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Item 1.01
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Entry into a Material Definitive Agreement.
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On October 28, 2020 (the “Effective Date”),
Cohen & Company Inc., a Maryland corporation (the “Company”), entered into a Loan Agreement (the “Loan
Agreement”) with Byline Bank, as lender (the “Lender”), by and among the Lender, the Company, as a guarantor,
and the Company’s subsidiaries, Cohen & Company, LLC (the “Operating LLC”) and J.V.B. Financial Group
Holdings, LP (“Holdings LP”), as guarantors, and J.V.B. Financial Group, LLC, as borrower (the “Borrower”),
and C&Co PrinceRidge Holdings, LP (“C&Co.”), pursuant to which the Lender agreed to make loans at the Borrower’s
request from time to time in the aggregate amount of up to $7.5 million.
In addition, on the Effective Date, the Borrower and the Lender
entered into a Revolving Note and Cash Subordination Agreement (the “Revolving Note and Cash Subordination Agreement,”
and, together with the Loan Agreement, the “Credit Facility”), pursuant to which, among other things, the Lender agreed
to make loans at the Borrower’s request from time to time in the aggregate amount of up to $17.5 million.
Loans (both principal and interest) made by the Lender to the
Borrower under the Loan Agreement and Revolving Note and Cash Subordination Agreement are scheduled to mature and become immediately
due and payable in full on October 28, 2022. In addition, loans may be made under the Loan Agreement and the Revolving Note
and Cash Subordination Agreement until October 28, 2022 and October 28, 2021, respectively.
Loans under the Credit Facility will bear interest at a per
annum rate equal to LIBOR plus 6.0%, provided that in no event can the interest rate be less than 7.0%. The Borrower is required
to pay on a quarterly basis an undrawn commitment fee at a per annum rate equal to 0.50% of the undrawn portion of the Lender’s
$25 million commitment under the Credit Facility. The Borrower is also required to pay on each anniversary of the Effective Date
a commitment fee at a per annum rate equal to 0.50% of the Lender’s $25 million commitment under the Credit Facility. Pursuant
to the terms of the Credit Facility, the Borrower paid to the Lender a commitment fee of $250,000 on the Effective Date.
Loans under the Credit Facility must be used by the Borrower
for working capital purposes and general liquidity of the Borrower. The Borrower may request a reduction in the Lender’s
$25 million commitment in a minimum amount of $1 million and multiples of $500,000 thereafter upon not less than five days’
prior notice to the Lender.
The obligations of the Borrower under the Credit Facility are
guaranteed by the Company, the Operating LLC and Holdings LP (collectively, the “Guarantors”), and are secured by a
lien on all of Holdings LP’s property, including its 100% ownership interest in all of the outstanding membership interests
of the Borrower.
Pursuant to the Credit Facility, the Borrower and the Guarantors
provide customary representations and warranties for a transaction of this type.
The Credit Facility also includes customary covenants for a
transaction of this type, including covenants limiting the indebtedness that can be incurred by the Borrower and Holdings LP and
restricting the Borrower’s ability to make certain loans and investments. Additionally, the Borrower may not permit (i) the
Borrower’s tangible net worth to be less than $80 million at any time from October 29, 2020 through December 31,
2021, and $85 million at any time thereafter; and (ii) the Borrower’s excess net capital to be less than $40 million
at any time. The Borrower and each Guarantor are also limited in their ability to repay certain of their existing outstanding indebtedness.
The Credit Facility contains customary events of default for
a transaction of this type. If an event of default under the Credit Facility occurs and is continuing, then the Lender may declare
and cause all or any part of the Loans and all other liabilities outstanding under the Credit Facility to become immediately due
and payable.
The foregoing description of the Credit Facility does not purport
to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement and the Revolving Note and
Cash Subordination Agreement, copies of which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and
are incorporated herein by reference.
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Item 1.02
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Termination of a Material Definitive Agreement.
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The information set forth under Item 1.01 is incorporated by
reference herein.
The Credit Facility described in item 1.01 above was entered
into to replace (i) the Loan Agreement, by and among the Company, the Operating LLC and Holdings LP, as guarantors, and the
Borrower, as borrower, C&Co, and Fifth Third Financial Bank, N.A. (as successor to MB Financial Bank, N.A.), as lender,
dated April 25, 2018, as amended (the “Original Loan Agreement”), and (ii) the Revolving Note and Cash Subordination
Agreement, by and between the Borrower and Fifth Third Financial Bank, N.A. (as successor to MB Financial Bank, N.A.),
dated January 29, 2019 (the “Original Revolving Note and Cash Subordination Agreement,” and, together with the
Original Loan Agreement, the “Original Credit Facility”). Pursuant to the Original Credit Facility, Fifth Third Financial
Bank had agreed to make loans at the Borrower’s request from time to time in the aggregate amount of up to $25 million.
In connection with the execution of the Credit Facility,
on October 27, 2020, the Original Loan Agreement and the Original Revolving Note and Cash Subordination Agreement were
both terminated and the Borrower paid to Fifth Third Financial Bank, N.A. all amounts outstanding under the Original Credit
Facility as of the such date.