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Palladium Capital Advisors, LLCBusiness Continuity Plan (BCP)Updated April 2, 2017INTRODUCTIONUnder FINRA Rules 4370 and 3520, Palladium Capital Advisors, LLC (“Palladium”) is requiredto create and maintain a Business Continuity Plan (BCP) and Emergency Contact Person List. TheEmergency Contact Person List exists electronically on FINRA’s Web Access system. Our firmwill update this whenever we have a material change to our operations, structure, business orlocation. In addition, our firm will review this quarterly, within 17 business days of the end of thequarter, and modify it for any changes in our operations, structure, business, or location. The topemergency contacts are also located in this BCP document under “Emergency Contact Persons”two paragraphs below.Palladium is a private-placement agency brokerage specializing in Private Investments in PublicEquities (PIPEs), late-stage private equity, reverse mergers, and mergers and acquisitions ofmicrocap public companies. It never takes custody of client funds or assets, and acts only as anagent/advisor, earning a commission on transactions it brokers/advises, directly from corporateissuers, which are the only entities to accept client funds. As such, Palladium does not use theservices of any clearing broker dealer or other similar entity.CRITICAL ELEMENTSEmergency Contact PersonsOur firm’s emergency contact persons are:Joel PadowitzMichael Hartstein(646) 485-7297(917) .comThese names will be updated in the event of a material change, and our Chief Compliance Officerwill review them within 17 business days of the end of each quarter.Rule: FINRA Rule 3520.Firm PolicyOur firm’s policy is to respond to a Significant Business Disruption (SBD) by safeguardingemployees’ lives and firm property, making a financial and operational assessment, quicklyrecovering and resuming operations, protecting all of the firm’s books and records, and keepingall of our customers updated as to the state of our business. In the event that we determine we areunable to continue our business, we will notify all customers immediately.Significant Business Disruptions (SBDs)1
Our plan anticipates two kinds of SBDs, internal and external. Internal SBDs affect only our firm’sability to communicate and do business, such as a fire in our building. External SBDs prevent theoperation of the securities markets or a number of firms, such as a terrorist attack, a city flood, ora wide-scale regional disruption. Our response to an external SBD relies more heavily on otherorganizations and systems.Approval and Execution AuthorityJoel Padowitz is the firm’s Chief Compliance Officer and registered principal. He is responsiblefor approving the BCP and for conducting the required annual review. Joel Padowitz has theauthority to execute this BCP.Plan Location and AccessOur firm will maintain copies of its BCP plan and the annual reviews, and the changes that havebeen made to it for inspection. An electronic copy of our plan is located at the Firm’s computerserver and on the Firm’s website.Business DescriptionOur firm conducts private-placement business in hedge-fund units, private equity, and PIPEtransactions. We also provide M&A consulting services. Our firm is an agency private placementfirm and does not perform any type of clearing function for itself or others. Furthermore, we donot hold customer funds or securities. All funds are sent to various issuers directly by the clientsthemselves. The issuers accept and allocate them. These issuers also maintain our customers’accounts, can grant customers access to them, and deliver funds and securities.Office LocationsMain Branch (OSJ)Our firm has one branch office which serves as our Main Branch and is located at 10 RockefellerPlaza, Suite 909, New York, NY 10020. The Chief Compliance Officer’s direct dial number is(646) 485-7297. Our employees may travel to that office by means of foot, car, subway, train, busand plane.Alternative Physical Location(s) of EmployeesIn the event of an SBD, we will essentially move any staff from the main or other office to theirhomes. Possibly we will ask staff to temporarily share use of their home locations with other staff.All of our staff personnel are well wired at home which allows them to continue correspondencewith our clients.Rule: FINRA Rule 4370(c)(6).2
Customers’ Access to Funds and SecuritiesOur firm does not maintain custody of client’s funds or securities, which are placed by themdirectly to various issuers. In the event of an internal or external SBD, if telephone service isavailable, our registered persons will help clients contact these issuers.SIPC regulations do not really help the clients of a private placement firm like ours, but if SIPCdetermines that we are unable to meet our obligations to our customers or if our liabilities exceedour assets in violation of Securities Exchange Act Rule 15c3-1, SIPC may seek to appoint a trusteeto disburse our assets to customers.Rules: FINRA Rule 4370(a); Securities Exchange Act Rule 15c3-1; 15 U.S.C. 78e (2003).Data Back-Up and RecoveryOur firm maintains its books and records at its Main Branch, (our only branch) 10 RockefellerPlaza, Suite 909, New York, NY 10020. Joel Padowitz, CEO, (646) 485-7297 is responsible forthe maintenance of these books and records. All important documents are scanned and saved onour server. Our firm maintains its financials and supporting statements as well as client agreementsand client information at its Main Branch.Our firm maintains its back-up of all documents stored on our server at Joel Padowitz’s personalresidence on his computer which is regularly synced with the server’s files. These records areelectronic copies of the financials, and customer information/agreements, as well as electronicbackups of our office server files.The firm backs up its records by (1) remotely syncing the contents of the relevant folders on theserver with a folder on the computer at Joel Padowitz’s residence and (2) a redundant backup issent to a remote location using Dropbox, a leading web-based provider of data storage andprotection solutions.In the event of an internal or external SBD that causes the loss of our records, we will eitherphysically recover the storage media or electronically recover data from our back-up site, or, if ourprimary site is inoperable, continue operations from our back-up site or an alternate location.EmailOur firm uses Rackspace Inc. an external email hosting company to host and archive our electronicemails. We believe Rackspace’s servers and security meets or exceeds all reasonable expectationsto protect from SBD. Rackspace represents the following.Rackspace Hosting services are supported by nine (9) data centers located in the U.S., the UKand Hong Kong — to serve global customer needs.Physical Security3
Keycard protocols, biometric scanning protocols and round-the-clock interior andexterior surveillance monitor access to every one of our data centers.Only authorized data center personnel are granted access credentials to our data centers.No one else can enter the production area of the datacenter without prior clearance and anappropriate escort.Every data center employee undergoes multiple and thorough background security checksbefore they're hired.Precision Environment Every data center's HVAC (Heating Ventilation Air Conditioning) system is N 1redundant. This ensures that a duplicate system immediately comes online should therebe an HVAC system failure.Every 90 seconds, all the air in our data centers are circulated and filtered to remove dustand contaminants.Our advanced fire suppression systems are designed to stop fires from spreading in theunlikely event one should occur.Conditioned Power Should a total utility power outage ever occur, all of our data centers' power systems aredesigned to run uninterrupted, with every server receiving conditioned UPS(Uninterruptible Power Supply) power.Our UPS power subsystem is N 1 redundant, with instantaneous failover if the primaryUPS fails.If an extended utility power outage occurs, our routinely tested, on-site diesel generatorscan run indefinitely.Core Routing Equipment Only fully redundant, enterprise-class routing equipment is used in Rackspace datacenters.Fiber carriers enter our data centers at disparate points to guard against service failure.Network Technicians We require that the networking and security teams working in our data centers becertified. We also require that they be thoroughly experienced in managing andmonitoring enterprise level networks.Our Certified Network Technicians are trained to the highest industry standards.Backup Automatically back up entire Windows or Linux servers. Rackspace Server Backup isoptimized for large file sizes and file systems. Your data is encrypted, compressed, andtransferred based on your schedule, your file set, and your retention policy. Save time andmoney with backup efficiency; storage costs and data transfer time are reduced by up to4
90% with compression and block-level de-duplication, which only uploads files that havechanged since the last backup.Remote Management Manage multiple servers from your Mac, Windows, or Linux desktop. Receive statusupdates via the desktop client, web, email, and RSS.Security Trust in data security with robust AES-256 encryption and a user-controlled key. Data isencrypted before it leaves your server and stays encrypted while stored.Restore Restore fields as they existed during a particular backup with easy point and click.File System Support Store and restore extended file systems with support for Windows and Linux securityattributes and ACLs, junction points, symlinks, hardlinks, and device nodes. RackspaceServer Backup supports alternate data streams, xattrs, and directory metadata. There are nomaximum file or backup set sizes.Rule: FINRA Rule 4370(c)(1).Financial and Operational AssessmentsOperational RiskIn the event of an SBD, we will immediately identify what means will permit us to communicatewith our clients, employees, critical business constituents, critical banks, and regulators. Althoughthe effects of an SBD will determine the means of alternative communication, the communicationoptions we will employ will include personal home and cell phones and personal home emailsystems. In addition, as appropriate, we will retrieve our key activity records as described in thesection above, Data Back-Up and Recovery.Rules: FINRA Rules 4370(c)(3) & (f)(2).Financial and Credit RiskWe are required to maintain only the greater of (a) the minimum 5,000 in Net Capital as definedby FINRA and (b) 1/15th of our aggregate indebtedness. In the event of an SBD, we should notsuffer liquidity constraints, and we should be able to continue to fund our operations and remainin capital compliance. In such an event, we will contact our banks, and investors to apprise themof our financial status, should such action be deemed appropriate. If we determine that we may beunable to meet our financial obligations or otherwise continue to fund our operations, the principalsof Palladium hope to provide bridge financing to fulfill our obligations to our clients. If we cannotremedy a capital deficiency, we will file appropriate notices with our regulators and immediately5
take appropriate steps, including desisting from expanding our business – thus conserving capitalto service current obligations.Rules: FINRA Rules 4370(c)(3), (c)(8) & (f)(2).Mission Critical SystemsOur firm’s “mission critical systems” are those that ensure prompt and accurate processing oftransactions, including new client and investment approval.We have primary responsibility for establishing and maintaining our business relationships withour clients and do not rely on any clearing firm. Since we are only a private-placement and M&Aconsulting firm, one or more of our representatives have a personal relationship with each of ourclients. Our main control, is for our Chief Compliance Officer, or for another Designated Principal,to review the suitability of any new client or investment. This is done for each investment. This“mission critical function” can reasonably be assured to continue in case of an SBD. If it cannotbe implemented due to the incapacity of key Principals, no new business transactions can occurand our business cannot be expanded. Our procedures do not allow for non-Principalrepresentatives to approve any transaction.Alternate Communications Between the Firm and Customers, Employees, and RegulatorsA. CustomersWe communicate with our customers using the telephone, e-mail, fax, U.S. mail, via courierservice such as FedEx and in person visits at our firm or at the other party’s location. In the eventof an SBD, we will assess which means of communication are still available to us, and use themeans closest in speed and form (written or oral) to the means that we have used in the past tocommunicate with the other party. For example, if we have communicated with a party by e-mailbut the Internet is unavailable, we will call them on the telephone and follow up where a record isneeded with paper copy in the U.S. mail.Rule: FINRA Rule 4370(c)(4).B. EmployeesWe communicate with our employees using the telephone, e-mail and in person. In the event of anSBD, we will assess which means of communication are still available to us, and use the meansclosest in speed and form (written or oral) to the means that we have used in the past tocommunicate with the other party. If necessary, we also have the ability to reach all employees attheir personal telephone numbers and email addresses using our personal telephones and emailaddresses.Rule: FINRA Rule 4370(c)(5).6
C. RegulatorsWe are currently members of FINRA. We communicate with our regulators using the telephone,e-mail, fax, U.S. mail, Internet and in person. In the event of an SBD, we will assess which meansof communication are still available to us, and use the means closest in speed and form (written ororal) to the means that we have used in the past to communicate with the other party.Rule: FINRA Rule 4370(c)(9).Critical Business Constituents, Banks, and Counter-PartiesBusiness constituentsWe will quickly establish alternative arrangements if a business constituent can no longer providethe needed goods or services because of an SBD. Besides Rackspace, our email-hosting providerwhose SBD recovery procedures are mentioned above under the “Data Backup and Recovery”section, our only critical business constituents is our bank, Citibank, a leading national bank withsatisfactory emergency procedures.Rules: FINRA Rule 4370(c)(7).Regulatory ReportingOur firm is subject to regulation by FINRA. We file our required financial and compliance reportswith our regulators using FINRA’s electronic FOCUS filing system and WEBCRD system overthe internet. In the event of an SBD, we will fax FINRA, and other regulators any reports that arerequired, or we will deliver the documents via courier to their offices.Rule: FINRA Rule 4370c(8).Disclosure of Business Continuity PlanWe will provide a hardcopy of this BCP document to those clients that request it. Our BCP is alsoavailable to all on our website (www.PalladiumCapital.com).Updates and Quarterly ReviewOur firm will update this BCP whenever we have a material change to our operations, structure,business or location. In addition, our firm will review this quarterly, within 17 business days ofthe end of the quarter, and modify it for any changes in our operations, structure, business, orlocation.Rule: FINRA Rule 4370(b).7
Senior Manager ApprovalI have approved this Business Continuity Plan as reasonably designed to enable our firm to meetits obligations to customers in the event of an SBD.Rule: FINRA Rule 4370 (d).Signed:Joel PadowitzTitle:Chief Compliance OfficerDate:April 2, 20178
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