,

(h) the proposed Acquisition shall be consensual and shall have been approved by the board of directors (or comparable managers) of the Person whose assets are proposed to be acquired,

(i) Borrower shall provide Agent with prior written notice (which notice shall not be less than 15 days prior to the closing date of the proposed Acquisition and which notice shall include, without limitation, a reasonably detailed description of such Acquisition) of such Acquisition, together with copies of all financial information, financial analysis, documentation and other information relating to such acquisition as the Lender Group shall reasonably request,

(j) at the time of the proposed Acquisition and after giving effect thereto, all representations and warranties contained in Article IV of this Agreement or in the other Loan Documents shall be true and correct in all respects (which in each case shall be deemed to have been made on the date of such Acquisition after giving effect thereto),

(k) the aggregate amount of consideration paid by an Obligor in connection with any Stock Acquisition pursuant to which the applicable Loan Party acquires less than a majority of the voting Securities in the acquired Person (including the proposed Stock Acquisition) is less than $5,000,000,

(l) prior to the closing of the proposed Acquisition, the chief executive officer or the chief financial officer of Borrower shall have delivered to Agent a certificate as to each of the items set for in the foregoing clauses (a), (b), (c), (d), (g), (h), (j) and (k), and

(m) the purchase consideration payable in respect of all Permitted Acquisitions (including deferred payment obligations) in an aggregate amount not to exceed $10,000,000 in any fiscal year; provided , that up to $15,000,000 in the aggregate of purchase consideration shall be permitted in respect of Permitted Acquisitions that are consummated during the fiscal year ending December 31, 2014.

“ Permitted Investments ” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments in funds, corporations, partnerships or other investment vehicles that are, after giving effect to such Investments (and were immediately prior to the time of such Investments) managed, directly or indirectly, by Borrower, if such entity is a Subsidiary, the applicable Obligor shall take such action as is required by Section 5.7 hereof to grant a first priority perfected Lien to Agent in an to such Investments (except to the extent not required by Agent under Section 5.7 ), (e) direct Investments in publicly traded securities in the ordinary course of business, so long as the purchase of such Investments is not funded with the proceeds of any Revolving Loan, (f) Permitted Acquisitions, (g) advances to officers, directors and employees in the ordinary course of business for travel, entertainment, relocation and other business purposes in an aggregate amount not to exceed $500,000 in any fiscal year of Borrower; (h) Investments permitted under Sections 6.1 and 6.7 , (i) Investments by Borrower or a Guarantor in the form of advances to an Excluded Fund to address short term cash flow issues, redemptions and reinvestments in Excluded Funds and in investee funds, so long as (i) such Investments are repaid by the applicable Excluded Fund to Borrower or such Guarantor, as applicable, within 5 Business Days after the making of such Investment, and (ii) no Event of Default or Unmatured Event of Default shall have occurred and be continuing or result therefrom, (j) so long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing or result therefrom, redemptions, repurchases or other acquisitions by Borrower of its outstanding Securities, to the extent that the aggregate amount paid by Borrower in connection with all such redemptions, repurchases or other acquisitions of its Securities (after giving effect to the proposed redemption, repurchase or other acquisition) would not exceed $5,000,000, (k) so long as no Event of Default or Unmatured Event of Default shall have occurred and be continuing or result therefrom, other Investments in an aggregate amount not to exceed $5,000,000 in any fiscal year; (l) Investments in CLO Entity in an aggregate amount not to exceed $60,000,000 (or such other amount as may be agreed to by Agent and Borrower in writing); and (m) Investments in Excluded Funds or any Preferential Investment not to exceed $10,000,000 for any single Investment or series of related Investments (for the avoidance of doubt, any Investment made pursuant to this clause (m) shall not constitute a Permitted Acquisition).

“ Permitted Liens ” means: (a) Liens for taxes, assessments, or governmental charges or claims the payment of which is not, at such time, required by Section 5.4 hereof, (b) any attachment or judgment Lien either in existence less than 45 calendar days after the entry thereof, or with respect to which execution has been stayed, or with respect to which payment in full above any applicable deductible is covered by insurance (so long as no reservation of rights has been made by the insurer in connection with such coverage), and Liens incurred to secure any surety bonds, appeal bonds, supersedeas bonds, or other instruments serving a similar purpose in connection with the appeal of any such judgment, (c) banker’s Liens in the nature of rights of setoff arising in the ordinary course of business of Borrower, (d) carrier’s warehousemen’s mechanics’ materialmen’s repairmen’s or other like Liens arising as a matter of law in the ordinary course of business which are not overdue or which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, and an adequate reserve or other appropriate provision, if any, shall have been made as required in order to be in conformity with GAAP; (e) pledges or deposits of cash in the ordinary course of business in connection with any worker’s compensation, unemployment insurance and other similar legislation; (f) deposits of cash to secure the performance of bids, trade contracts and leases, statutory obligations, surety bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (g) easements, rights of way and zoning restrictions affecting real property which do not materially interfere with or impair the use or operation thereof; (h) Liens described in the definition of “Permitted Acquired Indebtedness”; (i) Liens granted by Borrower and the Guarantors to Agent in order to secure their respective obligations under this Agreement and the other Loan Documents to which they are a party; and (j) Liens on deposits of cash to secure Debt described in Section 6.1(l).

“ Person ” means and include natural persons, corporations, partnerships, limited liability companies, joint ventures, associations, companies, business trusts, or other organizations, irrespective of whether they are legal entities.

“ Preferential Investment ” means any Investment by Borrower or any of its Subsidiaries (a) that is not offered to any other potential investors and is not a type of Investment that could be conducted as part of the ordinary course of a securities brokerage business, (b) the terms upon which such Investment is made by Borrower or such Subsidiary are not available to, and are materially more beneficial than the terms that are available to, any other potential investors with respect to a similar Investment, and (c) such terms are offered to Borrower or such Subsidiary for strategic purposes consistent with Borrower’s general business practices.

“ Pro Rata Share ” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make a Loan and receive payments of principal, interest, fees, costs, and expenses with respect thereto, (i) prior to the Revolving Credit Facility Commitments being terminated or reduced to zero, the percentage obtained by dividing (A) such Lender’s Revolving Credit Facility Commitments, by (B) the aggregate Revolving Credit Facility Commitments of all Lenders, and (ii) from and after the time the Revolving Credit Facility Commitments have been terminated or reduced to zero, the percentage obtained by dividing (A) the aggregate outstanding principal amount of such Lender’s Revolving Loans, by (B) the aggregate outstanding principal amount of all Revolving Loans;

(b) with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided , that if all of the Revolving Loans have been repaid in full and all Revolving Credit Facility Commitment have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined as if the Revolving Credit Facility Commitment had not been terminated and based upon the Revolving Credit Facility Commitment as they existed immediately prior to their termination;

(c) with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 10.7 of this Agreement), (A) prior to the Revolving Credit Facility Commitments being terminated or reduced to zero, the percentage obtained by dividing (1) such Lender’s Revolving Credit Facility Commitments, by (2) the aggregate amount of Revolving Credit Facility Commitments of all Lenders, and (B) from and after the time the Revolving Credit Facility Commitments have been terminated or reduced to zero, the percentage obtained by dividing (1) the aggregate outstanding principal amount of such Lender’s Revolving Loans, by (2) the aggregate outstanding principal amount of all Revolving Loans, as the applicable percentage may be adjusted by assignments permitted pursuant to Section 9.1 ; provided , that if all of the Loans have been repaid in full, all Revolving Credit Facility Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be determined as if the Revolving Loan Exposures had not been repaid or terminated and shall be based upon the Revolving Loan Exposures as they existed immediately prior to their repayment or termination.

“ Reaffirmation Agreement ” means that certain reaffirmation agreement executed and delivered by the Loan Parties and Agent, which shall be in form and substance satisfactory to Agent.

“ Record ” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“ Refinancing Debt ” means refinancings, renewals, or extensions of Debt so long as: (a) the terms and conditions of such refinancings, renewals, or extensions do not, in Agent’s reasonable judgment, materially impair the prospects of repayment of the Obligations by Borrower or materially impair Borrower’s creditworthiness, (b) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Debt so refinanced, renewed, or extended, (c) such refinancings, renewals, or extensions do not result in an increase in the interest rate with respect to, the Debt so refinanced, renewed, or extended, (d) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Debt so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially more burdensome or restrictive to Borrower, (e) if the Debt that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to Agent as those that were applicable to the refinanced, renewed, or extended Debt, and (f) the Debt that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Debt that was refinanced, renewed, or extended.

“ Regulatory Change ” shall have the meaning ascribed thereto in Section 2.13 hereof.

“ Replaced Lender ” has the meaning set forth in Section 11.2(e) hereof.

“ Replacement Lender ” has the meaning set forth in Section 11.2(e) hereof.

“ Request for Borrowing ” means an irrevocable written notice from a Responsible Officer of Borrower to Agent of Borrower’s request to borrow any Loan, which notice shall be substantially in the form of Exhibit R-1 attached hereto.

“ Request for Conversion/Continuation ” means an irrevocable written notice from a Responsible Officer of Borrower to Agent pursuant to the terms of Section 2.7 , substantially in the form of Exhibit R-2 attached hereto.

“ Required Lenders ” means, at any time, (a) when there are three or more Lenders, Lenders whose aggregate Pro Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares) exceed 50 % , or (b) when there are two or fewer Lenders, Lenders whose aggregate Pro Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares) exceed 66⅔% .

“ Responsible Officer ” means the president, chief executive officer, chief operating officer, chief financial officer, general counsel, or controller of a Person, or such other officer of such Person designated by a Responsible Officer in a writing delivered to Agent.

“ Revolving Credit Facility ” means the revolving credit facility described in Section 2.1 hereof.

“ Revolving Credit Facility Commitment ” means, with respect to each Lender, its commitment in respect of the Revolving Credit Facility, and, with respect to all Lenders, their commitments in respect of the Revolving Credit Facility, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 9.1 .

“ Revolving Credit Facility Usage ” means, at the time any determination thereof is to be made, the sum of (a) the aggregate Dollar amount of the outstanding Revolving Loans plus (b) the aggregate Letter of Credit Usage.

“ Revolving Loan ” means a loan made by a Lender to Borrower pursuant to Section 2.1 of this Agreement until, if ever, such loan is converted into a term loan pursuant to Section 2.3(e) of this Agreement.

“ Revolving Loan Exposure ” means, with respect to any Lender as of any date of determination, the aggregate outstanding principal amount of the Revolving Loans of such Lender.

“ Sanctioned Entity ” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.

“ Sanctioned Person ” means a person named on the list of Specially Designated Nationals maintained by OFAC.

“ SEC ” means the Securities and Exchange Commission of the United States of America or any successor thereto.

“ Securities ” means the capital stock, partnership interests, membership interests or other securities of a Person, all warrants, options, convertible securities, and other interests which may be exercised in respect of, converted into or otherwise relate to such Person’s capital stock, partnership interests, membership interests or other equity interests and any other securities, including debt securities of such Person.

“ Securities Account ” means a “securities account” as that term is defined in the Code.

“ Security Agreements ” means one or more security agreements, among Borrower, the Guarantors, and Agent, which Security Agreements shall be in form and substance satisfactory to Agent.

“ Seller Notes ” shall mean those promissory notes delivered by Borrower in connection with the closing of a Permitted Acquisition, which are subordinated to the Obligations on terms satisfactory to Lender (it being understood that the subordination provisions set forth on Schedule E-1 shall be deemed to be satisfactory to Lender).

“ Sixth Amendment Effective Date ” means August 24, 2011.

“ Stock Acquisition ” means the purchase or other acquisition by Borrower or a Guarantor of at least a majority of all of the voting Securities of any other Person.

“ Stock Pledge Agreements ” means one or more stock pledge agreements, in form and substance satisfactory to Agent, executed and delivered by Borrower and the Guarantors to Agent.

“ Subsidiary ” means, with respect to any Person (a) any corporation in which such Person, directly or indirectly through its Subsidiaries, owns more than 50% of the stock of any class or classes having by the terms thereof the ordinary voting power to elect a majority of the directors of such corporation, and (b) any partnership, association, joint venture, limited liability company, or other entity in which such Person, directly or indirectly through its Subsidiaries, has more than a 50% equity interest at the time; provided , however , that for the purposes of this Agreement, no Excluded Fund or Subsidiary of an Excluded Fund shall be deemed to be a Subsidiary.

“ Taxes ” means any tax based upon or measured by net or gross income, gross receipts, sales, use, ad valorem, transfer, franchise, withholding, payroll, employment, excise, occupation, premium or property taxes, or conduct of business, together with any interest and penalties, additions to tax and additional amounts imposed by any federal, state, local, or foreign taxing authority upon any Person.

“ Trademark Security Agreement ” means a trademark security agreement executed and delivered by Borrower and Agent, in form and substance satisfactory to Agent.

“ Ultimate Parent ” means the entity to be formed at a future date, if at all, which entity shall have acquired the Securities of JMPG (or other securities convertible into such Securities) representing 100% of the combined voting power of all Securities of JMPG entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of JMPG.

“ Unmatured Event of Default ” means an event, act, or occurrence which, with the giving of notice or the passage of time, would become an Event of Default.

1.2 Construction .

Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and to the singular include the plural, the part includes the whole, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” References in this Agreement to a “determination” or “designation” include estimates by Agent (in the case of quantitative determinations or designations), and beliefs by Agent (in the case of qualitative determinations or designations). The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, exhibit, and schedule references are to this Agreement unless otherwise specified. Any reference herein to this Agreement or any of the Loan Documents includes any and all alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. Any reference herein to this Agreement or any of the Loan Documents includes any and all alterations, amendments, changes, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. Any reference herein or in any other Loan Document to the satisfaction, payment or repayment in full of the Obligations shall mean the repayment in full in cash of all Obligations (and in the case of obligations with respect to Letters of Credit, providing cash collateral in an amount equal to 105% of the Letter of Credit Usage, and in the case of obligations with respect to Bank Products, providing cash collateral (in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure)) other than unasserted contingent indemnification Obligations and the termination of the commitments of Lenders to extend credit hereunder. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record.

ARTICLE II

AMOUNT AND TERMS OF LOANS

2.1 Revolving Credit Facility .

(a) Subject to the terms and conditions hereof:

(i) Subject to the terms and conditions of this Agreement, each Lender with a Revolving Credit Facility Commitment agrees (severally, not jointly or jointly and severally) to make Revolving Loans to Borrower from the Closing Date to, but not including, the Final Revolving Commitment Termination Date, at such times and in such amounts as Borrower may request in accordance with Section 2.6 , in an aggregate amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of the Maximum Revolver Amount; provided that at no time shall the amount of such Lender’s aggregate Loans exceed such Lender’s Revolving Credit Facility Commitment.

(ii) Borrowings under the Revolving Credit Facility may be borrowed, repaid without penalty or premium, and reborrowed.

(b) The foregoing to the contrary notwithstanding, in no event shall any Lender be obligated to make Loans hereunder if, after giving effect to the requested Revolving Loan, the Revolving Credit Facility Usage would exceed the Maximum Revolver Amount.

(c) In the event that, at any time, the Revolving Credit Facility Usage exceeds the Maximum Revolver Amount, then Borrower immediately shall repay the amount of such excess to Agent to be applied to the outstanding principal balance of the Revolving Loans. In the event that, at any time, the Revolving Credit Facility Usage exceeds the Sublimit for a period of more than 10 Business Days as a result of the extension of loans under the Broker/Dealer Credit Facility, then Borrower immediately shall pay the amount of such excess to Agent to be applied to the outstanding principal balance of the Revolving Loans.

(d) no Lender shall have any obligation to make any Revolving Loan under the Revolving Credit Facility on or after the Final Revolving Commitment Termination Date.

(e) Subject to Section 2.1(b) hereof, each Borrowing under the Revolving Credit Facility shall be in a minimum principal amount of $250,000 and, thereafter, in integral multiples of $100,000, unless such Borrowing is being made to pay any interest, fees, or expenses then due hereunder, in which case such Borrowing may be in the amount of such interest, fees, or expenses.

(f) On the Closing Date, “Revolving Loans” (as defined in the Existing Credit Agreement) outstanding under the Existing Credit Agreement (the “ Existing Revolving Loans ”) shall be converted into Revolving Loans hereunder, it being understood that no repayment of the Existing Revolving Loans is being effected hereby, but merely an amendment, restatement, and renewal in accordance with the terms hereof.

2.2 Rate Designation .

Borrower shall designate each Borrowing under the Revolving Credit Facility as a Base Rate Borrowing or a LIBOR Rate Borrowing in the Request for Borrowing or Request for Conversion/Continuation given to Agent in accordance with Section 2.6 or Section 2.7 . With respect to each LIBOR Rate Loan with an Interest Period that continues beyond the Closing Date, the LIBOR Rate that is applicable to such LIBOR Rate Loan as of the Closing Date under the Existing Credit Agreement shall continue to be applicable with respect to such LIBOR Rate Loan until the expiration of such Interest Period.

2.3 Interest Rates; Payment of Principal and Interest .

(a) Borrower shall make each payment due hereunder by making, or causing to be made, the amount thereof available to Agent’s Account in Los Angeles, California, not later than noon Pacific Time, on the date of payment. In lieu thereof, Borrower hereby authorizes Agent to, and Agent shall, charge such interest, the Letter of Credit Fee, and all other fees and expenses provided for in this Agreement or the other Loan Documents (as and when accrued or incurred), to Borrower’s Loan Account, which amounts thereafter shall accrue interest at the rate then applicable to Base Rate Loans hereunder.

(i) Unless Agent receives notice from Borrower prior to the date on which any payment is due to the Lenders that Borrower will not make such payment in full as and when required, Agent may assume that Borrower has made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrower does not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(ii) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (in accordance with their respective Pro Rata Shares) and applied thereto and payments of fees and expenses (other than fees or expenses that are for Agent’s separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders in accordance with their respective Pro Rata Shares. Subject to Section 2.3(a)(iv) below, all payments shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied as follows:

(A) first , to pay any fees and Lender Group Expenses then due to Agent under the Loan Documents, until paid in full,

(B) second , to pay any fees and Lender Group Expenses then due to the Lenders under the Loan Documents, on a ratable basis, until paid in full,

(D) fourth , so long as no Event of Default has occurred and is continuing, to pay all principal amounts then due and payable (other than as a result of an acceleration thereof) on the Revolving Loans, until paid in full (and, if any Revolving Loans are converted into a term loan pursuant to Section 2.3(e) of this Agreement, to pay the outstanding principal balance of such term loan (in the inverse order of the maturity of the installments due thereunder) until such term loan is paid in full),

(E) fifth , if an Event of Default has occurred and is continuing, ratably to pay the outstanding principal balance of the Revolving Loans, until paid in full,

(F) sixth , to pay any other Obligations (other than Obligations owing to Defaulting Lenders) (including all amounts then due and payable in respect of the Bank Product Obligations, with any balance to be held by Lender as cash collateral to be applied to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to Lender as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Lender in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.3(b)(ii) ), until paid in full,

(G) seventh , to pay any Obligations owed to Defaulting Lenders until paid in full, and

(H) eighth , to Borrower (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive.

(iv) In each instance, so long as no Event of Default has occurred and is continuing, Section 2.3(a)(ii) shall not apply to any payment made by Borrower to Agent and specified by Borrower in a written notice to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement.

(v) For purposes of the foregoing, “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, any LIBOR Prepayment Fee, and expense reimbursements, whether or not any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vi) In the event of a direct conflict between the priority provisions of this Section 2.3 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3 shall control and govern.

(b) Subject to Section 2.4 , each Base Rate Loan shall bear interest upon the unpaid principal balance thereof, from and including the date advanced or converted to a Base Rate Loan, to but excluding the date of conversion to a LIBOR Rate Loan or repayment thereof, at a fluctuating rate, per annum, equal to the lesser of (i) the Base Rate, or (ii) the Highest Lawful Rate. Any change in the interest rate resulting from a change in the Base Rate will become effective on the day on which each change in the Base Rate is announced by Agent. Interest due with respect to Base Rate Loans shall be due and payable, in arrears, commencing on the first Interest Payment Date following the Closing Date, and continuing on each Interest Payment Date thereafter up to and including the Interest Payment Date immediately preceding the Final Payment Date, and on the Final Payment Date.

(c) Subject to Section 2.4 , each LIBOR Rate Loan shall bear interest upon the unpaid principal balance thereof, from the date advanced, converted to a LIBOR Rate Loan, or continued as a LIBOR Rate Loan for a new Interest Period, to but excluding the date of conversion to a Base Rate Loan or repayment thereof, at a rate, per annum, equal to the lesser of (i) the LIBOR Rate plus 2.25 percentage points, and (ii) the Highest Lawful Rate. Interest due with respect to each LIBOR Rate Loan shall be due and payable, in arrears, on each Interest Payment Date applicable to that LIBOR Rate Loan and on the Final Payment Date. Anything to the contrary contained in this Agreement notwithstanding, Borrower may not have more than 10 LIBOR Rate Loans outstanding at any one time.

(d) Unless prepaid in accordance with the terms hereof, the outstanding principal balance of all Loans, together with accrued and unpaid interest thereon, shall be due and payable in accordance with clause (e) below.

(e) On the Final Revolving Commitment Termination Date, the outstanding principal balance of all Revolving Loans shall be deemed converted into a single term loan, which shall be repayable in 12 quarterly principal installments commencing on July 1, 2016 and continuing on the first day of each fiscal quarter of Borrower thereafter, (i) the first six of which shall be in an amount equal to the 3.75 percent times the outstanding principal balance of such term loan as of the date of conversion and (ii) the second six of which shall be in an amount equal to the 5.00 percent times the outstanding principal balance of such term loan as of the date of conversion, with all unpaid amounts due and payable on the Final Payment Date.

2.4 Default Rate .

Upon the occurrence and during the continuance of an Event of Default, all Obligations (except for Bank Product Obligations) shall bear interest at a rate equal to (i) the Base Rate, plus (ii) 3.00 percentage points. All amounts payable under this Section 2.4 shall be immediately due and payable without the requirement of notice or demand.

2.5 Computation of Interest and Fees Maximum Interest Rate .

(a) All computations of interest with respect to the Loans and computations of the fees (including the Letter of Credit Fee) due hereunder for any period shall be calculated on the basis of a year of 360 days for the actual number of days elapsed in such period, provided that all computations of interest with respect to Base Rate Loans shall be calculated on the basis of a year of 365/366 days for the actual number of days elapsed in such period. Interest shall accrue from the first day of the making of a Loan (or the date on which interest or fees or other payments are due hereunder, if applicable) to (but not including) the date of repayment of such Loan (or the date of the payment of interest or fees or other payments, if applicable) in accordance with the provisions hereof.

(b) Anything to the contrary contained in this Agreement notwithstanding, Borrower shall not be obligated to pay, and Agent shall not be entitled to charge, collect, receive, reserve, or take interest (it being understood that interest shall be calculated as the aggregate of all charges which constitute interest under applicable law that are contracted for, charged, reserved, received, or paid) in excess of the Highest Lawful Rate. During any period of time in which the interest rates specified herein exceed the Highest Lawful Rate, interest shall accrue and be payable at such Highest Lawful Rate; provided , however , that, if the interest rate otherwise applicable hereunder declines below the Highest Lawful Rate, interest shall continue to accrue and be payable at the Highest Lawful Rate (so long as there remains any unpaid principal with respect to the Loans) until the interest that has been paid hereunder equals the amount of interest that would have been paid if interest had at all times accrued and been payable at the applicable interest rates otherwise specified in this Agreement. For purposes of this Section 2.5 , the term “applicable law” shall mean that law in effect from time to time and applicable to this loan transaction which lawfully permits the charging and collection of the highest permissible, lawful, non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of California and, to the extent controlling, laws of the United States of America.

2.6 Request for Borrowing .

(a) Each Base Rate Borrowing shall be made on a Business Day and each LIBOR Rate Borrowing shall be made on a Eurodollar Business Day.

(b) Each Borrowing shall be made upon written notice, by way of a Request for Borrowing, which Request for Borrowing shall be irrevocable and shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email address as Agent may designate to Borrower in accordance herewith), or telefacsimile to Agent at the address (or its email address or telefacsimile number) indicated on Exhibit 11.3 attached hereto, as follows:

(i) for a Base Rate Borrowing, Borrower shall give Agent notice not later than noon Pacific Time 1 Business Day prior to the date on which such Borrowing is to be made (which date shall be a Business Day), and such notice shall specify that a Base Rate Borrowing is requested and state the amount thereof (subject to the provisions of this Article II );

(ii) for a LIBOR Rate Borrowing, Borrower shall give Agent notice no earlier than two (2) Eurodollar Business Days before and no later than noon Pacific Time on the day the LIBOR Rate Borrowing is to be made, and such notice shall specify (among other things) that a LIBOR Rate Borrowing is requested and state the amount thereof (subject to the provisions of this Article II ); provided , however , that no Borrowing shall be available as a LIBOR Rate Borrowing when any Unmatured Event of Default or Event of Default has occurred and is continuing. If Borrower fails to designate a Loan as a LIBOR Rate Borrowing in accordance herewith, the Loan will be a Base Rate Borrowing, and any outstanding LIBOR Rate Loan will be deemed to be a LIBOR Rate Loan with an Interest Period of one (1) month upon expiration of the applicable Interest Period.

(c) If the notice provided for in clause (b) of this Section 2.6 with respect to a Base Rate Borrowing or a LIBOR Rate Borrowing is received by Agent not later than noon, Pacific Time, on a Business Day or Eurodollar Business Day, as applicable, such day shall be treated as the first Business Day or Eurodollar Business Day, as applicable, of the required notice period. In any other event, such notice will be treated as having been received immediately before noon, Pacific Time, of the next Business Day or Eurodollar Business Day, as applicable.

(d) Promptly after receipt of a Request for Borrowing pursuant to Section 2.7(b) , Agent shall notify the Lenders, not later than 1:00 p.m. (Pacific time) on the Business Day immediately preceding the Funding Date applicable thereto (in the case of a Base Rate Loan) or the third Eurodollar Business Day preceding the Funding Date (in the case of a LIBOR Rate Loan), by email, telephone, or other similar form of transmission, of the requested Loan. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Loan available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. (Pacific time) on the Funding Date applicable thereto. After Agent’s receipt of the proceeds of such Loans from the Lenders, Agent shall make the proceeds thereof available to Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Borrower’s Designated Account; provided, that Agent shall not request any Lender to make, and no Lender shall have an obligation to make, any Loan if Agent shall have actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Loan unless such condition has been waived, or (ii) the requested Loan would exceed the Availability on such Funding Date.

(e) Each Request for Borrowing shall (i) specify, if applicable, among other information, the identity of the Excluded Fund(s) that the proceeds of such Borrowing will be used by Borrower to invest in and the amount of each such Investment and (ii) include a description of all Margin Securities (if any) held or to be acquired by any Loan Party in connection with such Borrowing (including the name of the issuer of such Margin Securities, the owner (or proposed owner) thereof and the number of shares of each class of Margin Securities held or to be acquired by such Person), and the market value thereof, together with a description of the other Collateral held by such Loan Party in each case with such detail as may be required to enable Lender to comply with its obligations under Regulation U, and any other related information reasonably requested by Lender, and, upon request of the Lender, Borrower will provide a Borrower-prepared financial report with respect to the Loan Parties (including a Borrower-prepared balance sheet with respect to the Loan Parties) as of the end of the most recent fiscal month then ended.

(f) Unless Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Loan after the Closing Date, prior to 9:00 a.m. (Pacific time) on the date of such Loan, that such Lender will not make available as and when required hereunder to Agent for the account of Borrower the amount of that Lender’s Pro Rata Share of the Loan, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If and to the extent any Lender (other than CNB) shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender’s Loan on the date of Loan for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Borrower of such failure to fund and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Loan, at a rate per annum equal to the interest rate applicable at the time to the Loans composing such Loan, without in any way prejudicing the rights and remedies of Borrower against the Defaulting Lender. The failure of any Lender to make any Loan on any Funding Date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Funding Date.

(g) (i) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrower to Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (i) first, to each other Non-Defaulting Lender ratably in accordance with their Revolving Credit Facility Commitments (but only to the extent that such Defaulting Lender’s Loan was funded by such other Non-Defaulting Lender), (ii) second, to a suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the benefit of Borrower (upon the request of Borrower and subject to the conditions set forth in Section 3.2) as if such Defaulting Lender had made its portion of Loans (or other funding obligations) hereunder, and (iii) third, from and after the date when all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (i) of Section 2.4(a)(ii) . Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.11(b) , such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Revolving Credit Facility Commitment shall be deemed to be zero; provided , that the foregoing shall not apply to any of the matters governed by Section 11.2(a)(i) through (iii) . This Section shall remain effective with respect to such Defaulting Lender until the earlier of (x) the Non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting Lender’s default in writing, or (y) the Defaulting Lender makes its Pro Rata Share of the applicable Loans and pays to Agent all amounts owing by Defaulting Lender in respect thereof and, if requested by Agent, provides adequate assurance of its ability to perform its future obligations hereunder. The operation of this Section shall not be construed to increase or otherwise affect the Revolving Credit Facility Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrower of its duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (other than Bank Product Obligations) without any premium or penalty of any kind whatsoever; provided, however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrower’s rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. In the event of a direct conflict between the priority provisions of this Section 2.6(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.6(g) shall control and govern.

(h) Agent, as a non-fiduciary agent for Borrower, shall maintain a register showing the principal amount of the Loans, the portions thereof owing to each Lender, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, conclusively be presumed to be correct and accurate.

(i) All Loans shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Loan (or other extension of credit) hereunder, nor shall any Revolving Credit Facility Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

2.7 Conversion or Continuation .

(a) Subject to the provisions of clause (d) of this Section 2.7 and the provisions of Section 2.14 , Borrower shall have the option to (i) convert all or any portion of the outstanding Base Rate Borrowings equal to $250,000, and integral multiples of $100,000 in excess of such amount, to a LIBOR Rate Borrowing, (ii) convert all or any portion of the outstanding LIBOR Rate Borrowings equal to $250,000 and integral multiples of $100,000 in excess of such amount, to a Base Rate Borrowing, and (iii) upon the expiration of any Interest Period applicable to any of its LIBOR Rate Borrowings, continue all or any portion of such LIBOR Rate Borrowing equal to $250,000, and integral multiples of $100,000 in excess of such amount, as a LIBOR Rate Borrowing, and the succeeding Interest Period of such continued Borrowing shall commence on the expiration date of the Interest Period previously applicable thereto; provided , however , that a LIBOR Rate Borrowing only may be converted or continued, as the case may be, on the expiration date of the Interest Period applicable thereto; provided further , however , that no outstanding Borrowing may be continued as, or be converted into, a LIBOR Rate Borrowing when any Unmatured Event of Default or Event of Default has occurred and is continuing; provided further , however , that if, before the expiration of an Interest Period of a LIBOR Rate Borrowing, Borrower fails timely to deliver the appropriate Request for Conversion/Continuation, such LIBOR Rate Borrowing automatically shall be converted to a LIBOR Rate Borrowing with an Interest Period of one (1) month.

(b) Borrower shall, by personal delivery or by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Agent may designate to Borrower in accordance herewith), or telefacsimile, deliver a Request for Conversion/Continuation to Agent (i) no later than noon, Pacific Time, on the Business Day that is the proposed conversion date (in the case of a conversion to a Base Rate Borrowing), and (ii) no earlier than two (2) Eurodollar Business Days before and no later than noon Pacific Time on the day of the proposed conversion or continuation date (in the case of a conversion to, or a continuation of, a LIBOR Rate Borrowing). A Request for Conversion/Continuation shall specify (x) the proposed conversion or continuation date (which shall be a Business Day or a Eurodollar Business Day, as applicable), (y) the amount and type of the Borrowing to be converted or continued, and (z) the nature of the proposed conversion or continuation.

(c) Any Request for Conversion/Continuation (or telephonic notice in lieu thereof) shall be irrevocable and Borrower shall be obligated to convert or continue in accordance therewith.

(d) No Borrowing (or portion thereof) may be converted into, or continued as, a LIBOR Rate Borrowing with an Interest Period that ends after the Final Payment Date.

2.8 Mandatory Repayment .

(a) The Revolving Credit Facility Commitments shall automatically terminate on the Final Revolving Commitment Termination Date, and the Loans shall convert into a term loan and shall be repayable as provided in Section 2.3(e) hereof. Notwithstanding the foregoing, at the request of Borrower, any Letters of Credit that are outstanding on the Final Revolving Commitment Termination Date shall be renewed through the Final Payment Date. On the Final Payment Date all remaining outstanding Loans, all interest that has accrued and remains unpaid thereon, all contingent reimbursement obligations of Borrower with respect to outstanding Letters of Credit, all unpaid fees, costs, or expenses that are payable hereunder or under any other Loan Document, and all other Obligations (including any amounts due and payable to any Bank Product Provider in respect of all Bank Products provided by such Bank Product Provider) immediately shall each become due and payable in full, without notice or demand (including (a) either (i) providing cash collateral to be held by Agent, for the benefit of the Lenders, in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to Issuing Bank, and (b) providing cash collateral (in an amount determined by Lender as sufficient to satisfy the reasonably estimated credit exposure) to be held by Agent for the benefit of the Bank Product Providers with respect to the Bank Product Obligations).

(b) Borrower shall make repayments in accordance with Section 2.1(c) .

(c) All prepayments of the Loans made pursuant to Section 2.8(b) shall be applied, first , to the outstanding principal amount of the Revolving Loans, until paid in full, and second , to cash collateralize the Letters of Credit in an amount equal to 105% of the then extant Letter of Credit Usage, until paid in full.

2.9 Voluntary Prepayments . Borrower shall have the right, at any time and from time to time, to prepay the Loans without penalty or premium. Borrower shall give Agent notice of any such prepayment with respect to Base Rate Loans and not less than 3 Eurodollar Business Days prior written notice of any such prepayment with respect to LIBOR Rate Loans. In each case, such notice shall specify the date on which such prepayment is to be made (which shall be a Business Day or Eurodollar Business Day, as applicable). Each such prepayment shall be in an aggregate minimum amount of $250,000, and integral multiples of $50,000 in excess of such amount, in each case, and shall include interest accrued on the amount prepaid to, but not including, the date of payment in accordance with the terms hereof (or, in each case, such lesser amount constituting the amount of all Loans then outstanding). The foregoing to the contrary notwithstanding, (x) Borrower may not make a partial principal prepayment on a LIBOR Rate Loan; and (y) Borrower may prepay the full outstanding principal balance on a LIBOR Rate Loan prior to the end of the Interest Period, provided , that such prepayment is accompanied by a fee (" LIBOR Prepayment Fee ") equal to the amount, if any, by which (i) the additional interest which would have been earned by the Lender Group had the LIBOR Rate Loan not been prepaid, at the LIBOR Rate that would have been applicable thereto, for the period from the date of such prepayment to the last day of the then current Interest Period therefore, exceeds (ii) the interest which would have been recoverable by the Lender Group by placing the amount of the LIBOR Rate Loan on deposit in the LIBOR market for a period starting on the date on which it was prepaid and ending on the last day of the applicable Interest Period. Agent’s calculation of the LIBOR Prepayment Fee will be deemed conclusive absent manifest error.

2.10 [Intentionally Omitted] .

2.11 Fees .

(a) Fee Letter . Borrower shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

(b) Unused Commitment Fee . Borrower shall pay a fee (the “ Unused Commitment Fee ”) to Agent quarterly in arrears, commencing on the first day of the first fiscal quarter of Borrower following the Sixth Amendment Effective Date, and continuing on the first day of each fiscal quarter of Borrower thereafter so long as the Revolving Credit Facility Commitment is extant. The Unused Commitment Fee shall be equal to 0.25% per annum times the average daily amount of the unfunded portion of the Revolving Credit Facility Commitment and shall be calculated, as set forth in Section 2.6 hereof, on the basis of a year of 360 days for the actual number of days elapsed.

2.12 Maintenance of Loan Account; Statements of Obligations .

Agent shall maintain an account on its books in the name of Borrower (the “ Loan Account ”) on which Borrower will be charged with all Loans made by Agent to Borrower or for Borrower’s account, the Letters of Credit issued by Issuing Bank for Borrower’s account, and with all other payment Obligations (except for Bank Product Obligations), including all accrued interest, fees and expenses (in each case, as and when payable hereunder or under the other Loan Documents). Agent shall render statements regarding the Loan Account to Borrower, including principal, interest, fees, and including an itemization of all expenses owing, and such statements shall be conclusively presumed to be correct and accurate (absent manifest error) and constitute an account stated between Borrower and Agent unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements.

2.13 Increased Costs .

If after the Closing Date, the adoption of, or any change in, any applicable law, rule, or regulation, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Agent or the Lenders (or their Affiliates) with any request, guideline, or directive (irrespective of whether having the force of law) of any Governmental Authority (a “ Regulatory Change ”) shall impose, modify, or deem applicable any reserve, special deposit, or similar requirement (including any such requirement imposed by the Federal Reserve Board, but excluding with respect to any LIBOR Rate Loan any such requirement included in the calculation of the Base LIBOR Rate, as applicable) against Assets of, deposits with, or for the account of, or credit extended by Agent or the Lenders (or their Affiliates) or shall impose on Agent or the Lenders (or their Affiliates) or the interbank eurodollar market any other condition affecting its LIBOR Rate Loans, as applicable, or its obligation to make LIBOR Rate Loans, as applicable, then, Agent may, by written notice given to Borrower, together with supporting evidence, require Borrower to pay to the Lender Group such additional amounts as shall compensate the Lender Group for any such increased cost, reduction, loss, or expense actually incurred by the Lender Group in connection with the Loans for preceding the date on which such notice is given during each fiscal quarter thereafter. Any such request for compensation by Agent under this Section 2.13 shall set forth the basis of calculation thereof and shall, in the absence of manifest error, be conclusive and binding for all purposes; provided that, in making such calculation, the Lender Group shall treat Borrower in a manner consistent with the Lender Group’s treatment of similarly situated borrowers. Notwithstanding anything herein to the contrary, the issuance of any rules, regulations or directions under (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, or (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, in each case after the date of this Agreement shall be deemed to be a change in law, rule, regulation or guideline for purposes of this Agreement and the protection of this Agreement shall be available to the Lender Group regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed, so long as it shall be customary for lenders or issuing banks affected thereby to comply therewith.

2.14 Suspension of LIBOR Rate Loans .

If Agent, on any Eurodollar Business Day, is unable to determine the Base LIBOR Rate applicable for a new, continued, or converted LIBOR Rate Loan for any reason, or any law, regulation, or governmental order, rule or determination, makes it unlawful for any Lender to make a LIBOR Rate Loan, Borrower’s right to select LIBOR Rate Loans will be suspended until such time as Agent is again able to determine the Base LIBOR Rate or such Lender is again able to make LIBOR Rate Loans, as the case may be. During such suspension, new Loans, outstanding Base Rate Loans, and LIBOR Rate Loans whose Interest Periods terminate may only be Base Rate Loans. Any such determination shall, in the absence of manifest error, be conclusive and binding for all purposes.

2.15 Funding Sources .

Nothing herein shall be deemed to obligate the Lenders (or Agent on behalf thereof) to obtain the funds to make any Loan in any particular place or manner and nothing herein shall be deemed to constitute a representation by Agent or any Lender that it has obtained or will obtain such funds in any particular place or manner.

2.16 Place of Borrowings .

All Loans made hereunder shall be disbursed by credit to Borrower’s Designated Account or as may otherwise be agreed to between Borrower and Agent.

2.17 Survivability .

Borrower’s obligations under Section 2.13 hereof shall survive repayment of the Loans made hereunder and termination of the Revolving Credit Facility Commitment for a period of 90 days.

2.18 Letters of Credit .

(a) Subject to the terms and conditions of this Agreement, upon the request of Borrower made in accordance herewith, and prior to the Final Revolving Commitment Termination Date, Issuing Bank agrees to issue letters of credit for the account of Borrower (each, a “ Letter of Credit ”). Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by an Authorized Person and delivered to Issuing Bank via personal delivery, registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email address as Issuing Bank may designate to Borrower in accordance herewith), or telefacsimile, reasonably in advance of the requested date of issuance, amendment, renewal, or extension. Each such request shall be in form and substance satisfactory to Issuing Bank in its reasonable discretion and shall specify (i) (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the expiration date of such Letter of Credit (which shall not be later than the earlier to occur of (x) one year after the date of issuance thereof, and (y) the Final Revolving Commitment Termination Date), (D) the name and address of the beneficiary thereof, and (E) such other information (including, in the case of an amendment, renewal, or extension, identification of the outstanding Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit and (ii) shall be accompanied by such Issuer Documents as Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances. Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue or cause the issuance of a Letter of Credit that supports the obligations of Borrower or its Subsidiaries in respect of (A) a lease of real property, or (B) an employment contract. Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the issuance of such requested Letter of Credit:

(i) the Letter of Credit Usage would exceed $5,000,000, or

(ii) the Revolving Credit Facility Usage would exceed the Maximum Revolver Amount.

(c) In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, the Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii) , or (ii) the Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrower to eliminate the Issuing Bank’s risk with respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrower cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii) . Additionally, Issuing Bank shall have no obligation to issue a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, (B) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally, or (C) if amounts demanded to be paid under any Letter of Credit will or may not be in United States Dollars.

(d) Borrower and Issuing Bank hereby acknowledge and agree that all Letters of Credit (as defined in the Existing Credit Agreement) (the “ Existing Letters of Credit ”) issued under the Existing Credit Agreement as of the Closing Date shall constitute Letters of Credit under this Agreement on and after the Closing Date with the same effect as if such Existing Letters of Credit were issued by Issuing Bank on the Closing Date. Each Letter of Credit shall be in form and substance acceptable to Agent (in the exercise of its reasonable discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Agent is obligated to advance funds under a Letter of Credit, Borrower immediately shall reimburse such L/C Disbursement to Agent by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., Pacific Time, on the date that such L/C Disbursement is made, if Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., Pacific Time, on such date, or, if such notice has not been received by Borrower prior to such time on such date, then not later than 11:00 a.m., Pacific Time, on the Business Day that Borrower receives such notice, if such notice is received prior to 10:00 a.m., Pacific Time, on the date of receipt, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be a Base Rate Loan under the Revolving Credit Facility hereunder and, thereafter, shall bear interest at the rate then applicable to Base Rate Loans. To the extent an L/C Disbursement is deemed to be a Base Rate Loan hereunder, Borrower’s obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting Base Rate Loan.

(g) Borrower hereby agrees to indemnify, save, defend, and hold each member of the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by Lender arising out of or in connection with any Letter of Credit; provided , however , that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability to the extent that it is caused by the gross negligence or willful misconduct of such member of the Lender Group. Borrower agrees to be bound by Agent’s interpretations of any Letter of Credit issued by Issuing Bank to or for Borrower’s account, even though this interpretation may be different from Borrower’s own, and Borrower understands and agrees that no member of the Lender Group shall be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Borrower hereby acknowledges and agrees that no member of the Lender Group shall be responsible for delays, errors, or omissions resulting from the malfunction of equipment in connection with any Letter of Credit.

(b) If by reason of (x) any change after the Closing Date in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (y) compliance by Agent with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or

(ii) there shall be imposed on Agent any other condition regarding any Letter of Credit issued pursuant hereto,

and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by Agent, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrower, and Borrower shall pay on demand such amounts as Agent may specify to be necessary to compensate Agent for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder. The determination by Agent of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

(c) Borrower shall pay Issuing Bank a Letter of Credit fee (the “ Letter of Credit Fee ”) which shall accrue at a rate equal to 1.25% per annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit, and which shall be payable quarterly in arrears on the first day of each fiscal quarter beginning after the Closing Date.

(d) Issuing Bank and Borrower agree that, in paying any drawing under a Letter of Credit, Issuing Bank shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. Neither Issuing Bank nor any Affiliate of Issuing Bank, shall be liable to any Loan Party for (i) any action taken or omitted in connection herewith at the request or with the approval of Issuing Bank, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; (iii) any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit or any error in interpretation of technical terms; or (iv) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, that this assumption is not intended to, and shall not, preclude Borrower from pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of Issuing Bank or any Affiliate of Issuing Bank shall be liable or responsible for any of the matters described in clauses (i) through (vi) of Section 2.18(f) or for any action, neglect or omission under or in connection with any Letter of Credit or Issuer Document, including in connection with the issuance or any amendment of any Letter of Credit, the failure to issue or amend any Letter of Credit, the honoring or dishonoring of any demand under any Letter of Credit, or the following of Borrower’s instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto, and such action or neglect or omission will bind Borrower. In furtherance and not in limitation of the foregoing, Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary (or Issuing Bank may refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit and may disregard any requirement in a Letter of Credit that notice of dishonor be given in a particular manner and any requirement that presentation be made at a particular place or by a particular time of day), and Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. Issuing Bank shall not be responsible for the wording of any Letter of Credit (including any drawing conditions or any terms or conditions that are ineffective, ambiguous, inconsistent, unduly complicated or reasonably impossible to satisfy), notwithstanding any assistance Issuing Bank may provide to Borrower with drafting or recommending text for any letter of credit application or with the structuring of any transaction related to any Letter of Credit, and Borrower hereby acknowledges and agrees that any such assistance will not constitute legal or other advice by Issuing Bank or any representation or warranty by Issuing Bank that any such wording or such Letter of Credit will be effective. Without limiting the foregoing, Issuing Bank may, as it deems appropriate, use in any Letter of Credit any portion of the language prepared by Borrower and contained in the letter of credit application relative to drawings under such Letter of Credit. Borrower hereby acknowledges and agrees that Issuing Bank shall not be responsible for delays, errors, or omissions resulting from the malfunction of equipment in connection with any Letter of Credit.

(e) The obligation of Borrower to reimburse Issuing Bank for each drawing under each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document,

(ii) the existence of any claim, counterclaim, setoff, defense (other than payment in full) or other right that Borrower or any of its Subsidiaries may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction,

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit,

(iv) any payment by Issuing Bank under such Letter of Credit against presentation of a draft or certificate that does not substantially or strictly comply with the terms of such Letter of Credit (including, without limitation, any requirement that presentation be made at a particular place or by a particular time of day), or any payment made by Issuing Bank under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit,

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or discharge of, Borrower or any of its Subsidiaries, or

(vi) the fact that any Event of Default or Unmatured Event of Default shall have occurred and be continuing.

(f) Unless otherwise expressly agreed by Issuing Bank and Borrower when a Letter of Credit is issued, (i) the rules of the ISP and the UCP 600 shall apply to each standby Letter of Credit, and (ii) the rules of the UCP 600 shall apply to each commercial Letter of Credit.

(g) In the event of a direct conflict between the provisions of this Section 2.18 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.18 shall control and govern.

2.19 Accordion .

(a) At any time during the period from and after the Closing Date through but excluding the date that is the one (1) year anniversary of the Closing Date, at the option of Borrower (but subject to the conditions set forth in clause (b) below), the Revolving Credit Facility Commitments and the Maximum Revolver Amount may be increased by an amount in the aggregate for all such increases of the Revolving Credit Facility Commitment and the Maximum Revolver Amount not to exceed the Available Increase Amount (each such increase, an “ Increase ”). Agent shall invite each Lender to increase its Revolving Credit Facility Commitment (it being understood that no Lender shall be obligated to increase its Revolving Credit Facility Commitment) in connection with a proposed Increase on the terms set forth in this Agreement, and if sufficient Lenders do not agree to increase their Revolving Credit Facility Commitment in connection with such proposed Increase, then Agent or Borrower may invite any prospective lender who is reasonably satisfactory to Agent and Borrower to become a Lender in connection with a proposed Increase. Any Increase shall be in an amount of at least $5,000,000 and integral multiples of $1,000,000 in excess thereof. In no event may the Revolving Credit Facility Commitment and the Maximum Revolver Amount be increased pursuant to this Section 2.19 on more than 2 occasions in the aggregate for all such Increases.

(b) Each of the following shall be conditions precedent to any Increase of the Revolving Credit Facility Commitment and the Maximum Revolver Amount in connection therewith:

(i) Agent or Borrower have obtained the commitment of one or more Lenders (or other prospective lenders) reasonably satisfactory to Agent and Borrower to provide the applicable Increase and any such Lenders (or prospective lenders), Borrower, and Agent have signed a joinder agreement to this Agreement (an “ Increase Joinder ”), in form and substance reasonably satisfactory to Agent, to which such Lenders (or prospective lenders), Borrower, and Agent are party,

(ii) each of the conditions precedent set forth in Section 3.2 are satisfied,

(iii) Agent shall have received form FR U-1 for each Lender fully completed and executed by Borrower, and

(iv) Borrower has delivered to Agent updated pro forma calculations (after giving effect to the applicable Increase) for Borrower and its Subsidiaries evidencing that: (i) the Fixed Charge Coverage Ratio and Minimum Interest Coverage Ratio for JMPG and its Subsidiaries, for the four consecutive fiscal quarter period ending as of the last day of the fiscal quarter most recently ended prior to the Increase Date as to which financial statements were required to be delivered pursuant to this Agreement, are each greater than the respective ratio required by Section 6.14 for such period by at least 10% of such required ratio, and (ii) the Liquidity and Net Worth of for Loan Parties and their Subsidiaries, as of the Increase Date, is each greater than the respective amount required by Section 6.14 as of such date by at least 10% of such required amount.

(c) Unless otherwise specifically provided herein, all references in this Agreement and any other Loan Document to Revolving Loans shall be deemed, unless the context otherwise requires, to include Revolving Loans made pursuant to the increased Revolving Credit Facility Commitment and Maximum Revolver Amount pursuant to this Section 2.19 .

(d) Each of the Lenders having a Revolving Credit Facility Commitment prior to the Increase Date (the “ Pre-Increase Revolver Lenders ” ) shall assign to any Lender which is acquiring a new or additional Revolving Credit Facility Commitment on the Increase Date (the “ Post-Increase Revolver Lenders ”), and such Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letters of Credit on such Increase Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letters of Credit will be held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share after giving effect to such increased Revolving Credit Facility Commitments.

(e) The Revolving Loans, Revolving Credit Facility Commitments, and Maximum Revolver Amount established pursuant to this Section 2.19 shall constitute Revolving Loans, Revolving Credit Facility Commitments, and Maximum Revolver Amount under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests created by the Loan Documents. Borrower shall take any actions reasonably required by Agent to ensure and demonstrate that the Liens and security interests granted by the Loan Documents continue to be perfected under the Code or otherwise after giving effect to the establishment of any such new Revolving Credit Facility Commitments and Maximum Revolver Amount.

ARTICLE III

CONDITIONS TO LOANS

3.1 Conditions Precedent to Effectiveness .

The effectiveness of this Agreement, in addition to the conditions set forth in Section 3.2 hereof, subject to the fulfillment, to the satisfaction of Agent and its counsel, of each of the following conditions on or before the Closing Date:

(a) Borrower shall have executed and delivered to Agent the Disclosure Statement required under this Agreement. The form and content of the Disclosure Statement shall be satisfactory to Agent;

(b) Agent shall have received the Reaffirmation Agreement, duly executed and delivered by each party thereto;

(c) Agent shall have received the Amendment Number Five to Revolving Note and Cash Subordination Agreement & Revolving Note, in form and substance reasonably satisfactory to Agent, executed and delivered by all parties thereto and in full force and effect, together with evidence, satisfactory to Agent, that FINRA approval has been obtained with respect to the amendments to the Broker/Dealer Credit Facility as set forth therein;

(d) Agent shall have received a certificate executed by the Secretary of Borrower to the effect that: (i) Borrower and each of its Subsidiaries has each obtained all orders, consents, approvals, and other authorizations and having made all filings and other notifications (governmental or otherwise) required in connection with the Loan Documents, other than orders, consents, approvals, authorizations, or filings the failure to obtain or file, as applicable, which could not reasonably be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries, (ii) the Governing Documents of Borrower that were provided to CNB on October 11, 2012 have not been amended since they were last provided to CNB on such date, and are in full force and effect as of the date hereof, (ii) the signature and incumbency certificate of the Responsible Officers of Borrower attached thereto as an exhibit and last provided to CNB on October 11, 2012 is true and correct as of the date hereof, and (iii) attaching a copy of the resolutions of Borrower, certified as of the Closing Date, authorizing (A) the transactions contemplated by the Loan Documents to which Borrower is or will be a party, and (B) the execution, delivery and performance by Borrower of each Loan Document to which Borrower is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith;

(e) Agent shall have received a certificate executed by the Secretary of Harvest to the effect that: (i) the Governing Documents of Harvest that were provided to CNB on October 11, 2012 have not been amended since they were last provided to CNB on such date, and are in full force and effect as of the date hereof, (ii) the signature and incumbency certificate of the Responsible Officers of Harvest attached thereto as an exhibit and last provided to CNB on October 11, 2012 is true and correct as of the date hereof, and (iii) attaching a copy of the resolutions of Harvest, certified as of the Closing Date, authorizing (A) the transactions contemplated by the Loan Documents to which Harvest is or will be a party, and (B) the execution, delivery and performance by Harvest of each Loan Document to which Harvest is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith;

(f) Agent shall have received a certificate executed by the Secretary of JMP Securities to the effect that: (i) the Governing Documents of JMP Securities that were provided to CNB on October 11, 2012 have not been amended since they were last provided to CNB on such date, and are in full force and effect as of the date hereof, (ii) the signature and incumbency certificate of the Responsible Officers of JMP Securities attached thereto as an exhibit and last provided to CNB on October 11, 2012 is true and correct as of the date hereof, and (iii) attaching a copy of the resolutions of JMP Securities, certified as of the Closing Date, authorizing (A) the transactions contemplated by the Loan Documents to which JMP Securities is or will be a party, and (B) the execution, delivery and performance by JMP Securities of each Loan Document to which JMP Securities is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith;

(g) Agent shall have received full payment of all fees set forth in the Fee Letter that are required to be paid on the Closing Date;

(h) Agent shall have received form FR U-1, with Part I fully completed and executed by Borrower;

(i) no litigation, inquiry, other action or proceeding (governmental or otherwise), or injunction or other restraining order shall be pending or overtly threatened that could have, in the reasonable opinion of Agent: (i) a material adverse effect on Borrower’s or any Guarantor’s ability to repay the Loans or (ii) a Material Adverse Effect on Borrower or any Guarantor; and

(j) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered or executed or recorded and shall be in form and substance reasonably satisfactory to Agent and its counsel.

3.2 Conditions Precedent to All Extensions of Credit .

The obligation of each Lender to make each Loan or issue any Letter of Credit hereunder is subject to the fulfillment, at or prior to the time of the making of such Loan or the issuance of such Letter of Credit, of each of the following conditions:

(a) the representations and warranties of Borrower contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such Loan or such Letter of Credit as though made on and as of such date (except to the extent that such representations and warranties solely relate to an earlier date);

(b) no Event of Default or Unmatured Event of Default shall have occurred and be continuing on the date of such Loan or such Letter of Credit, nor shall either result from the making of such Loan or the issuance of such Letter of Credit; and

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF BORROWER

In order to induce the Lender Group to enter into this Agreement, Borrower makes the following representations and warranties which, except as set forth in the Disclosure Statement with a specific reference to the Section of this Article IV affected thereby, shall be true, correct, and complete in all respects as of the date hereof, and shall be true, correct, and complete in all respects as of the Closing Date, and at and as of the date of each Loan (or other extension of credit) made thereafter, as though made on and as of the date of the making of such Loan (or other extension of credit), and at and as of the date of each issuance of, renewal of, or amendment to any Letter of Credit, as though made on and as of the date of the making of such Loan (or other extension of credit), and at and as of the date of such issuance of, renewal of, or amendment to any Letter of Credit (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement and the making of the Loans (or other extension of credit) and the issuance of the Letters of Credit:

4.1 Due Organization .

Borrower is a duly organized and validly existing limited liability company in good standing under the laws of the State of Delaware and is duly qualified to conduct business in all jurisdictions where its failure to do so could reasonably be expected to have a Material Adverse Effect on Borrower. Each Guarantor is duly organized and validly existing entity and in good standing under the laws of the jurisdiction of its incorporation or organization and is duly qualified to conduct business in all jurisdictions where its failure to do so could reasonably be expected to have a Material Adverse Effect on such Guarantor.

4.2 Interests in Borrower and its Subsidiaries .

(a) As of the Closing Date, all of the interests in Borrower and its Subsidiaries are owned by the Persons identified in the Disclosure Statement.

(b) Borrower may amend the Disclosure Statement with respect to this Section 4.2 to reflect changes that would not, individually or in the aggregate result in a Change of Control Event.

4.3 Requisite Power and Authorization .

Borrower has all requisite power to execute and deliver this Agreement and the other Loan Documents to which it is a party, and to borrow the sums provided for in this Agreement. Each Guarantor has all requisite power to execute and deliver the Loan Documents to which it is a party. Borrower and each Guarantor has all governmental licenses, authorizations, consents, and approvals necessary to own and operate its Assets and to carry on its businesses as now conducted and as proposed to be conducted, other than licenses, authorizations, consents, and approvals that are not currently required or the failure to obtain which reasonably could not be expected to have a Material Adverse Effect on Borrower or any Guarantor. The execution, delivery, and performance of this Agreement and the other Loan Documents have been duly authorized by Borrower and all necessary action in respect thereof has been taken, and the execution, delivery, and performance thereof do not require any consent or approval of any other Person that has not been obtained. The execution, delivery, and performance of the Loan Documents to which it is a party have been duly authorized by each Guarantor and all necessary action in respect thereof has been taken, and the execution, delivery, and performance of the Loan Documents to which a Guarantor are a party do not require any consent or approval of any other Person that has not been obtained.

4.4 Binding Agreements .

This Agreement and the other Loan Documents to which Borrower is a party, when executed and delivered by Borrower, will constitute, the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, and the Loan Documents to which the Guarantors are a party, when executed and delivered by the Guarantors, will constitute, the legal, valid, and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms, in each case except as the enforceability hereof or thereof may be affected by: (a) any Insolvency Proceeding, or other similar laws affecting the enforcement of creditors’ rights generally, and (b) the limitation of certain remedies by certain equitable principles of general applicability.

4.5 Other Agreements .

The execution, delivery, and performance by Borrower of this Agreement and the other Loan Documents to which it is a party, and the execution, delivery and performance by the Guarantors of the Loan Documents to which they are a party, do not and will not: (a) violate (i) any provision of any federal (including the Exchange Act), state, or local law, rule, or regulation (including Regulations T, U, and X of the Federal Reserve Board) binding on Borrower or any Guarantor, (ii) any order of any domestic governmental authority, court, arbitration board, or tribunal binding on Borrower or any Guarantor, or (iii) the Governing Documents of Borrower or any Guarantor, or (b) contravene any provisions of, result in a breach of, constitute (with the giving of notice or the lapse of time) a default under, or result in the creation of any Lien (other than a Permitted Lien) upon any of the Assets of Borrower or any Guarantor pursuant to, any Contractual Obligation of Borrower or any Guarantor, or (c) require termination of any Contractual Obligation of Borrower or any Guarantor, or (d) constitute a tortious interference with any Contractual Obligation of Borrower or any Guarantor.

4.6 Litigation: Adverse Facts .

(a) There is no action, suit, proceeding, or arbitration (irrespective of whether purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any federal, state, municipal, or other governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, pending or, to the knowledge of Borrower, threatened in writing against or affecting Borrower or any of its Subsidiaries, that reasonably could be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries, or reasonably could be expected to materially and adversely affect the ability of Borrower or the Guarantors to perform their respective obligations under the Loan Documents (including Borrower’s ability to repay any or all of the Obligations when due);

(b) None of Borrower or any of its Subsidiaries is: (i) in violation of any applicable law in a manner that reasonably could be expected to have a Material Adverse Effect on such Person, or (ii) subject to or in default with respect to any final judgment, writ, injunction, decree, rule, or regulation of any court or of any federal, state, municipal, or other governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, in a manner that reasonably could be expected to have a Material Adverse Effect on such Person, or reasonably could be expected to materially and adversely affect the ability of Borrower or the Guarantors to perform their respective obligations under the Loan Documents (including Borrower’s ability to repay any or all of the Obligations when due); and

(c) (i) there is no action, suit, proceeding or, to the best of Borrower’s knowledge or belief, investigation pending or, to the best of Borrower’s knowledge or belief, threatened in writing against or affecting Borrower or any of its Subsidiaries that questions the validity or the enforceability of this Agreement or other the Loan Documents, and (ii) there is no action, suit, or proceeding pending against or affecting Borrower or any of its Subsidiaries pursuant to which, on the date of the making of any Loan hereunder, there is in effect a binding injunction that could materially and adversely affect the validity or enforceability of this Agreement or the other Loan Documents.

4.7 Government Consents . Other than such as may have previously been obtained, filed, or given, as applicable, no consent, license, permit, approval, or authorization of, exemption by, notice to, report to or registration, filing, or declaration with, any governmental authority or agency is required in connection with the execution, delivery, and performance by Borrower and the Guarantors of the Loan Documents to which they are a party.

4.8 Title to Assets; Liens . Except for Permitted Liens, all of the Assets of Borrower and its Subsidiaries are free from all Liens of any nature whatsoever. Except for Permitted Liens, Borrower and its Subsidiaries have good and sufficient title to all of their respective Assets reflected in their books and records as being owned by them or their nominee. Neither this Agreement, nor any of the other Loan Documents, nor any transaction contemplated under any such agreement will affect any right, title, or interest of Borrower or any of its Subsidiaries in and to any of the Assets of Borrower or any of its Subsidiaries in a manner that reasonably could be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries.

4.9 Payment of Taxes. All tax returns and reports of Borrower and its Subsidiaries (and all taxpayers with which Borrower or its Subsidiaries is or has been consolidated or combined) required to be filed by it has been timely filed (inclusive of any permitted extensions), and all Taxes, assessments, fees, amounts required to be withheld and paid to a Governmental Authority and all other governmental charges upon Borrower and its Subsidiaries, and upon their Assets, income, and franchises, that are due and payable have been paid, except to the extent that: (a) the failure to file such returns or reports, or pay such Taxes, assessments, fees, or other governmental charges, as applicable, reasonably could not be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries, or (b) other than with respect to Taxes, assessments, charges or claims which have become a tax Lien upon any of Borrower’s or any of its Subsidiaries’ Assets, such Tax, assessment, charge, or claim is being contested, in good faith, by appropriate proceedings promptly instituted and diligently conducted, and an adequate reserve or other appropriate provision, if any, shall have been made as required in order to be in conformity with GAAP. Borrower does not know of any proposed, asserted, or assessed tax deficiency against it or any of its Subsidiaries that, if such deficiency existed and had to be rectified, reasonably could be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries.

4.10 Governmental Regulation .

(a) Borrower and its Subsidiaries are not, nor immediately after the application by Borrower of the proceeds of the Loans will they be, subject to regulation under the Investment Company Act of 1940, as amended, or an exemption to such regulation is available.

(b) Borrower and each of its Subsidiaries, is, to the extent required thereby, duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”). Each of Borrower and each of its Subsidiaries is, to the extent that any such Person is required to be registered as an “investment company” under the Investment Company Act, duly registered as such thereunder or properly exempt.

(c) Borrower is not required to be duly registered as a broker-dealer under applicable law. Each Subsidiary of Borrower that is required to be so registered is so duly registered and is a member of a self-regulatory organization, such as FINRA or is properly registered with any other Governmental Authority under applicable law.

(d) Each Subsidiary of Borrower registered as a broker-dealer has not exceeded the business activities enumerated in any applicable restriction or membership agreement or other limitations imposed in connection with its regulations with any Governmental Authority, including the FINRA, and such registration, membership and membership agreement does not limit its ability to enter into the Loan Documents to which it is a party.

(e) Borrower and each of its Subsidiaries and each of their respective members, partners, officers and directors, as the case may be, is duly registered, licensed or qualified as an investment adviser, broker-dealer representative, or agent in each State of the United States where the conduct of its business requires the registration, licensing, qualification or membership and is in compliance in all material respects with applicable laws requiring such registration, licensing, qualification or membership.

(f) None of Borrower or any Guarantor is subject to regulation under the Federal Power Act, the Interstate Commerce Act, or any federal, state, or local law, rule, or regulation generally limiting its ability to incur Debt.

4.11 Disclosure . No representation or warranty of Borrower or any Guarantor contained in this Agreement or any other document, certificate, or written statement furnished to Agent or any Lender by or on behalf of Borrower with respect to the business, operations, Assets, or condition (financial or otherwise) of Borrower and the Guarantors for use solely in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not materially misleading. There is no fact actually known to Borrower (other than matters of a general economic nature) that Borrower believes reasonably could be expected to have a Material Adverse Effect on Borrower or any Guarantor, that has not been disclosed herein or in such other documents, certificates, and statements furnished to Agent or any Lender for use in connection with the transactions contemplated hereby. All financial projections represent, as of the date on which any other such financial projections are delivered to Agent or any Lender, Borrower’s good faith best estimate of its and its Subsidiaries’ future performance for the periods covered thereby.

4.12 Debt . Neither Borrower nor any of its Subsidiaries has any Debt outstanding other than Debt permitted by Section 6.1 hereof.

4.13 Existing Defaults . Neither Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, contained in any Contractual Obligation applicable to it, and no condition exists which, with or without the giving of notice or the lapse of time, would constitute a default under such Contractual Obligation, except, in any such case, where the consequences, direct or indirect, of such default or defaults, if any, reasonably could not be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries. Neither Borrower nor any of its Subsidiaries is in violation of any law, ordinance, rule, or regulation to which it or any of its Assets is subject, the failure to comply with which could reasonably be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries.

4.14 No Default . No Event of Default or Unmatured Event of Default has occurred and is continuing.

4.15 Immaterial Subsidiaries .

Alternative Capital Services LLC, a Delaware limited liability company, is the only Immaterial Subsidiary.

4.16 Excluded Subsidiaries . The Disclosure Statement sets forth the Excluded Subsidiaries as of the Closing Date.

4.17 Patriot Act . To the extent applicable, Borrower is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “ Patriot Act ”). No part of the proceeds of the Loans made hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.18 OFAC . Borrower is not in violation of any of the country or list based economic and trade sanctions administered and enforced by OFAC. Borrower (a) is not a Sanctioned Person or a Sanctioned Entity, (b) does not have its assets located in Sanctioned Entities, or (c) does not derive revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. The proceeds of any Loan will not be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

ARTICLE V

AFFIRMATIVE COVENANTS OF BORROWER

Borrower covenants and agrees that, so long as any portion of the Revolving Credit Facility Commitments under this Agreement shall be in effect and until payment, in full, of the Loans, with interest accrued and unpaid thereon, any other Obligations (including Obligations in respect of Letters of Credit and Bank Product Obligations) and any other amounts due hereunder, and except as set forth in the Disclosure Statement with specific reference to the Section of this Article V affected thereby concerning matters which do not conform to the covenants of this Article V , Borrower will, and will cause each of its Subsidiaries to do each and all of the following:

5.1 Accounting Records and Inspection . (a) Maintain adequate financial and accounting books and records in accordance with sound business practices and GAAP consistently applied, (b) permit any representative of Agent upon reasonable notice to Borrower, at any time during usual business hours, to inspect, audit, and examine such books and records and to make copies and take extracts therefrom, and to discuss its affairs, financing, and accounts with Borrower’s or the applicable Subsidiary’s officers and independent public accountants; provided , that so long as no Event of Default has occurred and is continuing, Agent shall not conduct more than one such financial inspection, audit, and examination during any calendar year, and (c) furnish Agent with any information reasonably requested by Agent regarding Borrower’s or its Subsidiaries’ business or finances promptly upon request.

5.2 Financial Statements and Other Information . Furnish to Agent:

(a) Within 120 days after the end of each fiscal year of Borrower, an annual report containing a statement of assets, liabilities, and capital of JMPG and its Subsidiaries as of the end of such fiscal year, and statements of operations and cash flows of JMPG and its Subsidiaries, for the year then ended, all of which shall be accompanied by a report and an unqualified opinion, prepared in accordance with generally accepted auditing standards, of independent certified public accountants of recognized standing selected by Borrower and satisfactory to Agent (which opinion shall be without (i) a “going concern” or like qualification or exception, (ii) any qualification or exception as to the scope of such audit, or (iii) any qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 6.14 ), together with a written statement of such accountants (1) to the effect that, in making the examination necessary for their audit of such financial statements, they have not obtained any knowledge of the existence of an Event of Default under Section 6.14 and (2) if such accountants shall have obtained any knowledge of the existence of an Event of Default under Section 6.14 , describing the nature thereof;

(b) Within 45 days after the end of each of the first three quarters of each fiscal year of Borrower, a Borrower-prepared financial report containing a statement of assets, liabilities, and capital, and statements of operations and cash flows of JMPG and its Subsidiaries, in each case for the period then ended;

(c) Within 45 days after the end of each quarter of each fiscal year of Borrower, a Compliance Certificate duly executed by the chief financial officer of Borrower listing any new Subsidiaries formed or acquired by Borrower from and after the date of the prior Compliance Certificate if Borrower elects to designate such Subsidiaries as Excluded Subsidiaries, and stating that he or she has individually reviewed the provisions of this Agreement and the other Loan Documents, that (i) the financial statements delivered hereunder have been prepared in accordance with GAAP (except for the lack of footnotes and being subject to year-end audit adjustments) and fairly present in all material respects the financial condition of Borrower and its Subsidiaries, (ii) JMPG and its Subsidiaries are in compliance with the financial covenants set forth in Section 6.14 and attaching the calculations of such financial covenants as of the end of such fiscal quarter, (iii) a review of the activities of Borrower and its Subsidiaries during such year or quarterly period, as the case may be, has been made by or under such individual’s supervision, with a view to determining whether Borrower and such Subsidiaries have fulfilled all of its obligations under this Agreement, and the other Loan Documents, that no Event of Default or Unmatured Event of Default has occurred and is continuing, or if an Event of Default or Unmatured Event of Default has so occurred and is continuing, specifying all such defaults and events of which such individual may have knowledge or belief, and (iv) Borrower has negotiated all transactions described in Section 6.8 , other than transactions in de minimis amounts, in good faith and on an arm’s length basis;

(d) if not otherwise provided pursuant to clause (a) or (b), above, as applicable, then, contemporaneously with each quarterly and year-end financial report required by clauses (a) and (b) of this Section 5.2 , a certificate of the chief financial officer of Borrower separately identifying and describing all Contingent Obligations of Borrower and its Subsidiaries that could reasonably be expected to result in payments (individually or in the aggregate) of greater than $5,000,000;

(e) notice, as soon as possible and, in any event, within 5 days after Borrower has knowledge, of the occurrence of any Event of Default or any Unmatured Event of Default. In any such event, Borrower also shall supply Agent with a statement from Borrower’s chief financial officer or general counsel setting forth the details thereof and the action that Borrower proposes to take with respect thereto;

(f) as soon as practicable, any written report pertaining to material items in respect of Borrower’s and its Subsidiaries’ internal control matters submitted to Borrower or such Subsidiary by its independent accountants in connection with each annual audit of the financial condition of Borrower and its Subsidiaries;

(g) as soon as practicable, written notice of any condition or event which has resulted or reasonably could be expected to result in: (i) a Material Adverse Effect on Borrower or any of its Subsidiaries; or (ii) a material breach of, or noncompliance with, any material term, condition, or covenant of any Contractual Obligation of Borrower or any of its Subsidiaries, if such breach or noncompliance could reasonably be expected to result in a Material Adverse Effect;

(h) promptly upon becoming aware of any Person’s seeking to obtain or threatening in writing to seek to obtain a decree or order for relief with respect to Borrower or any of its Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect, a written notice thereof specifying what action Borrower is taking or proposes to take with respect thereto;

(i) promptly, copies of all material amendments to the Governing Documents of Borrower or any of its Subsidiaries;

(j) prompt notice of:

(i) all legal or arbitral proceedings, and all proceedings by or before any governmental or regulatory authority or agency, against or, to the knowledge of Borrower, threatened in writing against or affecting Borrower or any of its Subsidiaries which, if adversely determined, reasonably could be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries, or on the timely payment of the principal of or interest on the Loans, or the enforceability of this Agreement or the other Loan Documents, or the rights and remedies of the Lender Group hereunder or thereunder, as applicable; and

(ii) the issuance by any United States of America federal or state court or any United States of America federal or state regulatory authority of any injunction, order, or other restraint prohibiting, or having the effect of prohibiting or delaying, the making of the Loans, or the institution of any litigation or similar proceeding seeking any such injunction, order, or other restraint;

(k) upon request by Agent and, within 5 Business Days after the filing thereof, upon the occurrence and during the continuation of an Event of Default or Unmatured Event of Default, copies of Focus Reports for JMP Securities and each of its Subsidiaries;

(l) promptly, such other information and data with respect to Borrower or any of its Subsidiaries, as from time to time may be reasonably requested by Agent.

5.3 Existence . Preserve and keep in full force and effect, at all times, its existence.

5.4 Payment of Taxes and Claims . Pay all Taxes, assessments, and other governmental charges imposed upon it or any of its Assets or in respect of any of its businesses, incomes, or Assets before any penalty or interest accrues thereon, and all claims (including claims for labor, services, materials, and supplies) for sums which have become due and payable and which by law have or may become a Lien upon any of its Assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided , however , that, other than with respect to Taxes, assessments, charges or claims which have become secured by a tax Lien upon any of Borrower’s or any of its Subsidiaries’ Assets, no such Tax, assessment, charge, or claim need be paid if the same is being contested, in good faith, by appropriate proceedings promptly instituted and diligently conducted and if an adequate reserve or other appropriate provision, if any, shall have been made there for as required in order to be in conformity with GAAP.

5.5 Compliance with Laws . Comply in all material respects with the requirements of all applicable laws, rules, regulations (including Regulations T, U and X of the Federal Reserve Board), and orders of any governmental authority, noncompliance with which could reasonably be expected to have a Material Adverse Effect on Borrower or any of its Subsidiaries.

5.6 Further Assurances . At any time or from time to time upon the request of Agent, execute and deliver such further documents and do such other acts and things as Agent may reasonably request in order to effect fully the purposes of this Agreement or the other Loan Documents and to provide for payment of the Loans made hereunder, with interest thereon, in accordance with the terms of this Agreement.

5.7 Formation of Subsidiaries .

(a) At the time that (x) Borrower or any Guarantor forms any Subsidiary or acquires any Subsidiary after the Closing Date (in each case other than an Immaterial Subsidiary or any Excluded Subsidiary, as determined by Section 5.7(b) ), or (y) any Subsidiary of Borrower or any Guarantor that is not a Guarantor is no longer an Immaterial Subsidiary or an Excluded Subsidiary, (a) cause such new Subsidiary (or former Immaterial Subsidiary or an Excluded Subsidiary) to provide to Agent a Guaranty and a Security Agreement, a joinder to the Intercompany Subordination Agreement and the Stock Pledge Agreement, together with such other security documents, as well as appropriate UCC-1 financing statements, all in form and substance satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary (or former Immaterial Subsidiary or Excluded Subsidiary)), (b) provide to Agent a pledge agreement or a supplement to an existing Stock Pledge Agreement and appropriate certificates and powers or UCC-1 financing statements, hypothecating all of the direct or beneficial ownership interest of Borrower or a Guarantor in such new Subsidiary (or former Immaterial Subsidiary or Excluded Subsidiary), in form and substance satisfactory to Agent, (c) if such Subsidiary is a limited liability company or limited partnership formed under the laws of Delaware, include in the limited liability company agreement, limited partnership agreement, or other similar Governing Documents language substantively similar to the provisions of Sections 7(e) and 7(f) of the Stock Pledge Agreement, and (d) provide to Agent all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 5.7 shall be a Loan Document. The foregoing to the contrary notwithstanding, such new Subsidiary shall not be required to execute and deliver a Guaranty or a Security Agreement or a joinder to the Stock Pledge Agreement, and neither Borrower nor any Guarantor, as applicable, shall be required to pledge more than 66% of the voting stock of such Subsidiary to the extent that (x) such Subsidiary is a Foreign Subsidiary, and (y) Borrower would incur material adverse tax consequences therefrom; provided , however , that if such Subsidiary is a Foreign Subsidiary, Borrower or such Guarantor, as applicable, must deliver such documents as required by this Section 5.7 within sixty (60) days of the date such entity was deemed to be a Subsidiary.

(b) Within 30 days after the date when Borrower delivers a Compliance Certificate to Agent in accordance with Section 5.2(c) that lists one or more Subsidiaries that Borrower elects to be designated as an Excluded Subsidiary (“ Response Period ”), Agent shall have the right to (i) deliver a notice to Borrower indicating that Agent accepts Borrower’s proposal to designate such Subsidiary as an Excluded Subsidiary or (ii) deliver a notice to Borrower indicating that Agent objects to Borrower’s proposal to designate such Subsidiary as an Excluded Subsidiary. If Agent accepts such proposal within the Response Period or fails to respond to Borrower’s proposal within the Response Period, such Subsidiary shall be deemed to constitute an Excluded Subsidiary from and after the date of formation until such time such Subsidiary is no longer an Excluded Subsidiary. If Agent objects to Borrower’s proposal within the Response Period, such Subsidiary shall be deemed an Exclusive Subsidiary from and after the date of formation until thirty (30) days after the date when Borrower receives a written notice indicating that Agent objects to Borrower’s proposal and, thereafter, such Subsidiary shall no longer be an Excluded Subsidiary and Borrower and such Subsidiary shall comply with Section 5.7(a) above.

ARTICLE VI

NEGATIVE COVENANTS OF BORROWER

Borrower covenants and agrees that, so long as any portion of the Revolving Credit Facility Commitments under this Agreement shall be in effect and until payment, in full, of the Loans, with interest accrued and unpaid thereon, any other Obligations (including Obligations in respect of Letters of Credit and Bank Product Obligations) and any other amounts due hereunder, and any other amounts due hereunder, and except as set forth in the Disclosure Statement with specific reference to the Section of this Article VI affected thereby concerning matters which do not conform to the covenants of this Article VI , Borrower will not, and will not permit any of its Subsidiaries to do any of the following:

6.1 Debt . Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Debt, except:

(a) the Obligations and any other Debt evidenced by this Agreement and the other Loan Documents;

(b) Capitalized Lease Obligations incurred in the ordinary course of business, in an aggregate outstanding amount not in excess of $250,000 at any one time;

(c) Contingent Obligations resulting from the endorsement of instruments for collection in the ordinary course of business;

(d) Permitted Acquired Indebtedness;

(e) Debt in respect of Earnout Arrangements and Seller Notes incurred in connection with a Permitted Acquisition;

(f) Debt consisting of loans or advances from time to time made by Borrower to JMP Securities in an aggregate outstanding amount at any one time not to exceed $15,000,000;

(g) Debt incurred by JMP Securities and owed to Agent consisting of loans or advances from time to time made in connection with underwriting advances or lines of credit that are subject to the applicable FINRA form, that are advanced to JMP Securities to permit it to meet its net capital requirements under applicable FINRA rules or under SEC Rule 15c3-1, so long as (y) no Event of Default or Unmatured Event of Default has occurred and is continuing at the time that such Debt is proposed to be incurred or would result therefrom and (z) no more than $15,000,000 of such loans is funded from the direct or indirect proceeds of a Borrowing under this Agreement;

(h) Debt of the CLO Entity;

(i) Advances by Borrower or any of its Subsidiaries to Borrower, any Subsidiary, any Affiliate or an Excluded Fund for the purpose of funding overhead and other operating expenses, so long as (x) the aggregate amount of such advances made by a Loan Party during any fiscal year of Borrower does not exceed $1,000,000 and (y) no Event of Default or Unmatured Event of Default has occurred and is continuing at the time that such Debt is proposed to be incurred or would result therefrom;

(j) Intercompany Debt advanced by an Obligor to a domestic Obligor, so long as such domestic Obligor is party to the Intercompany Subordination Agreement;

(k) Guarantees by Borrower of any Debt of a Guarantor otherwise permitted hereunder and guarantees by any Guarantor of any Debt of Borrower or another Guarantor otherwise permitted hereby (in each case, other than Permitted Acquired Indebtedness);

(l) Reimbursement obligations in respect of letters of credit issued after the Final Revolving Commitment Termination Date, to the extent that CNB elects not to issue such letters of credit under this Agreement (it being understood that if CNB does not notify Borrower that it has elected to issue such letters of credit under this Agreement within four (4) Business Days after the date when CNB receives a written request therefor from Borrower, CNB shall be deemed to have elected not to issue the requested letter of credit);

(m) any Refinancing Debt in respect of any Debt identified on the Disclosure Statement with respect to this Section 6.1 , or Debt described above in clauses (b) , (d) or (l ); and

(n) Debt incurred by JMPCC and payable to JMPG in an aggregate principal amount of $10,000,000.

6.2 Liens .

(a) Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its Assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except Permitted Liens, or

(b) enter into, assume, or permit to exist any agreement to refrain from granting Liens to or for the benefit of Agent, other than such agreements by JMP Securities;

6.3 Investments . Make or own, directly or indirectly, any Investment in any Person, except Permitted Investments; provided , however , that the Obligors shall not have Permitted Investments in Deposit Accounts or Securities Accounts (other than such Deposit Accounts or Securities Accounts maintained with Agent) in an aggregate amount in excess of $250,000 at any one time unless the applicable Obligor and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments.

6.4 [Intentionally Omitted] .

6.5 Dividends . If an Event of Default or Unmatured Event of Default has occurred and is continuing or would result from any of the following, make or declare, directly or indirectly, any dividend (in cash, return of capital, or any other form of Assets) on, or make any other payment or distribution on account of, or set aside Assets for a sinking or other similar fund for the purchase, redemption, or retirement of, or redeem, purchase, retire, or otherwise acquire any interest of any class in Borrower, whether now or hereafter outstanding, or grant or issue any warrant, right, or option pertaining thereto, or other security convertible into any of the foregoing, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or Assets or in obligations (collectively, a “ Distribution ”); provided that , at all times, (a) any direct or indirect Subsidiary may make such a Distribution to any Guarantor or to Borrower; (b) any Subsidiary of Borrower that is or intends to be a Real Estate Investment Trust, a Business Development Company or any other entity whose tax treatment is dependent on distributions of income can make such Distributions that are necessary to enable such Subsidiary to maintain such tax treatment; and (c) in no event will Borrower be permitted to redeem, repurchase or otherwise acquire its outstanding Securities (i) if an Event of Default or Unmatured Event of Default has occurred and is continuing or would result therefrom, or (ii) to the extent that the aggregate amount paid by Borrower in connection with all such redemptions, repurchases or other acquisitions of its Securities (after giving effect to the proposed redemption, repurchase or other acquisition) would exceed $5,000,000.

6.6 Restriction on Fundamental Changes . Change its name, change the nature of its business from that conducted by the Loan Parties on the date of this Agreement (and other ancillary businesses reasonably related thereto), enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its partnership interests (whether limited or general) or membership interests, as applicable, or convey, sell, assign, lease, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business or Assets, whether now owned or hereafter acquired except:

(a) Borrower or any of its Subsidiaries may sell Assets in accordance with the provisions of Section 6.7 hereof;

(b) [Intentionally omitted.]

(c) Borrower or any of its Subsidiaries may offer or sell its membership interests to its employees so long as the aggregate voting power of the membership interests purchased by such employees does not exceed 49% of the aggregate voting power of the membership interests of each of Borrower or any of its Subsidiaries, as applicable;

(d) upon 10 days prior written notice to Agent, Borrower or any its Subsidiaries may change its name;

(e) Any Subsidiary of Borrower may merge into another Subsidiary, any Subsidiary may merge with a Guarantor, as long as the Guarantor is the surviving entity and Borrower and JMP Holdings, Inc. may merge, so long as (x) a Change of Control Event does not result therefrom and (y) the survivor thereof assumes Borrower’s obligations under the Loan Documents and agrees to be bound hereby and thereby; and

(f) Any Guarantor or JMP Securities may enter into a recapitalization with respect to its membership interests or Securities, so long as Borrower remains the managing member of such Subsidiary and holds a majority of the voting interest in such Subsidiary.

6.7 Sale of Assets . Sell, assign, transfer, convey, or otherwise dispose of all or any part of its Assets, whether now owned or hereafter acquired, except for:

(a) the sale or other disposition of any of the businesses or Assets of Borrower or any of its Subsidiaries in the ordinary course of business, for not less than the fair value thereof, to the extent that the fair market value of the foregoing does not exceed $5,000,000 in the aggregate in any fiscal year (other than sales and dispositions of Investments by JMP Securities in publicly traded securities in the ordinary course of business);

(b) involuntary sales or other dispositions of any of the businesses or Assets of Borrower or any of its Subsidiaries;

(d) dispositions by any Subsidiary to another Subsidiary, Borrower or a Guarantor, dispositions by Borrower to a Guarantor organized under the laws of a state within the United States and dispositions by a Guarantor to Borrower.

6.8 Transactions with Shareholders and Affiliates . Enter into or permit to exist, directly or indirectly, any transaction (including the purchase, sale, lease, or exchange of any Asset or the rendering of any service) with any holder of 5% or more of any class of equity interests of Borrower or any of its Subsidiaries or Affiliates, or with any Affiliate of Borrower or of any such holder, on terms that are less favorable to Borrower than those terms that might be obtained at the time from Persons who are not such a holder, Subsidiary, or Affiliate, or if such transaction is not one in which terms could be obtained from such other Person on terms that are not negotiated in good faith on an arm’s length basis.

6.9 Conduct of Business . Engage in any business other than the businesses in which it is permitted to conduct under its Governing Documents, or any businesses or activities substantially similar or related thereto.

6.10 Amendments or Waivers of Certain Documents; Actions Requiring the Consent of Agent . Without the prior written consent of Agent which consent shall not unreasonably be withheld, agree to any amendment to or waiver of the terms or provisions of its Governing Documents except for: (i) immaterial amendments or waivers permitted by such Governing Documents not requiring the consent of the holders of the Securities in Borrower or the applicable Subsidiary, as applicable; (ii) amendments or waivers which would not, either individually or collectively, be materially adverse to the interests of the Lender Group, Borrower or the applicable Subsidiary; or (iii) amendments required to permit the consummation of a transaction permitted by Section 6.6 .

6.11 Use of Proceeds . Use the proceeds of (i) up to $5,000,000 of any Revolving Loans made hereunder for any purpose other than, consistent with the terms and conditions hereof, to fund Permitted Investments, to fund Permitted Acquisitions and to fund Borrower’s working capital needs in the ordinary course of its business, and (ii) all other Revolving Loans made hereunder for any purpose other than by Borrower to make Investments in Harvest and by Harvest to make Investments in loans that are made to Persons that are not Affiliates of Borrower.

6.12 Misrepresentations . Furnish Agent any certificate or other document required hereunder that: (a) contains any untrue statement of material fact; or (b) omits to state a fact necessary to make it not materially misleading in light of the circumstances under which it was furnished.

6.13 Margin Regulation . Use any portion of the proceeds of any of the Loans in any manner which might cause the Borrowing, the application of such proceeds, or the transactions contemplated by this Agreement to violate Regulations T, U or X of the Federal Reserve Board, or any other regulation of such board, or to violate the Exchange Act, or to violate the Investment Company Act of 1940.

6.14 Financial Covenants .

(a) Fixed Charge Coverage Ratio . Fail to maintain for of JMPG and its Subsidiaries a Fixed Charge Coverage Ratio, measured as of the last day of each fiscal quarter of JMPG during such period, for each twelve month period ending on any such date, of at least 1.25:1.00.

(b) [Intentionally Omitted] .

(c) Minimum Net Worth . Fail to maintain Net Worth for JMPG and its Subsidiaries, as of the last day of each fiscal quarter of JMPG, of at least $80,000,000.

(d) Minimum Interest Coverage Ratio . Fail to maintain an Interest Coverage Ratio for JMPG and its Subsidiaries, measured as of the last day of each fiscal quarter of JMPG during such period, for each twelve month period ending on any such date, of at least 2.00:1.00.

(e) Minimum Liquidity . Fail to maintain Liquidity for Loan Parties and their Subsidiaries at all times of at least an amount equal to the sum of (i) the principal amount of all outstanding Loans, plus (ii) the Letter of Credit Usage, plus (iii) $20,000,000.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

7.1 Events of Default . The occurrence of any one or more of the following events, acts, or occurrences shall constitute an event of default (“Event of Default”) hereunder:

(a) Failure to Make Payments When Due . Borrower shall fail to pay any amount owing hereunder with respect to the principal of any of the Loans or Obligations in respect of Letters of Credit when such amount is due or Borrower shall fail to pay any amount owing hereunder with respect to, interest on any of the Loans, or with respect to any other Obligations or other amounts (including fees, costs, or expenses) payable in connection herewith or the other Loan Documents, within three (3) Business Days of the date when such amount is due, whether at stated maturity, by acceleration, or otherwise;

(b) Breach of Certain Covenants .

(i) Borrower shall fail to perform or comply fully with any covenant, term, or condition contained in Sections 5.1(b) or 5.8 or Article VI; or

(ii) Borrower shall fail to perform or comply fully with any covenant, term, or condition contained in Sections 5.1(a) , 5.2(a) , (b) , (c) , (d) , (e) , (f) , or 5.4 (except with respect to unpaid Taxes in an aggregate amount less than $25,000), of this Agreement and such failure shall not have been remedied or waived within 10 days after the occurrence thereof;

(iii) Borrower shall fail to perform or comply fully with any covenant, term, or condition contained in Sections 5.1(c), 5.6 or 5.7 of this Agreement and such failure shall not have been remedied or waived within 20 days after the occurrence thereof (except with respect to any Foreign Subsidiary in connection with Section 5.7 , in which case such cure period shall be 30 days);

(iv) Borrower shall fail to perform or comply fully with any covenant, term, or condition contained in Section 5.4 (with respect to unpaid Taxes in an aggregate amount less than $25,000) of this Agreement and such failure shall not have been remedied or waived within 30 days after the occurrence thereof

(v) Borrower or any Guarantor shall fail to perform or comply fully with any other covenant, term, or condition contained in this Agreement or other Loan Documents (other than any Bank Product Agreement with respect to Credit Card Services), to which it is a party and such failure shall not have been remedied or waived within 45 days after the occurrence thereof; provided , however , that this clause (iv) shall not apply to: (1) the covenants, terms, or conditions referred to in any other subsections of this Section 7.1 ; or (2) the covenants, terms, or conditions referred to in clauses (i), (ii), (iii) or (iv) above of this subsection (b) ;

(c) Breach of Representation or Warranty . Any financial statement, representation, warranty, or certification made or furnished by Borrower under this Agreement or in any statement, document, letter, or other writing or instrument furnished or delivered by or on behalf of Borrower or any Guarantor to Agent or any Lender pursuant to or in connection with this Agreement or any other Loan Document to which it is a party, or as an inducement to the Lender Group to enter into this Agreement or any other Loan Document shall have been false, incorrect, or incomplete when made, effective, or reaffirmed, as the case may be in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof);

(d) Involuntary Bankruptcy .

(i) If an Insolvency Proceeding is commenced against Borrower or any of its Subsidiaries under any other applicable law and any of the following events occur: (1) such Person consents to the institution of such Insolvency Proceeding against it; (2) the petition commencing the Insolvency Proceeding is not timely controverted; (3) the petition commencing the Insolvency Proceeding is not dismissed within 45 days of the date of the filing thereof; provided , however , that, during the pendency of such period, the Lender Group shall be relieved of its obligation to make additional Loans; (4) an interim trustee is appointed to take possession of all or a substantial portion of the Assets of Borrower or any of its Subsidiaries; or (5) an order for relief shall have been issued or entered therein;

(ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, custodian, trustee, or other officer having similar powers over Borrower or any of its Subsidiaries to take possession of all or a substantial portion of its Assets shall have been entered and, within 45 days from the date of entry, is not vacated, discharged, or bonded against, provided , however , that, during the pendency of such period, the Lender Group shall be relieved of its obligation to make additional Loans;

(e) Voluntary Bankruptcy . Borrower or any of its Subsidiaries shall institute an Insolvency Proceeding; Borrower or any of its Subsidiaries shall file a petition, answer, or complaint or shall otherwise institute any similar proceeding under any other applicable law, or shall consent thereto; Borrower or any of its Subsidiaries shall consent to the conversion of an involuntary case to a voluntary case; or Borrower or any of its Subsidiaries shall consent or acquiesce to the appointment of a receiver, liquidator, sequestrator, custodian, trustee, or other officer with similar powers to take possession of all or a substantial portion of its Assets; Borrower or any of its Subsidiaries shall generally fail to pay debts as such debts become due or shall admit in writing its inability to pay its debts generally; or Borrower or any of its Subsidiaries shall make a general assignment for the benefit of creditors;

(f) Dissolution . Any order, judgment, or decree shall be entered decreeing the dissolution of Borrower, any Guarantor or JMP Securities, and such order shall remain undischarged or unstayed for a period in excess of 45 days;

(g) Change of Control . A Change of Control Event shall occur;

(h) Judgments and Attachments . Borrower or any of its Subsidiaries shall suffer any money judgment, writ, or warrant of attachment, or similar process involving payment of money in an amount in excess of $250,000 (except to the extent payment in full above any applicable deductible is fully covered by insurance (so long as no reservation of rights has been made by the insurer in connection with such coverage)), and shall not discharge, vacate, bond, or stay the same within a period of 45 days;

(i) Cross-Default . There is a default in any agreement to which Borrower or any of its Subsidiaries is a party and such default (a) involves amounts in excess of $250,000 and (b) either (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by the other party thereto, irrespective of whether exercised, to accelerate the maturity of such Borrower’s or such Subsidiaries’ obligations thereunder or to terminate such agreement, unless such right is waived in writing by such other party;

(j) If the obligation of any Guarantor under the Guaranty is limited or terminated by operation of law or by any Guarantor thereunder;

(k) [Intentionally Omitted.]

(l) [Intentionally Omitted.]

(m) If Borrower or any of its Subsidiaries makes any payment on account of Debt that has been contractually subordinated in right of payment to the payment of the Obligations and any other Debt evidenced by this Agreement or any other Loan Document, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Debt;

(n) If this Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Assets covered hereby or thereby;

(o) Any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower or any Guarantor, or a proceeding shall be commenced by Borrower or any Guarantor, or by any Governmental Authority having jurisdiction over Borrower or any Guarantor, seeking to establish the invalidity or unenforceability thereof, or Borrower or any Guarantor shall deny that Borrower or any Guarantor has any liability or obligation purported to be created under any Loan Document; or

(p) If any loan under the Broker/Dealer Credit Facility remains outstanding for more than 30 days.

7.2 Remedies . Upon the occurrence of an Event of Default:

(a) If such Event of Default arises under subsections (d) or (e) of Section 7.1 hereof, then the Revolving Credit Facility Commitment hereunder immediately shall automatically terminate and the unpaid principal amount of and any accrued and unpaid interest on the Loans and any other amounts owing hereunder or under the other Loan Documents automatically shall become immediately due and payable, without presentment, demand, protest, notice, or other requirements of any kind, all of which are hereby expressly waived by Borrower; and

(b) In the case of any other Event of Default, Agent may, and, at the request of the Required Lenders, shall, by written notice to Borrower, declare the Revolving Credit Facility Commitment hereunder terminated and the unpaid principal amount of and any accrued and unpaid interest on the Loans and any other amounts owing hereunder or under the Loan Documents to be, and the same immediately shall become due and payable, without presentment, demand, protest, further notice, or other requirements of any kind, all of which are hereby expressly waived by Borrower.

Upon acceleration, Agent (without notice to or demand upon Borrower, which are expressly waived by Borrower to the fullest extent permitted by law), shall be entitled to, and upon request of the Required Lenders shall, proceed to protect, exercise, and enforce the Lender Group’s rights and remedies hereunder or under the other Loan Documents, or any other rights and remedies as are provided by law or equity. Agent may determine, in its sole discretion, the order and manner in which Lender’s rights and remedies are to be exercised. All payments received by Agent shall be applied in accordance with Section 2.3(a)(ii) .

ARTICLE VIII

EXPENSES AND INDEMNITIES

8.1 Expenses . Irrespective of whether the transactions contemplated hereby are consummated, Borrower agrees to pay on demand by Agent all of the Lender Group Expenses.

8.2 Indemnity . In addition to the payment of expenses pursuant to Section 8.1 hereof, and irrespective of whether the transactions contemplated hereby are consummated, Borrower agrees to indemnify, exonerate, defend, pay, and hold harmless the Agent-Related Persons, and the Lender-Related Persons (collectively the “Indemnitees” and individually as “Indemnitee”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, causes of action, judgments, suits, claims, costs, expenses, and disbursements of any kind or nature whatsoever (including, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigation, administrative, or judicial proceeding, whether such Indemnitee shall be designated a party thereto), that may be imposed on, incurred by, or asserted against such Indemnitee, in any manner relating to or arising out of this Agreement or any other Loan Document, the use or intended use of the proceeds of the Loans or the consummation of the transactions contemplated by this Agreement, including any matter relating to or arising out of the filing or recordation of any of the Loan Documents which filing or recordation is done based upon information supplied by Borrower to Agent and its counsel ( provided , that the indemnification described herein shall not extend to disputes solely between or among the Lenders that do not involve any acts or omissions of Borrower, it being understood and agreed that the indemnification described herein shall extend to Agent (but not the Lenders) relative to disputes between or among Agent on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand) (the “ Indemnified Liabilities ”); provided , however , that Borrower shall have no obligation hereunder with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of any such Indemnitee or a material breach by such Indemnitee of the express provisions of this Agreement. Each Indemnitee will promptly notify Borrower of each event of which it has knowledge which may give rise to a claim under the indemnification provisions of this Section 8.2 . If any investigative, judicial, or administrative proceeding arising from any of the foregoing is brought against any Indemnitee indemnified or intended to be indemnified pursuant to this Section 8.2 , Borrower, will resist and defend such action, suit, or proceeding or cause the same to be resisted and defended by counsel designated by Borrower (which counsel shall be reasonably satisfactory to the Indemnitee or intended Indemnitee). Each Indemnitee will use its reasonable efforts to cooperate in the defense of any such action, writ, or proceeding. To the extent that the undertaking to indemnify, pay, and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, Borrower shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. The obligations of Borrower under this Section 8.2 shall survive the termination of this Agreement and the discharge of Borrower’s other obligations hereunder.

ARTICLE IX

ASSIGNMENT AND PARTICIPATIONS

9.1 Assignments and Participations .

(a) Any Lender may assign and delegate to one or more assignees (each an “ Assignee ”; provided , that none of Borrower, any Guarantor, or any of their respective Affiliates shall be permitted to become an Assignee) approved by Agent and Borrower ((x) such approvals not to be unreasonably withheld, delayed, or conditioned and not to be required in connection with assignments to other Lenders or their Affiliates, and (y) such approval of Borrower not to be required after the occurrence and during the continuance of an Event of Default) all, or any ratable part of all, of the Obligations, the Revolving Credit Facility Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000 (or the remaining amount of any Lender’s Revolving Credit Facility Commitment, if less); provided , that Borrower and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Borrower and Agent an Assignment and Acceptance, fully executed and delivered by each party thereto, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender.

(b) From and after the date that Agent notifies the assigning Lender (with a copy to Borrower) that it has received an executed Assignment and Acceptance satisfying clause (a) above and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 8.2 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrower and the Assignee; provided, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 10 and Section 11.1 of this Agreement.

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon Agent's receipt of the required processing fee payment and the fully executed Assignment and Acceptance satisfying clause (a) above, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Revolving Credit Facility Commitments arising therefrom. The Revolving Credit Facility Commitment allocated to each Assignee shall reduce such Revolving Credit Facility Commitments of the assigning Lender pro tanto .

(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “ Participant ”) approved by Borrower (such approval of Borrower (x) not to be unreasonably withheld, delayed, or conditioned and not to be required in connection with participations to another Lender or its Affiliates, and (y) not to be required after the occurrence and during the continuance of an Event of Default) participating interests in its Obligations, the Revolving Credit Facility Commitment, and the other rights and interests of that Lender (the “ Originating Lender ”) hereunder and under the other Loan Documents; provided , that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Revolving Credit Facility Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, (v) no Lender shall transfer or grant any participating interest to a Direct Competitor without the consent of Borrower (which consent of Borrower shall not be required if an Event of Default has occurred and is continuing), and (vi) all amounts payable by Borrower hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrower, the collections of Borrower or its Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

(f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 11.11 , disclose all documents and information which it now or hereafter may have relating to Borrower and its Subsidiaries and their respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 C.F.R. § 203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

9.2 Successors . This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided , that Borrower may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio . No consent to assignment by the Lenders shall release Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 9.1 hereof and, except as expressly required pursuant to Section 9.1 hereof, no consent or approval by Borrower is required in connection with any such assignment.

ARTICLE X

AGENT: THE LENDER GROUP

10.1 Appointment and Authorization of Agent . Each Lender hereby designates and appoints CNB as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Article X . The provisions of this Article X (other than the proviso to Section 10.11(a) ) are solely for the benefit of Agent, and the Lenders, and Borrower and its Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that CNB, in its capacity as Agent, is merely the agent of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the collections of Borrower and its Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Loans, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the collections of Borrower and its Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the collections of Borrower and its Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrower, the Obligations, the Collateral, the collections of Borrower and its Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

10.2 Delegation of Duties . Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

10.3 Liability of Agent . None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Books or properties of Borrower or the books or records or properties of any of Borrower’s Subsidiaries or Affiliates.

10.4 Reliance by Agent . Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

10.5 Notice of Unmatured Event of Default or Event of Default . Agent shall not be deemed to have knowledge or notice of the occurrence of any Unmatured Event of Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Unmatured Event of Default or Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Unmatured Event of Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Unmatured Event of Default or Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Unmatured Event of Default or Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Unmatured Event of Default or Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 10.4 , Agent shall take such action with respect to such Event of Default as may be requested by the Required Lenders in accordance with Section 7.2 ; provided , that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Unmatured Event of Default or Event of Default as it shall deem advisable.

10.6 Credit Decision . Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.

10.7 Costs and Expenses; Indemnification . Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the collections of Borrower and its Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the collections of Borrower and its Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make a Loan or other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

10.8 Agent in Individual Capacity . CNB and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though CNB were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, CNB or its Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include CNB in its individual capacity.

10.9 Successor Agent . Agent may resign as Agent upon 45 days notice to the Lenders and Borrower. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders and Borrower, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

10.10 Lender in Individual Capacity . Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and any of its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

10.11 Withholding Taxes .

(a) All payments made by Borrower hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future Taxes, and in the event any deduction or withholding of Taxes is required, Borrower shall comply with the penultimate sentence of this Section 10.11(a) . If any Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 10.11(a) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided , that Borrower shall not be required to increase any such amounts if the increase in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction). Borrower will furnish to Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable law certified copies of tax receipts evidencing such payment by Borrower.

(b) If a Lender claims an exemption from United States withholding tax, Lender agrees with and in favor of Agent and Borrower, to deliver to Agent:

(i) if such Lender claims an exemption from United States withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the IRC) or (III) a controlled foreign corporation related to Borrower within the meaning of Section 864(d)(4) of the IRC and (B) a properly completed and executed IRS Form W-8BEN, before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower;

(ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed and executed IRS Form W-8BEN before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower;

(iii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower; or

(iv) such other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower.

Lender agrees promptly to notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(c) If a Lender claims an exemption from withholding tax in a jurisdiction other than the United States, Lender agrees with and in favor of Agent and Borrower, to deliver to Agent any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement and at any other time reasonably requested by Agent or Borrower.

Lender agrees promptly to notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(d) If any Lender claims exemption from, or reduction of, withholding tax and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Lender, such Lender agrees to notify Agent and Borrower of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrower to such Lender. To the extent of such percentage amount, Agent and Borrower will treat such Lender’s documentation provided pursuant to Sections 10.11(b) or 10.11(c) as no longer valid. With respect to such percentage amount, Lender may provide new documentation, pursuant to Sections 10.11(b) or 10.11(c) , if applicable.

(e) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (b) or (c) of this Section 10.11 are not delivered to Agent, then Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(f) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender due to a failure on the part of the Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section 10.11 , together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.

(g) The provisions of this Section 10.11 to the contrary notwithstanding, Borrower shall not be required to indemnify any Lender, or pay any additional amounts to any Lender, in respect of United States Federal withholding tax pursuant to this Section 10.11 to the extent that (i) the obligation to withhold amounts with respect to United States Federal withholding tax existed on the date such Lender became a party to this Agreement (or, in the case of a Participant, on the date such Participant became a holder of a participation interest with respect to the Obligations or the Revolving Credit Facility Commitment) or (ii) the obligation to pay such additional amounts would not have arisen but for a failure by such Lender to comply with the provisions of clause (b) above.

10.12 Collateral Matters .

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Revolving Credit Facility Commitments and payment and satisfaction in full by Borrower of all Obligations, (ii) constituting property being sold or disposed of if a release is required or requested in connection therewith and if Borrower certifies to Agent that the sale or disposition is permitted under this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which neither Borrower nor any Subsidiary of Borrower owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not contractually subordinate any of Agent’s Liens, without the prior written authorization of (A) if, with respect to the Collateral, the release or contractual subordination is with respect to all or substantially all of the Collateral, all of the Lenders, or (B) otherwise, the Required Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 10.12 ; provided , that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrower or is cared for, protected, or insured or has been encumbered, or that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

10.13 Restrictions on Actions by Lenders; Sharing of Payments .

(a) Each of the Lenders agrees that it shall not, until an Event of Default has occurred and is continuing, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower or any deposit accounts of Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent (which request shall not be made by Agent unless an Event of Default has occurred and is continuing), take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided , that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

10.14 Agency for Perfection . Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9 , as applicable, of the California Uniform Commercial Code, as in effect from time to time, can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

10.15 Payments by Agent to the Lenders . All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

10.16 Concerning the Collateral and Related Loan Documents . Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

10.17 Field Examinations and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information . By becoming a party to this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field examination or examination report (each a “ Report ” and collectively, “ Reports ”) prepared by Agent, and Agent shall so furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any examination will inspect only specific information regarding Borrower and will rely significantly upon the Books, as well as on representations of Borrower’s personnel,

(d) agrees to keep all Reports and other material, non-public information regarding Borrower and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 11.11 , and

(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrower to Agent that has not been contemporaneously provided by Borrower to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrower, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

10.18 Several Obligations; No Liability . Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Revolving Credit Facility Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Revolving Credit Facility Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 10.7 , no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Revolving Credit Facility Commitments, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

10.19 Legal Representation of Agent . In connection with the negotiation, drafting, and execution of this Agreement and the other Loan Documents, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or enforcement of remedies, Paul Hastings only has represented and only shall represent CNB in its capacity as Agent and as a Lender. Each other Lender hereby acknowledges that Paul Hastings does not represent it in connection with any such matters.

10.20 Prohibited Event . In the event a Lender notifies Agent that, subsequent to the Closing Date, such Lender or any of its Affiliates: (i) has become a fiduciary with respect to any ERISA Partner in connection with its investment in Borrower or this transaction, or (ii) has acquired any discretionary authority or control with respect to any ERISA Partner’s investment in Borrower, or renders any investment advice (within the meaning of 29 C.F.R. § 2510.3-21(c) or any successor regulation of the United States Department of Labor under ERISA) with respect to such investment, the parties hereby agree that the event described in clause (i) or (ii) above (the “ Prohibited Event ”) shall be deemed to have caused a prohibited transaction under Section 406(a) of ERISA or Section 4975(c)(1)(A), (B), (C) or (D) of the IRC, with respect to the transactions described in this Agreement, and the parties to this Agreement shall cooperate with each other to correct such deemed prohibited transaction in accordance with Section 4975(f)(5) of the IRC or otherwise. Notwithstanding anything in this Agreement to the contrary, any such correction shall prevent such Lender from receiving any direct or indirect fees, loan repayments, or any other benefits from such ERISA Partner. If Agent determines at any time in its reasonable discretion that any of the corrections described herein are insufficient to correct any deemed prohibited transaction in accordance with Section 4975(f)(5) of the IRC or otherwise, then the parties shall also cooperate to replace such affected Lender.

ARTICLE XI

MISCELLANEOUS

11.1 No Waivers, Remedies . No failure or delay on the part of Agent or any Lender, or the holder of any interest in this Agreement in exercising any right, power, privilege, or remedy under this Agreement or any of the other Loan Documents shall impair or operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, privilege, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, privilege, or remedy. The waiver of any such right, power, privilege, or remedy with respect to particular facts and circumstances shall not be deemed to be a waiver with respect to other facts and circumstances. The remedies provided for under this Agreement or the other Loan Documents are cumulative and are not exclusive of any remedies that may be available to Agent or any Lender, or the holder of any interest in this Agreement at law, in equity, or otherwise.

11.2 Waivers and Amendments .

(a) No amendment, modification, restatement, supplement, termination, or waiver of or to, or consent to any departure from, any provision of this Agreement or the other Loan Documents (other than the Fee Letter), shall be effective unless the same shall be in writing and signed by or on behalf of the Required Lenders (or by Agent at the written request of the Required Lenders) and Borrower and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided , that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders affected thereby and Borrower, do any of the following:

(i) increase or extend any Commitment of any Lender; provided , that no amendment, modification or waiver of any condition precedent, covenant, Event of Default or Unmatured Event of Default shall constitute an increase in any Commitment of any Lender,

(ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except in connection with the waiver of applicability of Section 2.5 (which waiver shall be effective with the written consent of Required Lenders),

(iv) change the Pro Rata Share that is required to take any action hereunder,

(v) amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(vi) other than as permitted by Section 10.12 , release the Agent’s Lien in and to any of the Collateral,

(vii) amend Section 9.1(a) to permit Borrower, any Guarantor, or any of their respective Affiliates to be permitted to become an Assignee,

(viii) change the definition of “Required Lenders” or “Pro Rata Share”, or

(ix) other than as permitted by Section 10.12 , release Borrower from any obligation for the payment of money.

(b) No amendment, waiver, modification, or consent shall amend, modify, or waive (i) the definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of Agent and Borrower (and shall not require the written consent of any of the Lenders), and (ii) any provision of Section 10 pertaining to Agent, or any other rights or duties of Agent under this Agreement or the other Loan Documents, without the written consent of Agent, Borrower, and the Required Lenders.

(c) No amendment, waiver or consent shall, unless in writing and signed by Agent, affect the rights or duties of Agent under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower.

(d) [Intentionally Omitted].

(e) If (i) any action to be taken by the Lender Group or Agent hereunder requires the consent, authorization, or agreement of all Lenders or all Lenders affected thereby and if such action has received the consent, authorization, or agreement of the Required Lenders but not of one or more other Lenders, (ii) any Lender becomes a Defaulting Lender, (iii) any Lender is unable to make, maintain or fund LIBOR Rate Loans, or (iv) Borrower is required to make additional payments to a Lender or Governmental Authority under Section 10.11 (any such Lender replaced pursuant to this subsection (e) shall be referred to as a “ Replaced Lender ”); then Agent, upon at least five Business Days prior irrevocable notice to the Replaced Lender, may permanently replace the Replaced Lender with one or more substitute Lenders (each, a “ Replacement Lender ”), and the Replaced Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Replaced Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. Prior to the effective date of such replacement, the Replaced Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Replaced Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever. If the Replaced Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, the Replaced Lender shall be deemed to have executed and delivered such Assignment and Acceptance. The replacement of any Replaced Lender shall be made in accordance with the terms of Section 9.1 . Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitment, and the other rights and obligations of the Replaced Lender hereunder and under the other Loan Documents, the Replaced Lender shall remain obligated to make the Replaced Lender’s Pro Rata Share of Loans.

11.3 Notices . All notices, demands, instructions, requests, and other communications required or permitted to be given to, or made upon, any party hereto shall be in writing and (except for financial statements and other related informational documents to be furnished pursuant hereto which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Borrower or Lender, as applicable, may designate to each other in accordance herewith), or telefacsimile and shall be deemed to be given for purposes of this Agreement on the day that such writing is received by the Person to whom it is to be sent pursuant to the provisions of this Agreement. Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.3 , notices, demands, requests, instructions, and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective email addresses or telefacsimile numbers) indicated on Exhibit 11.3 attached hereto.

11.4 Successors and Assigns . This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns; provided , however , that (i) Borrower may not assign or transfer any interest or rights hereunder without the prior written consent of Agent and the Lenders and any such prohibited assignment or transfer shall be absolutely void, and (ii) Agent may assign and delegate all or any portion of its rights and duties under this Agreement and the other Loan Documents to one or more assignees with the prior written consent (such consent not be unreasonably withheld or delayed) of Borrower; provided , that no consent of Borrower shall be required (1) if an Event of Default has occurred and is continuing.

11.5 Headings . Article and section headings used in this Agreement and the table of contents preceding this Agreement are for convenience of reference only and shall neither constitute a part of this Agreement for any other purpose nor affect the construction of this Agreement.

11.6 Execution in Counterparts; Effectiveness . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall deliver an original executed counterpart of this Agreement, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis .

11.7 GOVERNING LAW . EXCEPT AS SPECIFICALLY SET FORTH IN ANY OTHER LOAN DOCUMENT: (A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

11.8 JURISDICTION AND VENUE . TO THE EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO AGREE THAT ALL ACTIONS, SUITS, OR PROCEEDINGS ARISING BETWEEN ANY MEMBER OF THE LENDER GROUP, OR BORROWER IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT FACILITY NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. BORROWER AND EACH MEMBER OF THE LENDER GROUP, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.8 AND STIPULATE THAT THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE REVOLVING CREDIT FACILITY NOTE, OR THE OTHER LOAN DOCUMENTS. TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR PERSONAL JURISDICTION IN ANY ACTION AGAINST BORROWER MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED ON EXHIBIT 11.3 ATTACHED HERETO.

11.9 WAIVER OF TRIAL BY JURY . BORROWER AND EACH MEMBER OF THE LENDER GROUP, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

11.10 Independence of Covenants . All covenants under this Agreement and other Loan Documents shall be given independent effect so that if a particular action or condition is not permitted by any one covenant, the fact that it would be permitted by another covenant, shall not avoid the occurrence of an Event of Default or Unmatured Event of Default if such action is taken or condition exists.

11.11 Confidentiality . Agent and Lenders, each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Borrower and its Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except: (a) to counsel for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender Group, provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 11.11 , (c) as may be requested by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (d) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (e) as may be agreed to in advance by Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (f) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders or any of their respective Subsidiaries or Affiliates), (g) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender’s interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section, and (h) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents. The provisions of this Section 11.11 shall survive for 2 years after the payment in full of the obligations of Borrower under this Agreement.

11.12 Revival and Reinstatement of Obligations . If the incurrence or payment of the Obligations by Borrower or any Guarantor or the transfer to the Lender Group of any property should for any reason subsequently be asserted, or declared, to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (each, a “ Voidable Transfer ”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrower or any Guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. Anything to the contrary contained herein notwithstanding, if Agent or any Lender accepts a guaranty of only a portion of the Obligations pursuant to any guaranty, Borrower hereby waives its right under Section 2822(a) of the California Civil Code or any similar laws of any other applicable jurisdiction to designate the portion of the Obligations satisfied by the applicable guarantor’s partial payment.

11.13 Complete Agreement . This Agreement, together with the exhibits hereto, the Disclosure Statement, and the other Loan Documents is intended by the parties hereto as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter of this Agreement.

11.14 USA PATRIOT Act . Each Lender hereby notifies Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender to identify Borrower in accordance with the Patriot Act. In addition, if Agent is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for the Loan Parties, and (b) OFAC/PEP searches, and customary individual background checks for the Loan Parties’ senior management and key principals, and Borrower agrees to cooperate in respect of the conduct of such searches and further agrees that the reasonable costs and charges for such searches shall constitute Lender Group Expenses hereunder and be for the account of Borrower.

11.15 No Novation . This Agreement does not extinguish the obligations for the payment of money outstanding under the Existing Credit Agreement or discharge or release the obligations or the liens or priority of any mortgage, pledge, security agreement or any other security therefor. Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Existing Credit Agreement, the other Original Loan Documents or instruments securing the same, which shall remain in full force and effect, except as modified hereby or by instruments executed concurrently herewith. Nothing expressed or implied in this Agreement shall be construed as a release or other discharge of Borrower or any Guarantor from any of its obligations or liabilities under the Existing Credit Agreement or any of the security agreements, pledge agreements, mortgages, guaranties or other loan documents executed in connection therewith. Borrower hereby (a) confirms and agrees that each Original Loan Document to which it is a party that is not being amended and restated concurrently herewith is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the Closing Date, all references in any such Original Loan Document to “the Credit Agreement,” “thereto,” “thereof,” “thereunder” or words of like import referring to the Existing Credit Agreement shall mean the Existing Credit Agreement as amended and restated by this Agreement; and (b) confirms and agrees that to the extent that any such Original Loan Document purports to assign or pledge to Agent or to grant to Agent a security interest in or lien on, any collateral as security for the obligations of Borrower or any other Loan Party, as the case may be, from time to time existing in respect of the Existing Credit Agreement or the Original Loan Document, such pledge or assignment or grant of the security interest or lien is hereby ratified and confirmed in all respects with respect to this Agreement and the Loan Documents.

[Signature pages follow.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first set forth above.

	JMP GROUP LLC
	a Delaware limited liability company


	By:	/s/ Raymond S. Jackson
		Raymond S. Jackson
		Chief Financial Officer

[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]

	CITY NATIONAL BANK
	a national banking association, as Agent and as a Lender


	By:	/s/ Eric Lo
	Name:	Eric Lo
	Title:	Vice President

[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]

EXHIBITS AND SCHEDULES

Exhibit A-1	Form of Assignment and Acceptance Agreement

Exhibit C-1	Form of Compliance Certificate

Exhibit R-1	Form of Request for Borrowing

Exhibit R-2	Form of Request for Conversion/Continuation

Exhibit 11.3	Addresses and Information for Notices

Schedule A-1	Agent’s Account

Schedule C-1	Lenders’ Commitments

Exhibit 10.31

AMENDMENT NUMBER FIVE TO REVOLVING NOTE AND CASH SUBORDINATION AGREEMENT & REVOLVING NOTE

This AMENDMENT NUMBER FIVE TO REVOLVING NOTE AND CASH SUBORDINATION AGREEMENT & REVOLVING NOTE (this “ Amendment ”), effective as of April 30, 2014, is entered into by and between JMP SECURITIES LLC , a Delaware limited liability company (“ Broker/Dealer ”), and CITY NATIONAL BANK , a national banking association (“ Lender ”), and in light of the following:

W I T N E S S E T H

WHEREAS , Broker/Dealer and Lender are parties to: (a) that certain Revolving Note and Cash Subordination Agreement, dated as of April 8, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Note Agreement ”), and (b) that certain Revolving Note, dated as of April 8, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Note ”);

WHEREAS , JMP GROUP LLC , a Delaware limited liability company (“ Guarantor ”) guaranteed in favor of Lender, the obligations of Broker/Dealer under the Note Agreement and the Note pursuant to that certain General Continuing Guaranty, dated as of April 8, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Broker/Dealer Guaranty ”);

WHEREAS , Broker/Dealer has requested that the Lender make certain amendments to the Note Agreement and the Note; and

WHEREAS , upon the terms and conditions set forth herein, Lender is willing to accommodate the Broker/Dealer’s requests.

NOW, THEREFORE , in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Defined Terms . All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Note Agreement, as amended hereby.

2. Amendments to Note Agreement .

(a) Section 1(a) of the Note Agreement is hereby amended by amending and restating in its entirety as follows:

“(a) Subject to the terms and conditions hereinafter set forth, the Lender agrees that from time to time between the date first written above and the 6th day of May, 2015 (the “Credit Period”) it will lend to the Broker/Dealer sums of money on a revolving basis (each an “Advance”, collectively “Advances”) which, in the aggregate principal amount outstanding (i) at any one time on or prior to March 31, 2013, shall not exceed $10,000,000, and (ii) at any one time thereafter and before May 7, 2013 shall not exceed $15,000,000, (iii) at any one time thereafter and before October 11, 2013 shall not exceed $20,000,000, (iv) at any one time thereafter and before May 6, 2014 shall not exceed $15,000,000, and (v) at any one time thereafter and before May 6, 2015 shall not exceed $20,000,000 (each of the amounts in subclauses (i), (ii), (iii), (iv) and (v), the “Credit Line” or “Commitment Amount”, as applicable).”

(b) Section 1(c) of the Note Agreement is hereby amended by replacing the reference to “6th day of May, 2015” with “6th day of May, 2016”.

3. Amendments to Note .

(a) The Note is hereby amended by replacing the reference to “6th day of May 2015” with “6th day of May, 2016”.

(b) The second sentence of the first paragraph of the Note is hereby amended by amending and restating in its entirety as follows:

“Such sum shall not exceed (i) at any time on or prior to March 31, 2013, $10,000,000 (ii) at any time thereafter and before May 7, 2013, $15,000,000, (iii) at any time thereafter and before October 11, 2013, $20,000,000, (iv) at any time thereafter and before May 6, 2014 shall not exceed $15,000,000, and (v) at any time thereafter and before May 6, 2015 shall not exceed $20,000,000.”

(c) The Schedule to the Note is hereby deleted in its entirety and replaced with the Schedule attached hereto as Exhibit B .

4. Conditions Precedent to Amendment . The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of the Amendment (such date being the “ Amendment Effective Date ”):

(a) Lender shall have received this Amendment, duly executed by the parties hereto, and the same shall be in full force and effect.

(b) Lender shall have received the reaffirmation and consent of the Guarantor attached hereto as Exhibit A , duly executed and delivered by an authorized officer of the Guarantor.

(c) After giving effect to this Amendment, the representations and warranties herein, in the Note Agreement, and in the Note shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date).

(d) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any governmental entity against Broker/Dealer, Guarantor, or Lender.

(e) No Events of Acceleration or Event of Default shall have occurred and be continuing or shall result from the consummation of the transactions contemplated herein.

(f) Pursuant to Section 19(b) of the Note Agreement, FINRA shall have provided prior written approval of this Amendment.

(g) All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Lender.

5. Representations and Warranties . Broker/Dealer hereby represents and warrants to Lender as follows:

(a) It (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified reasonably could be expected to result in a material adverse effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted, to enter into this Amendment and carry out the transactions contemplated hereby.

(b) The execution, delivery, and performance by it of this Amendment (i) have been duly authorized by all necessary limited liability company action, (ii) do not and will not (A) violate any material provision of federal, state or local law, rule or regulation, or any order, judgment, decree, writ, injunction or award of any arbitrator, court or governmental entity binding on it or of Guarantor, (B) violate the certificate of formation or limited liability company agreement of it or of Guarantor, (C) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of it or of Guarantor, except to the extent that any such conflict, breach or default could not individually or in the aggregate reasonably be expected to have a material adverse effect, (D) result in or require the creation or imposition of any lien of any nature whatsoever upon any assets of Broker/Dealer, other than as expressly permitted by Lender, or (E) require any approval of Broker/Dealer’s interest holders or any approval or consent of any person under any material contractual obligation of Broker/Dealer, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of a material contractual obligation, for consents or approvals, the failure of which to obtain could not individually or in the aggregate reasonably be expected to cause a material adverse effect.

(c) The execution, delivery and performance by Broker/Dealer of this Amendment, and the consummation of the transactions contemplated herein do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any governmental entity other than consents or approvals that have been obtained and that are still in force and effect.

(d) This Amendment, when executed and delivered by each person that is a party thereto, will constitute the legal, valid and binding obligation of it, enforceable against it in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally.

(e) As of the date hereof, no injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein has been issued and remains in force by any governmental entity against Broker/Dealer or Guarantor.

(f) No Events of Acceleration or Event of Default has occurred and is continuing as of the date of the effectiveness of this Amendment, and no condition exists which constitutes an Event of Acceleration or an Event of Default.

(g) The representations and warranties set forth in this Amendment, the Note Agreement, and the Note, as amended by this Amendment and after giving effect hereto, are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date).

6. Agreements . This Amendment has been entered into without force or duress, of the free will of Broker/Dealer, and the decision of Broker/Dealer to enter into this Amendment is a fully informed decision and Broker/Dealer is aware of all legal and other ramifications of each decision. It has read and understands this Amendment, has consulted with and been represented by independent legal counsel of its own choosing in negotiations for and the preparation of this Amendment, has read this Amendment in full and final form, and has been advised by its counsel of its rights and obligations hereunder and thereunder.

7. Payment of Costs and Fees . Broker/Dealer shall reimburse Lender on demand for all of its actual out-of-pocket costs, expenses, fees and charges in connection with the preparation, negotiation, execution and delivery of this Amendment and any documents and instruments relating hereto (which costs may include the reasonable fees and expenses of any attorneys retained by Lender).

8. Choice of Law . This Amendment and the rights of the parties hereunder, shall be governed by, and construed in accordance with, the laws of the State of California applicable to contracts made and to be performed in the State of California.

9. Amendments . This Amendment cannot be altered, amended, changed or modified in any respect or particular unless each such alteration, amendment, change or modification shall have been agreed to by each of the parties and reduced to writing in its entirety and signed and delivered by each party.

10. Counterpart Execution . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or other electronic method of transmission shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

11. Effect on Note Agreement and Note .

(a) The Note Agreement and the Note, as amended hereby, shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects. Except for the amendments to the Note Agreement and the Note expressly set forth herein, the Note Agreement and the Note shall remain unchanged and in full force and effect. The execution, delivery and performance of this Amendment shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power, or remedy of Lender under the Note Agreement or the Note. The amendments set forth herein are limited to the specifics hereof, and, except as expressly set forth herein, shall neither excuse any future non-compliance with the Note Agreement or the Note, nor operate as a waiver of any Event of Acceleration or Event of Default.

(b) Upon and after the effectiveness of this Amendment, each reference in the Note Agreement and the Note to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Note Agreement, and each reference in the Broker/Dealer Guaranty to “the Note Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement as modified and amended hereby.

(c) Upon and after the effectiveness of this Amendment, each reference in the Note Agreement and the Note to “the Revolving Note”, “hereunder”, “herein”, “hereof” or words of like import referring to the Note, and each reference in the Broker/Dealer Guaranty to “the Note”, “thereunder”, “therein”, “thereof” or words of like import referring to the Note, shall mean and be a reference to the Note as modified and amended hereby.

(d) To the extent any terms or provisions of this Amendment conflict with those of the Note Agreement or the Note, the terms and provisions of this Amendment shall control. To the extent that any terms and conditions shall contradict or be in conflict with any terms or conditions of the Note Agreement or the Note, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Note Agreement and the Note as modified or amended hereby.

(e) Unless the context of this Amendment clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.

12. Entire Agreement . This Amendment, and terms and provisions hereof, the Note Agreement, and the Note constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.

13. Reaffirmation of Obligations . The Broker/Dealer hereby restates, ratifies and reaffirms each and every term and condition set forth in the Note Agreement and the Note effective as of the date hereof and as amended hereby.

14. Severability . In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

[Signature page follows]

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

	JMP SECURITIES LLC ,
	a Delaware limited liability company, as Broker/Dealer


	By:	/s/ Mark Lehmann
		Mark Lehmann
		President

[SIGNATURE PAGE TO AMENDMENT NUMBER FIVE TO REVOLVING NOTE AND CASH SUBORDINATION AGREEMENT & REVOLVING NOTE]

	CITY NATIONAL BANK ,
	a national banking association, as Lender


	By:	/s/ Eric Lo
	Name:	Eric Lo
	Title:	Vice President

[SIGNATURE PAGE TO AMENDMENT NUMBER FIVE TO REVOLVING NOTE AND CASH SUBORDINATION AGREEMENT & REVOLVING NOTE]

Exhibit A

REAFFIRMATION AND CONSENT

All capitalized terms used herein without definition shall have the meanings ascribed thereto in: (a) that certain Revolving Note and Cash Subordination Agreement, dated as of April 8, 2012 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Note Agreement ”) by and between JMP SECURITIES LLC , a Delaware limited liability company (“ Broker/Dealer ”) and CITY NATIONAL BANK , a national banking association (“ Lender ”), and (b) that certain Revolving Note, dated as of April 8, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Note ”) by and between Broker/Dealer and Lender. Reference is made to: (a) that certain Amendment Number Five to Revolving Note and Cash Subordination Agreement & Revolving Note, effective as of April 30, 2014 (the “ Amendment ”), by and between Broker/Dealer and Lender, and (b) that certain General Continuing Guaranty, dated as of April 8, 2011 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Broker/Dealer Guaranty ”) by JMP GROUP LLC , a Delaware limited liability company (“ Guarantor ”), in favor of Lender. The undersigned Guarantor hereby (a) represents and warrants to the Lender that the execution, delivery, and performance of this Reaffirmation and Consent are within its powers, have been duly authorized by all necessary limited liability company action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental entity, or of the terms of its certificate of formation and limited liability company agreement, or of any material contractual obligation to which it is a party or by which any of its properties may be bound or affected, except to the extent that any such conflict, breach or default could not individually or in the aggregate reasonably be expected to have a material adverse effect; (b) consents to the amendment of the Note Agreement and the Note as set forth in the Amendment and any waivers granted therein; (c) acknowledges and reaffirms its obligations owing to the Lender under the Broker/Dealer Guaranty, as amended hereby; and (d) agrees that the Note Agreement and the Note shall remain in full force and effect, as amended hereby. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, they each understand that the Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed by the laws of the State of California.

IN WITNESS WHEREOF, the undersigned have each caused this Reaffirmation and Consent to be executed as of the date of the Amendment.

JMP GROUP LLC , a Delaware limited liability

company

By:

/s/ Raymond S. Jackson

Raymond S. Jackson

Chief Financial Officer

[SIGNATURE PAGE TO AMENDMENT NUMBER FIVE TO REVOLVING NOTE AND CASH SUBORDINATION AGREEMENT & REVOLVING NOTE]

Exhibit B

[Attached]

FINRA Form REV - 33R

Schedule to Revolving Note

SCHEDULE

Advances/Payments and Interest of Account Referred to in the Revolving Note

Commitment Amount: $10,000,000 at any one time on or prior to March 31, 2013, $15,000,000 at any one time thereafter and before May 7, 2013, $20,000,000 at any one time thereafter and before October 11, 2013, $15,000,000 thereafter and before May 6, 2014, and $20,000,000 thereafter and before May 6, 2015.

Date of Advance	Amount Advanced	Interest Rate	Date of Re-Payment	Principal Amount Re-Paid	Date of Interest Paid	Amount of Interest Paid	Outstanding Amount After Transaction	Signature

Exhibit 31.1

JMP GROUP INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

I, Joseph A. Jolson, certify that:

1.	I have reviewed this quarterly report for the period ended March 31, 2014 on Form 10-Q of JMP Group Inc.;

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;

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 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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 the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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.

Date: May 1, 2014

/s/ Joseph A. Jolson

Joseph A. Jolson

Chairman and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

JMP GROUP INC.

CERTIFICATION OF CHIEF FINANCIAL OFFICER REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

I, Raymond S. Jackson, certify that:

1.	I have reviewed this quarterly report for the period ended March 31, 2014 on Form 10-Q of JMP Group Inc.;

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;

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 the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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.

Date: May 1, 2014

/s/ Raymond S. Jackson

Raymond S. Jackson

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

JMP GROUP INC.

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.

In connection with the periodic report of JMP Group Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph A. Jolson, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, 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 at the dates and for the periods indicated.

Date: May 1, 2014				/s/ Joseph A. Jolson
				Joseph A. Jolson
				Chief Executive Officer

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Exhibit 32.2

JMP GROUP INC.

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.

In connection with the periodic report of JMP Group Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Raymond S. Jackson, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, 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 at the dates and for the periods indicated.

Date: May 1, 2014				/s/ Raymond S. Jackson
				Raymond S. Jackson
				Chief Financial Officer

	JMP GROUP LLC , a Delaware limited liability
	company


	By:	/s/ Raymond S. Jackson
		Raymond S. Jackson
		Chief Financial Officer