Exhibit 10.16
AMENDED AND RESTATED SENIOR
MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED SENIOR
MANAGEMENT AGREEMENT (this “ Agreement ”) is
executed as of January 31, 2007, by and among Cohen Brothers,
LLC, a Delaware limited liability company (the “
Company ”), and Christopher Ricciardi (“
Executive ”).
The Company and Executive previously
entered into an Agreement, dated as of February 13, 2006 (the
“ Original Agreement ”), pursuant to which the
Company retained the services of Executive as the Company’s
Chief Executive Officer and, as part of Executive’s
compensation, the Company agreed to issue to Executive 2,335,797
restricted units of membership interest in the Company.
The members of the Company,
including Executive, have approved a recapitalization of the
Company as described in the Recapitalization Agreement and Consent,
dated as of the date hereof, among the Company and each of its
members (the “ Recapitalization Agreement ”),
and in connection therewith, the Company and Executive desire to
amend and restate the Original Agreement in its entirety. Upon
execution of this Agreement by the Company and Executive, the
Original Agreement shall terminate and be of no further force and
effect.
Certain definitions are set forth in
Section 7 of this Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as
follows:
PROVISIONS RELATING TO EXECUTIVE
SECURITIES
1. Issuance of Executive
Securities .
(a) On the date of this Agreement,
Executive will exchange his existing units of membership interest
in the Company for 2,335,797 Class A Units and 2,335,797 Class
B Units to be issued to Executive in the Recapitalization (the
“ Executive Securities ”). The Executive
Securities are uncertificated and the Company will maintain a
record of Executive’s ownership of Class A Units and
Class B Units in its books and records.
(b) In connection with the issuance
of the Executive Securities, Executive represents and warrants to
the Company that:
(i) The Executive Securities will be
issued to Executive for Executive’s own account and not with
a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and
the Executive Securities will not be disposed of in contravention
of the Securities Act or any applicable state securities
laws.
(ii) Executive is an executive
officer of the Company, is sophisticated in financial matters and
is able to evaluate the risks and benefits of the investment in the
Executive Securities.
(iii) Executive is an
“accredited investor” within the meaning of Rule 501 of
Regulation D of the Securities and Exchange Commission.
(iv) Executive is able to bear the
economic risk of his investment in the Executive Securities for an
indefinite period of time because the Executive Securities have not
been registered under the Securities Act and, therefore, cannot be
sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(v) Executive has had an opportunity
to ask questions and receive answers concerning the terms and
conditions of the offering of Executive Securities, has reviewed
all materials provided by the Company to him, has reviewed this
Agreement and such materials with counsel of his choosing and has
had full access to such other information concerning the Company as
he has requested.
(vi) Executive is neither party to,
nor bound by, any other employment agreement, consulting agreement,
noncompete agreement, non-solicitation agreement or confidentiality
agreement or any agreement that would limit or could reasonably be
expected to limit his ability to perform under this
contract.
(c) In connection with the issuance
of the Executive Securities to Executive, the Company represents
and warrants to Executive that:
(i) It is a Delaware Limited
Liability Company in good standing, qualified to transact business
in the Commonwealth of Pennsylvania.
(ii) This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, and the execution, delivery and
performance of this Agreement by the Company does not and will not
conflict with, violate or cause a breach of any agreement, contract
or instrument to which the Company is a party or any judgment,
order or decree to which is subject.
(iii) It has provided to Executive a
full and complete copy of the New LLC Agreement.
(iv) It has provided to Executive a
true and accurate ledger of all Units of the Company which have
been issued, together with a true and complete schedule of all
rights, options or warrants to receive Units in the Company which
have been granted or sold to any person or entity.
(v) It has provided to Execute true
and complete copies of its audited financial statements for
years-end dated December 31, 2003 and 2004 and an unaudited
report for the nine months ended September 30, 2005
(“Financial Statements”).
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(vi) It has provided to Executive
true and complete copies of all tax returns for the Company for
2003 and 2004.
(vii) The Financial Statements are
true, correct and complete in all material respects and present
fairly the financial position and assets and liabilities of the
Company for the periods then ended in conformity with GAAP applied
on a consistent basis.
(viii) Except as disclosed in the
Financial Statements, there are no material liabilities or
obligations of the Company.
(ix) Except as disclosed in the
Financial Statements or on the attached Schedule, neither the
Company or any of its subsidiaries are parties to any litigation or
administrative proceedings or have to the best of its knowledge
been threatened with any litigation or administrative
proceeding.
(x) All material tax returns
required to have been filed by or on behalf of the Company or any
of its subsidiaries as of the date of this Agreement have been duly
filed and each such tax-return is true and correct in all material
respects. All taxes required to have been paid by the Company or
any subsidiary as of the date of this Agreement have been
paid.
(xi) There is no action, dispute,
audit or claim relating to taxes now pending against the Company or
any subsidiary and to the best of its knowledge, no such action,
claim or audit is proposed or threatened.
(d) As an inducement to the Company
to issue the Executive Securities to Executive, and as a condition
thereto, Executive acknowledges and agrees that neither the
issuance of the Executive Securities to Executive nor any provision
contained in this Section 1 shall entitle Executive to
remain as an officer of the Company or its Subsidiaries or affect
the right of the Company or its Subsidiaries to terminate
Executive’s status as an officer of the Company at any time
for any reason (subject to Section 4(c)
hereof).
(e) Concurrently with the execution
of this Agreement, Executive shall become a party to the New LLC
Agreement.
(f) One third (1/3) of the
Executive Securities that are Class A Units vested on
December 31, 2006 pursuant to the Original Agreement, and the
remaining two thirds (2/3) vested on January 31, 2007.
One third (1/3) of the Executive Securities that are Class B
Units vested on December 31, 2006 pursuant to the Original
Agreement and the remaining two thirds (2/3) shall vest on
December 31, 2008.
(g) Prior to the vesting of any
unvested Executive Securities, the Executive shall be entitled to
all rights and prerequisites of ownership of the Executive
Securities, including the right to vote (in the case of Class B
Units) and the right to receive distributions. Except for the right
to put unvested Units and to have the Company purchase Units as set
forth in Section 2 below, there shall be no distinction
between Executive’s non-vested Units and the balance of Units
of the same class in the Company.
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(h) Prior to January 15, 2007
the Company paid Executive an amount equal to the sum of
(i) the estimated federal, state and local taxes (the “
Estimated Taxes ”) payable by Executive in respect of
Executive Securities that are Class A Units that vested during
2006, plus (ii) an amount equal to the Estimated Taxes
specified in the preceding clause (i) divided by 0.6. Prior to
March 31, 2007 and prior to June 30, 2007, the Company
will pay Executive amounts equal to, in the case of each payment,
one half of the sum of (y) the Estimated Taxes payable by
Executive in respect of Executive Securities that are Class A
Units that vested in January 2007, plus (z) an amount equal to
the Estimated Taxes specified in the preceding clause
(y) divided by 0.6. For all purposes hereunder, the Estimated
Taxes payable by the Executive in respect of the vesting of
Executive Securities that are Class A Units shall be deemed to
equal 40% of the Class A Capital Amount (as defined in the New
LLC Agreement) of the Executive Securities that are Class A
Units which have vested during or at the specified time. The
Class A Capital Amount of the Executive Securities that are
Class A Units for purposes of making the calculations in the
preceding sentences in each year shall be based upon a good faith
estimate by the Company of the value of the Executive Securities
that are Class A Units or, in the event that the Company has
commissioned an appraisal of its Units for purposes of calculating
Estimated Taxes, at the Company’s election, such third party
valuation.
2. Repurchase Option and Put
.
(a) In the event of a Separation,
Executive Securities will be subject to repurchase at the option of
the Company pursuant to the terms and conditions set forth in this
Section 2 (the “ Repurchase Option
”). Only in the event of a Separation for Cause, Executive
Securities which have not yet vested shall be deemed cancelled and
the Executive shall be deemed to have forfeited all of his right,
title and interest in and to them.
(b) The purchase price for each Unit
will be the Fair Market Value of such Unit.
(c) In the event the Company
exercises its option to purchase the Executive Securities the
Company shall be limited to a one time right to exercise such
option by giving notice to the Executive to purchase all, but not
less than all of the Securities by delivering written notice (the
“ Repurchase Notice ”) to the holder or holders
of such securities within sixty (60) days after the
Separation.
(d) The closing of the purchase of
the Executive Securities pursuant to the Repurchase Option shall
take place on the date designated by the Company in the Repurchase
Notice, which date shall not be more than thirty (30) days nor
less than five (5) days after the delivery of such notice or
after the receipt by the Company of a binding determination of Fair
Market Value, whichever is later. The Company will pay for the
Securities to be purchased by it pursuant to the Repurchase Option
by a check or wire transfer of funds. In the event that the
purchase price exceeds the sum of $2,000,000.00, the Company shall
have the right, by notice to the Executive in the Repurchase
Option, to pay such excess by delivery of a promissory note of the
Company (x) maturing on the second anniversary of issuance
(provided that no less than 50% of the original principal amount of
the note, less the aggregate amount of principal payments
previously made under the note, shall be payable on the first
anniversary of issuance) and (y) bearing interest at a per
annum rate equal to ten percent (10%), which interest shall be
payable monthly. In the event that the Company elects to partially
pay for Executive’s Securities via a
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Company note, then the Company agrees that,
other than tax distributions to unit holders in an amount no
greater than that necessary for such holders to make federal, state
and local tax payments on their respective allocated share of the
Company’s income, it will not make any distributions or
increase the compensation of senior executives of the Company prior
to making full payment on the note. The Company will be entitled to
receive customary representations and warranties from the sellers
regarding such sale.
(e) The provisions of
Section 2(f) will terminate upon the consummation of a
Public Offering or upon the consummation of a Sale of the
Company.
(f) At any time after
February 13, 2009, in the case of Executive Securities that
are Class A Units, or July 2, 2009 in the case of
Executive Securities that are Class B Units, or, if a Separation
occurs prior to July 2, 2009, at any time after six months and
one day after the latest vesting date of Executive Securities
occurring prior to the date of the Executive Notice (as defined
herein), Executive may notify the Company in writing (the
“Executive Notice”) that Executive desires the Company
to redeem all, but not less than all of the vested Executive
Securities then owned by the Executive. Such notice shall be
irrevocable, shall state his intent to exercise his rights
hereunder and shall be binding on all prior transferees of
Executive Securities. The Company shall thereafter redeem the
Executive Securities within sixty (60) days of the date of the
Executive Notice to the Company. The purchase price for the
Executive Securities shall be determined in accordance with the
following. The Company shall calculate and specify the amount (the
“Aggregate Value”) that is the greater of
(i) seven and one half times the taxable income of the Company
(plus any compensation paid to the Chairman (other than
distributions paid to the Chairman by the Company that were also
paid, on a pro rata basis, to Executive) in the previous twelve
(12) month period that was in excess of the compensation of
the Executive for the same period) for the twelve month period
ending with the calendar quarter ended immediately prior to the
date of the Executive Notice, or (ii) the book value of the
Company as at the calendar quarter ended immediately prior to the
date of the Executive Notice. If the Aggregate Value exceeds the
aggregate Class A Capital Amount (as defined in the New LLC
Agreement) of the Members of the Company plus any unpaid preferred
return payable with respect to the Class A Units (the
“Aggregate Adjusted Class A Capital Amount”), then
(x) the purchase price for each Class A Unit shall be the
Class A Capital Amount (as defined in the New LLC Agreement)
attributable to such Class A Unit plus any unpaid preferred
return payable with respect to such Class A Unit, and
(y) the purchase price for each Class B Unit shall be the
amount by which the Aggregate Value exceeds the sum of (A) the
Aggregate Adjusted Class A Capital Amount plus (B) the
Economic Capital Account Balance associated with all outstanding
LTIP Units (as defined in the New LLC Agreement), with such sum
then being divided by the number of Class B Units of the Company
then outstanding. Alternatively, if the Aggregate Value is less
than the Aggregate Adjusted Class A Capital Amount, then the
purchase price for each Class A Unit shall be the Aggregate
Value divided by the number of Class A Units of the Company
then outstanding, and the purchase price for each Class B Unit
shall be zero. The taxable income and the book value of the Company
shall be determined by the Company’s accounting firm in
accordance with generally accepted accounting principles, properly
applied. The Company will pay for the Executive Securities to be
purchased by it pursuant to the Repurchase Option by a check or
wire transfer of funds. In the event that the purchase price
exceeds the sum of $2,000,000.00, the Company shall have the right,
by written notice to the Executive to pay such excess by delivery
of a promissory note of the Company (x) maturing no
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later than the second anniversary of issuance
(provided that no less than 50% of the original principal amount of
the note, less the aggregate amount of principal payments
previously made under the note, shall be payable no later than the
first anniversary of issuance) and (y) bearing interest at a
per annum rate equal to ten percent (10%), which interest shall be
payable monthly. In the event that the Company elects to partially
pay for Executive’s Securities via a Company note, then the
Company agrees that, other than tax distributions to unit holders
in an amount no greater than that necessary for such holders to
make federal, state and local tax payments on their respective
allocated share of Company’s income, it will not make any
distributions or increase the compensation of senior executives of
the Company prior to making full payment on the note.
3. Restrictions on Transfer of
Executive Securities .
(a) Transfer of Executive
Securities . The holders of Executive Securities shall not
Transfer any interest in any Executive Securities, except pursuant
to (i) the provisions of Section 2 hereof,
(ii) an Approved Sale, or (iii) the provisions of
Section 3(b) below.
(b) Certain Permitted
Transfers . The restrictions in this Section 3 will
not apply with respect to any Transfer of Executive Securities made
(i) pursuant to applicable laws of descent and distribution or
to such Person’s legal guardian in the case of any mental
incapacity or among such Person’s Family Group, or
(ii) subject to the restrictions on transfer set forth in the
LLC Agreement or any other agreement entered into pursuant thereto,
of Units at such time as Cohen Bros. Financial, LLC or its
transferees (“Selling Members”) sell Units in a Public
Sale, but in the case of this clause (ii) only an
amount of units (the “ Transfer Amount ”) equal
to the lesser of (A) the number of Units owned by Executive
and (B) the product of (I) the number of Units owned by
Executive and (II) a fraction (the “ Transfer Fraction
”), the numerator of which is the number of Units sold by the
Selling Members in such Public Sale and the denominator of which is
the total number of Units held by the Selling Members prior to the
Public Sale; provided that the restrictions contained in
this Section 3 will continue to be applicable to the
Executive Securities after any Transfer of the type referred to in
clause (i) above and the transferees of such Executive
Securities must agree in writing to be bound by the provisions of
this Agreement. Any transferee of Executive Securities pursuant to
a Transfer in accordance with the provisions of clause (i)
of this Section 3(b) is herein referred to as a
“ Permitted Transferee .” Upon the Transfer of
Executive Securities pursuant to this Section 3(b), the
transferring holder of Executive Securities will deliver a written
notice (a “ Transfer Notice ”) to the Company.
In the case of a Transfer pursuant to clause (i)
hereof, the Transfer Notice will disclose in reasonable
detail the identity of the Permitted Transferee(s).
(c) Approved Sale
.
(i)(A) If, at any time after the
date hereof, the Board approves a Sale of the Company, then the
Company shall deliver written notice (the “ Sale
Notice ”) to Executive, which notice shall be binding on
all transferees of Executive Securities, setting forth in
reasonable detail the terms of the proposed Sale of the Company (a
“ Board Approved Sale ”). In such event, all of
the Executive Securities shall immediately vest. Each holder of
Executive Securities shall vote for, consent to and raise no
objections against such Board Approved Sale. If the Board Approved
Sale is structured as a (i) merger or consolidation, each
holder of Executive Securities shall waive any dissenters’
rights, appraisal rights or similar rights in connection
with
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such merger or consolidation or (ii) sale
of Units, each holder of Executive Securities shall agree to sell
all of his, her or its Executive Securities or rights to acquire
Executive Securities on the terms and conditions set forth in the
Sale Notice. Each holder of Executive Securities shall take all
necessary or desirable actions in connection with the consummation
of the Board Approved Sale as requested by the Board.
(B) In the event that holders of a
majority of the Units of the Company agree to sell their units to a
third party, then Executive shall have the right to sell his units
to such purchaser at the same time and on the same terms and
conditions pursuant to which the holders of a majority of the units
are selling or transferring their units.
(ii) If either the Company or the
holders of any equity securities of the Company enter into a
negotiation or transaction for which Rule 506 (or any similar rule
then in effect) promulgated by the Securities and Exchange
Commission may be available with respect to such negotiation or
transaction (including a merger, consolidation or other
reorganization), the holders of Executive Securities will, at the
request of the Company, appoint a purchaser representative (as such
term is defined in Rule 501) reasonably acceptable to the Company.
If any holder of Executive Securities appoints a purchaser
representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if any holder of
Executive Securities declines to appoint the purchaser
representative designated by the Company such holder will appoint
another purchaser representative, and such holder will be
responsible for the fees of the purchaser representative so
appointed.
(iii) Holders of Executive
Securities will bear their pro rata share (based upon the number of
Units to be sold) of the costs of any Board Approved Sale to the
extent such costs are incurred for the benefit of all holders of
Units and are not otherwise paid by the Company or the acquiring
party. For purposes of this Section 3(c)(iii) , costs
incurred in exercising reasonable efforts to take all actions in
connection with the consummation of a Board Approved Sale in
accordance with Section 3(c)(i) shall be deemed to be
for the benefit of all holders of Units. Costs incurred by holders
of Executive Securities on their own behalf will not be considered
costs of the transaction hereunder and shall be paid by such holder
of Executive Securities.
(d) Termination of
Restrictions . The restrictions set forth in this
Section 3 will continue with respect to each unit of
Executive Securities until the earlier of (i) the date of a
Public Sale, (ii) the date on which such unit of Executive
Securities has been transferred in a Participating Sale or
(iii) the consummation of a Sale of the Company.
PROVISIONS RELATING TO
EXECUTIVE’S STATUS WITH THE COMPANY
4. Service . The Company
agrees that the Executive was hired as an officer of the Company
effective February 13, 2006, and Executive agrees to continue
in such position until his separation pursuant to
Section 4(c) hereof (the “ Service Period
”).
(a) Position and Duties.
(i) During the Service Period,
Executive shall serve as the Chief
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Executive Officer of Company and its subsidiary,
Cohen Bros. & Company, LLC, and shall have the normal
duties, responsibilities and authority implied by such positions,
including, without limitation, the responsibilities associated with
all aspects of the daily operations of Company, subject to the
power of the Company’s Chairman to expand or limit such
duties, responsibilities and authority.
(ii) Executive shall report to the
Chairman, and Executive shall devote his best efforts and his full
business time and attention to the business and affairs of the
Company and its Subsidiaries, provided that nothing in this
agreement shall prohibit Executive from spending normal and
reasonable time and efforts in managing his personal investments.
Executive represents and warrants that his personal investments do
not include any controlling interest in any company or entity and
covenants that he will not acquire a controlling interest in any
company or entity without the prior written consent of the
Company.
(b) Salary, Bonus and
Benefits .
(i) During the Service Period, the
Company will pay Executive a base salary of $1,000,000 per annum
(the “ Annual Base Salary ”), which salary will
be payable by the Company in regular installments guaranteed
distributions in accordance with the Company’s general
practices and which Annual Base Salary may be adjusted by the
Chairman prior to each anniversary of this Agreement.
(ii) For each compensation year
completed during the Service Period, Executive shall be eligible
for an annual bonus, to be determined by the Chairman based upon
the achievement by the Company and its Subsidiaries of their
financial objectives and Executive’s contribution to such
achievement. During the first compensation year of the Service
Period only, Executive shall receive no less than $5,000,000 in
Annual Base Salary and bonuses, (the “Guaranteed
Payment”). The Company shall be permitted, at its discretion,
to pay up to $4,000,000 of such amount no later than March 15,
2007
(iii) Executive shall be permitted
during the Service Period to participate in any group life,
hospitalization or disability insurance plans, health programs,
retirement plans, fringe benefit programs and other benefits,
including employer 401(k) matching benefits, that may be available
to other senior executives of the Company generally, in each case
to the extent that Executive is eligible under the terms of such
plans or programs.
(iv) The Company shall pay or
reimburse Executive for all ordinary and reasonable out-of-pocket
expenses actually incurred (and, in the case of reimbursement,
paid) by Executive during the Service Period in the performance of
his services under this Agreement, in accordance with the
Company’s policies regarding such reimbursements.
(c) Separation . The Service
Period will continue until (i) Executive’s resignation
(with or without Good Reason), Disability or death, or
(ii) the Chairman decides to terminate Executive’s
status as an officer of the Company with or without Cause. If
Executive’s Service Period is terminated for any reason,
Executive (or Executive’s estate) shall be entitled to
receive
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his Annual Base Salary through the date of
termination and reimbursement of expenses incurred by Executive
through the date of termination in accordance with
Section 4(b)(v) above. In addition, if
Executive’s Service Period is terminated by the Company
without Cause or by Executive with Good Reason prior to
December 31, 2006, then Executive will be entitled to the
portion of the
