representative thereof for any advice of any sort, including, but not limited to securities or investment advice, or advice regarding the federal, state or local tax consequences arising from the grant, vesting, holding or disposition of the Incentive Units (the Tax Matters).
(b) Acknowledgments. The Participant acknowledges and agrees that:
(i) The Incentive Units cannot be transferred except in very limited circumstances in accordance with the provisions of the LLC Agreement, the Incentive Plan and this Agreement and at present no market for the Incentive Units exists and it is not anticipated that a market for the Incentive Units will develop in the future.
(ii) The Incentive Units may be worthless.
(iii) The Company is treated as a partnership for federal and state income tax purposes and, as a result of receiving and holding the Incentive Units, the Participant will be treated as a partner of the Company for federal and state income tax purposes. Further, the Participant acknowledges that the Participants status may have adverse consequences to the Participant with respect to matters in which employees may be treated more favorably than partners, such as entitlement to and the tax treatment of fringe benefits, employee benefit plans, payroll taxes, and possible self-employment tax liability.
(iv) The Participant will receive an annual Schedule K-l from the Company requiring that the Participant report on the Participants tax return the Participants distributive share of the income, gain, loss, deductions and credits of the Company attributable to the Incentive Units (including any unvested Incentive Units).
(v) The distributions made to the Participant will not be subject to FIC A or other tax withholding.
(vi) Ownership of the Incentive Units may result in taxable income to the Participant without a corresponding cash or in-kind distribution.
(vii) The Participant has been advised to seek and has had an opportunity to seek independent advice regarding the Tax Matters, including the 83(b) Election required by Section 8 hereof.
(viii) The Company will have no obligation to indemnify or hold the Participants harmless for any claims or liabilities arising from the Tax Matters.
(ix) The Incentive Units will not be registered under the Securities Act of 1933, as amended (the Securities Act) or any applicable state securities laws (collectively, the Securities Laws), and they are being issued in reliance upon certain exemptions contained in Securities Laws, including Rule 701 promulgated under the Securities Act and corresponding state law exemptions, if any, and the representations and warranties of the Participant contained herein are essential to any claim of exemption by the Company under the Securities Laws.
(x) The Incentive Units are restricted securities as that term is defined in Rule 144 promulgated under the Securities Act.