Exhibit 10.2
EXECUTION COPY
June 3, 2009
David M. Malcolm
At the address last on the records of
Cowen
Dear Greg:
As you know, Cowen Group, Inc.
(“Cowen”) has entered into a Transaction Agreement and
Agreement and Plan of Merger (the “Transaction
Agreement”) with LexingtonPark Parent Corp. (the
“Company”), Lexington Merger Corp., Park Exchange LLC
(the “Exchange Sub”), and Ramius LLC
(“Ramius”), pursuant to which, among other things,
Cowen will become a wholly owned subsidiary of the Company and
Exchange Sub will acquire substantially all of the assets and
assume all of the liabilities of Ramius (collectively, the
“Transaction”). The Company and Cowen desire to have
your continued dedication and service pending and following the
Transaction. Accordingly, we are pleased to offer you continued
employment with the Company and its subsidiaries, and we look
forward to continuing our mutually rewarding and beneficial
relationship. This letter agreement (the “Agreement”)
will outline the terms of your continued employment. This Agreement
will become effective upon the Effective Time (as defined in the
Transaction Agreement) (the “Effective Date”) and, as
more fully set forth below, shall, as of the Effective Date,
supersede any and all prior employment agreements and letters
concerning your employment with Cowen and its subsidiaries,
including, without limitation the Employment Agreement by and
between Cowen and Company, LLC and you, dated as of March 4,
2008 (the “Previous Employment Agreement”).
1.
Term . This Agreement provides the details of the
terms of your employment from and following the Effective Date
until termination of your employment (the “Term”), and
certain other terms and conditions of your employment with the
Company and its subsidiaries that continue beyond the Term unless
otherwise specified.
2.
Position . You shall be employed as the Chief Executive
Officer and President of the Company’s Broker-Dealer
Subsidiary (the “BD Subsidiary”) and shall report
directly to the Chief Executive Officer of the Company. You shall
also be appointed, on the Effective Date, to serve as a member of
the Board of Directors of the Company and as a member of the
Company’s Executive Management Committee and the
Company’s Operating Committee. You shall have the duties,
responsibilities and authority commensurate with your title and
position and such other duties and responsibilities as may be
reasonably assigned to you by the Chief Executive Officer of the
Company, including (a) the responsibility of making
non-binding recommendations to the Compensation Committee of the
Company’s Board of Directors (the “Compensation
Committee”) to assist such committee in making compensation
decisions relating to senior management of the BD Subsidiary and
(b) the responsibility, in consultation with the Chief
Executive Officer of the Company, for determining the compensation
of the employees of the BD Subsidiary whose compensation is not
determined by the Compensation
Committee. You shall continue to be subject to,
and must comply with, all policies and procedures applicable to
employees of the BD Subsidiary, as now existing or as may be
modified or supplemented from time to time by the BD
Subsidiary.
3.
Compensation and
Benefits .
(a)
Base Salary
. You will be paid a base
salary at the rate of not less than Four Hundred Fifty Thousand
Dollars ($450,000) per annum (“Base Salary”), payable
in accordance with the Company’s prevailing payroll practices
but no less frequently than monthly. The term Base Salary as
utilized in this Agreement shall refer to Base Salary as in effect
from time to time, including any increases. Except as otherwise
provided in this Agreement, any obligation to pay your Base Salary
will cease upon the termination of your employment.
(b)
Annual Bonus
. For each calendar year
during which you are employed by the Company (excluding any period
in which you are employed as a Senior Advisor, as defined below),
you shall be entitled to earn an annual performance-based bonus
pursuant to a Company bonus plan as determined by the Compensation
Committee. The total annual bonus that may be earned by you for any
calendar year is referred to herein as the “Annual
Bonus.” Your Annual Bonus shall be determined by the
Compensation Committee consistently with and on the same basis as,
and shall have terms and conditions no less favorable than those
that apply to, other similarly situated executives of the Company,
provided that you shall be entitled to a minimum Annual
Bonus equal to Two Hundred Thousand Dollars ($200,000) for each
completed calendar year ending during the Term (excluding any
Notice Period, as defined below, upon a voluntary termination
without Good Reason, as defined below). Your Annual Bonuses may, at
the discretion of the Compensation Committee, and consistent with
similarly situated executives of the Company, include a certain
percentage of restricted securities, other stock or security-based
awards or deferred cash or other deferred compensation.
(c)
Benefits . During the Term, you will be entitled to
employee benefits, fringe benefits and perquisites consistent with,
and on the same basis as, similarly situated executives of the
Company, subject to the terms of the Transaction Agreement,
including, without limitation, the provisions contained in
Section 7.6 thereof.
(d)
Expense Reimbursement
. During the Term, the Company
shall reimburse you for all reasonable expenses incurred by you in
the performance of your duties in accordance with the
Company’s policies applicable to similarly situated
executives of the Company. All reimbursements provided under this
Agreement shall be made or provided in accordance with the
requirements of Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended (the
“Code”).
(e)
Vacation . During the Term, you shall be eligible
for paid-time off in accordance with the BD Subsidiary’s
vacation policy.
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(f)
Effective Date Payment
. You will become vested on
the Effective Date in the right to be paid One Million Five Hundred
Thousand Dollars ($1,500,000) (the “Effective Date
Payment”). The Effective Date Payment will be paid to you in
a single lump sum in cash on the Effective Date.
(g)
CHRP Interest
. On March 14, 2008, you
were admitted as a member of Cowen Healthcare Royalty GP, LLC
(“GP LLC”), such that your interest in GP LLC equals
six and one-quarter percent (6.25%) as of such date. Your interest
in GP LLC relates only to the initial Cowen Healthcare Royalty
Partners fund (the “Healthcare Fund”). Such membership
interest in GP LLC is referred to herein as the “CHRP
Interest.” At the time you were admitted as a member of GP
LLC, you purchased your interest in GP LLC from Cowen Capital
Partners II, LLC (“CCP II”) at a price equal to the
aggregate amount paid by CCP II as of that date relating to the
interest so purchased. You are obligated to make all future
payments and contributions relating to capital calls by the
Healthcare Fund and are entitled to receive all future
distributions. The CHRP Interest vested with regard to fifty
percent (50%) on January 1, 2009 and, except as otherwise
provided in paragraph 5 hereof, the remaining fifty percent (50%)
shall vest on January 1, 2010.
4.
Restricted Stock Award
.
(a)
Award . The Company will grant you, effective as
of the Effective Date, 288,832 restricted shares of Company common
stock (“Common Stock”) (the “Restricted Stock
Award”) on the terms and conditions set forth in this
paragraph 4; provided, however, if as of the Effective Date,
the Company’s shareholders have not approved an amendment or
a successor plan to the Cowen Group, Inc. 2007 Equity and
Incentive Plan and the Cowen Group, Inc. 2006 Equity and
Incentive Plan (together, the “Cowen Plan”) and there
are not sufficient shares under the Cowen Plan to grant you the
entire amount of shares of Common Stock subject to the Restricted
Stock Award, you will be granted a “Pro-Rata Restricted Stock
Award” on the Effective Date. For purposes of this Agreement,
a “Pro-Rata Restricted Stock Award” means that number
of restricted shares of Common Stock equal to the product of
(i) (x) the total number of shares of Common Stock
subject to your Restricted Stock Award, divided by (y) the
total number of shares of Common Stock subject to similar
restricted stock awards or restricted stock unit awards to be
granted on the Effective Date and (ii) the total number of
shares of Common Stock available for grant under the Cowen Plan on
the Effective Date.
(b)
Failure to Grant the Entire
Restricted Stock Award on the Effective Date
. In the event that the
Company has not granted you the entire Restricted Stock Award on
the Effective Date, the Company shall, by July 1, 2010, grant
you any theretofore ungranted portion of the Restricted Stock
Award; provided, however, if there are insufficient shares to grant
you such ungranted portion of the Restricted Stock Award, the
Company shall instead, in no event later than July 1, 2010,
grant you the right to receive an amount in cash equal to Two
Million Five Hundred Thousand Dollars ($2,500,000), less the
Effective Date value of the Pro-Rata
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Restricted Stock Award and any other portion of
the Restricted Stock Award, if any, previously granted to you (such
cash award, the “Cash Makeup Award”).
(c)
Vesting . The Restricted Stock Award (or the Cash
Makeup Award, as applicable) shall vest and become free of
restrictions in two equal installments on each of the second and
third anniversaries of the Effective Date, provided that you are
employed by the Company or a subsidiary thereof and have not yet
given notice to terminate your employment without Good Reason (as
set forth in paragraph 6 below) as of such date. Notwithstanding
the foregoing, any theretofore unvested portion of the Restricted
Stock Award (or the Cash Makeup Award, as applicable) shall
immediately vest in full and become free of restriction (and, in
the case of the Cash Makeup Award, be paid in cash within thirty
(30) days of the date of termination), in the event that,
(i) your employment is terminated (x) by the Company
other than for Cause (as defined below), (y) due to your death
or Disability (as defined below) or (z) by you for Good Reason
(as defined below) or (ii) a Change in Control of the Company
(as defined in the Cowen Group, Inc. 2007 Equity and Incentive
Plan, as may be revised to reflect the structure of the Company
following the Transaction) occurs after the Effective Date (each of
the events in clauses (i) and (ii), an “Accelerated
Vesting Event”). In the event that an Accelerated Vesting
Event occurs prior to the Company having granted you any portion of
the Restricted Stock Award or the Cash Makeup Award, as applicable,
you shall vest in full in, and be paid in cash within thirty (30)
days of the date of termination (or, in the event of a Change in
Control, on the date of such Change in Control), an amount in cash
equal to the theretofore ungranted portion of the Restricted Stock
Award.
(d)
Registration
. As of the Effective Date,
the Company shall, at its expense, reserve for issuance a number of
shares of Common Stock at least equal to the number of shares of
Common Stock that will be subject to the Restricted Stock Award and
shall, as soon as reasonably possible after the Effective Date,
file a registration statement on Form S-8 (or any successor
form, or if Form S-8 is not available, other appropriate
forms) with respect to the shares of Common Stock subject to the
Restricted Stock Award. The Company shall thereafter maintain the
effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as you hold the
Restricted Stock Award (or any portion thereof) or any of the
shares of Common Stock that were previously subject to the
Restricted Stock Award, or until such earlier date as such
Restricted Stock Award and shares of Common Stock, as applicable,
may otherwise be freely sold under applicable law.
(e)
Other Terms of Restricted Stock
Award; Form of Agreement . The terms of your Restricted Stock Award
will be evidenced in an award agreement by and between you and the
Company, which will be substantially in the same form as (and shall
in no event contain terms less favorable to you than those
contained in) the “Form of 2007 Equity Award Agreement
for Executive Officers” filed as Exhibit 10.25 to the
Cowen Group, Inc. Form 10-K for the year ended
December 31, 2008, provided that such award agreement will be
modified to incorporate
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the terms of this Agreement (including, without
limitation, the defined terms contained herein and the restrictive
covenants set forth herein) which shall, in any event,
control.
5.
Termination of
Employment .
(a)
By the Company Other than for
Death, Disability or for Cause; By You for Good Reason
. If your employment is
terminated (i) by the Company for any reason other than due to
(x) your death or Disability (as defined below) or
(y) for Cause (as defined below) or (ii) by you upon
resignation for Good Reason (as defined below), you shall be
entitled to receive (A) that portion of your Base Salary
earned, but unpaid as of the date of termination, paid within
thirty (30) days of the date of your termination, (B) any
Annual Bonus earned by you for a prior completed calendar year to
the extent not theretofore paid and not theretofore deferred (with
any such deferred amounts to be paid in accordance with and at the
times set forth in the applicable deferral arrangement) paid at the
same time as all other Company annual bonuses are paid for the year
in which your employment terminates, but in no event later than
March 15 of the calendar year following the year in which your
employment terminates (the amounts described in clauses
(A) and (B), and the times at which such amounts are paid,
shall be hereinafter referred to as the “Accrued
Obligations”); (C) your rights and interests in the CHRP
Interest shall immediately vest, (D) you shall be entitled to
receive a lump sum cash payment (the “Separation
Payment”) equal to the sum of (x) Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000), (y) your Base
Salary as of the end of the calendar year immediately preceding the
calendar year in which such termination occurs, and (z) the
cash portion of your Annual Bonus in respect of the calendar year
immediately preceding the calendar year in which such termination
occurs, and (E) in addition to any rights you have with
respect to the Restricted Stock Award under paragraph 4 of this
Agreement, (1) any outstanding equity awards shall become
fully vested and exercisable and any restrictions thereon shall
lapse effective as of your date of termination (provided that any
delays in payment or settlement set forth in such grant or award
agreements that are required under Section 409A shall remain
effective) and (2) any stock options outstanding as of your
date of termination shall remain exercisable for the remainder of
the respective terms of such stock options (taking into account any
provisions of the equity incentive plan or option agreements that
cause them to expire or be replaced in connection with changes in
control or similar events) (clauses (1) and
(2) collectively referred to herein as the “Equity
Benefits”). In order to receive the Separation Payment, you
will also be required to sign a Settlement Agreement and Release of
the Company in a form customarily used by the BD Subsidiary, which
will include a general release of known and unknown claims,
provisions relating to return of Company property and
non-disparagement and a requirement to cooperate regarding any
future litigation (the “Release”) within fifty-two (52)
days of the date of termination of your employment (or such earlier
time as may be permissible under the Release taking into account
any revocation period). The
