PROPOSAL ONEELECTION OF DIRECTORS
Pursuant to the Maryland General Corporation Law and our charter and Bylaws, our business and affairs are managed under the direction of our
Board of Directors. Our Board of Directors, based on the recommendation of its Nominating and Corporate Governance Committee (the "Nominating and Corporate Governance Committee"), has unanimously
nominated all five of its current directors, Messrs. Cohen, Dawson, DiMaio and Haraburda and Ms. Liberto (each a "Director Nominee" and, collectively, the "Director Nominees"), for
election as directors at the meeting, each to serve until our next annual meeting of stockholders and until his or her successor has been duly elected and qualified, or until his or her earlier death,
resignation or retirement. Our Nominating and Corporate Governance Committee knows of no reason why any of the Director Nominees would be unable or unwilling to serve on the Board of Directors, but if
any Director Nominee should be unable or unwilling to serve, the named proxies will vote FOR the election of such other person for director as the Board
of Directors, based on the recommendation of our Nominating and Corporate Governance Committee, may nominate in the place of such Director Nominee.
Names of the Director Nominees and Biographical Information; Qualifications
Daniel G. Cohen, age 50, has, since February 21, 2018, served as the Chairman of the
Board of Directors and of the Board of Managers of the Company's majority owned subsidiary, Cohen & Company, LLC, and has, since September 16, 2013, served as the President and
Chief Executive of the Company's European Business, and as President, a director and the Chief Investment Officer of the Company's indirect majority owned subsidiary, Cohen & Company Financial
Limited (formerly known as EuroDekania Management Limited), a Financial Conduct Authority regulated investment advisor and broker dealer focusing on the European capital markets
("CCFL"). Mr. Cohen served as Vice Chairman of the Board of Directors and of the Board of Managers of Cohen & Company, LLC from September 16, 2013 to
February 21, 2018. Mr. Cohen served as the Chief Executive Officer and Chief Investment Officer of the Company from December 16, 2009 to September 16, 2013 and as the
Chairman of the Board of Directors from October 6, 2006 to September 16, 2013. Mr. Cohen served as the executive Chairman of the Company from October 18, 2006 to
December 16, 2009. In addition, Mr. Cohen served as the Chairman of the Board of Managers of Cohen & Company, LLC from 2001 to September 16, 2013, as the Chief
Investment Officer of Cohen & Company, LLC from October 2008 to September 16, 2013, and as Chief Executive Officer of Cohen & Company, LLC from December 16,
2009 to September 16, 2013. Mr. Cohen served as the Chairman and Chief Executive Officer of J.V.B. Financial Group, LLC (formerly C&Co/PrinceRidge Partners LLC), the
Company's indirect broker dealer subsidiary ("JVB"), from July 19, 2012 to September 16, 2013. Mr. Cohen served as a director of Star Asia Finance, Limited ("Star Asia"), a
permanent capital vehicle investing in Asian commercial real estate, until the Company's sale of its interest in Star Asia on February 20, 2014. Mr. Cohen served as Chairman of Cohen
Financial Group, Inc. since its inception in April 2007 until its liquidation in February 2012. Mr. Cohen served as a director of Muni Funding Company of America, LLC, a company
investing in middle-market non-profit organizations until it merged with Tiptree Financial Partners, L.P. in June 2011. Since 2000, Mr. Cohen has been the Chairman of the board of
directors of The Bancorp, Inc. (NASDAQ: TBBK), a holding company for The Bancorp Bank, which provides various commercial and retail banking products and services to small and mid-size
businesses and their principals in the United States, and since January 2015 has served as Executive Chairman of The Bancorp Bank. Mr. Cohen is a member of the Academy of the University of
Pennsylvania, a member of the Visiting Committees for the Humanities and a member of the Paris Center of the University of Chicago. Mr. Cohen is also a Trustee of the List College Board of the
Jewish Theological Seminary, a member of the board of the Columbia Global Center in Paris, a Trustee of the Paideia Institute and a Trustee of the Arete Foundation.
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G. Steven Dawson, age 62, has served as our director since January 11, 2005. Mr. Dawson also serves as the Chairman of the
Audit Committee of the Board of Directors (the "Audit Committee"), as a member of the Nominating and Corporate Governance Committee, and as a member of the Compensation Committee of the Board of
Directors (the "Compensation Committee"). Mr. Dawson
was previously a member of the compensation committee and nominating and corporate governance committee for Sunset Financial Resources, Inc. ("Sunset"), and was also the Chairman of Sunset's
special committee in connection with Sunset's merger with Alesco Financial Trust ("AFT"). Mr. Dawson is a private investor and, in addition to his current board activities noted above, he has,
from time to time, served on the boards of other public and private companies. He currently serves on the board of directors of Medical Properties Trust (NYSE: MPW), a Birmingham, Alabama-based real
estate investment trust ("REIT") specializing in the ownership of acute care facilities and related medical properties (Chairman of the audit committee and member of the investment committee) and
American Campus Communities (NYSE: ACC), an Austin-based equity REIT focused on student housing (Chairman of the audit committee and member of the compensation committee). From 1990 to 2003,
Mr. Dawson served as Chief Financial Officer of Camden Property Trust and its predecessors, a multi-family REIT based in Houston with apartment operations, construction and development
activities throughout the United States.
Jack J. DiMaio, Jr., age 53, has, since February 21, 2018, served as the Vice Chairman of the Board of Directors and of the Board
of Managers of Cohen & Company, LLC and, from September 24, 2013 until February 21, 2018, Mr. DiMaio served as the Chairman of the Board of Directors and of the
Board of Managers of Cohen & Company, LLC. Mr. DiMaio is the founder and Chief Executive Officer of the Mead Park group of companies and has served in this capacity since
September 2011. Prior to founding Mead Park, Mr. DiMaio was a Managing Director and Global Head of Interest Rate, Credit and Currency Trading of Morgan Stanley, and served in this capacity from
September 2009 to August 2011. In addition, Mr. DiMaio served as a member of Morgan Stanley's Management Committee during his tenure at the firm. Prior to joining Morgan Stanley,
Mr. DiMaio co-founded DiMaio Ahmad Capital LLC, a New York-based asset manager specializing in credit markets, and served as the Chief Executive Officer and Managing Partner from
February 2005 to August 2009. Before founding DiMaio Ahmad Capital LLC, Mr. DiMaio was a Managing Director and Head of the Diversified Credit Hedge Fund Group at Credit Suisse
Alternative Capital, Inc. from March 2004 to February 2005. Prior to that time, Mr. DiMaio was the Chief Executive Officer of Alternative Investments at Credit Suisse Asset Management.
In addition, Mr. DiMaio was an Executive Board Member of Credit Suisse Securities (USA), Inc. and of Credit Suisse Asset Management. Mr. DiMaio joined Credit Suisse in 1989, and,
after completing its sales and trading program, he joined Credit Suisse's credit research group. In 1990, Mr. DiMaio joined the Credit Suisse corporate bond trading desk where he was appointed
Head Trader in 1995 and the Department Head in 1996. At the end of 1997, Mr. DiMaio was appointed Head of Credit Suisse Global Credit Trading. In 2000, Mr. DiMaio was responsible for
Credit Suisse's entire Global Credit Products Cluster and was named Head of Fixed Income Division North America. Mr. DiMaio holds a B.S. in Finance from New York Institute of Technology.
Jack Haraburda, age 81, has served as our director, a member of the Nominating and Corporate Governance Committee (except for a
seven-month period in 2010) and the Chairman of the Compensation Committee since October 6, 2006 and has served as a member of the Audit Committee since June 2018. Mr. Haraburda served
as a trustee and Chairman of the compensation committee of the board of trustees of AFT from January 2006 until Sunset's merger with AFT. Mr. Haraburda is the managing partner of CJH Securities
Information Group, a professional coaching business. Mr. Haraburda served as managing director for the Philadelphia Complex of Merrill Lynch, Pierce, Fenner & Smith Incorporated from
2003 to 2005. He has also served in various positions at Merrill Lynch from 1984 until 2003, including as managing director of Merrill Lynch's Princeton Complex, resident Vice President of Merrill
Lynch's Philadelphia Main Line Complex, marketing director and
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national
sales manager of Merrill Lynch Life Agency and Chairman of Merrill Lynch Metals Company. From 1980 to 1984, he was managing director of Comark Securities, a government securities dealer. From
1968 until 1980, he served as a financial advisor, national sales manager for the Commodity Division, manager of the Atlanta Commodity Office and the Bala Cynwyd office of Merrill Lynch.
Diana Louise Liberto, Esq., age 62, has served as our director since December 21, 2015, and has served Chair of the Nominating and
Corporate Governance Committee, as a member of the Audit Committee and as a member of the Compensation Committee since June 2018. Ms. Liberto is a graduate of the Rutgers University School of
Law, having earned a Juris Doctor degree with honors. After clerking for a United States District Court Judge from September 1991 to September 1992, Ms. Liberto worked with a law firm in
Philadelphia, Pennsylvania. Ms. Liberto then joined the office of the General Counsel of Wal-Mart Stores, Inc., serving in various capacities from 2004 until October 2015, including an
interim assignment in Wal-Mart India. From October 2015 to April 2018, Ms. Liberto served as the Chief Executive Officer of WalkMyMind, Inc., a corporate and personal wellness company
headquartered in Philadelphia, Pennsylvania. Since April 2018, Ms. Liberto has served as President and Chief Executive Officer and Chair of the Board of Directors of WalkMyMind, Inc. and
its parent holding company, WMM Holding Co., LLC. Ms. Liberto serves on the advisory board of J3Personica, a medical education selection and assessment startup company.
When
determining whether it is appropriate to re-nominate a current director to continue on the Board of Directors, the Board focuses primarily on the information provided in each of the
director's individual biographies set forth above and its knowledge of the character and strengths of the sitting directors. With respect to Mr. Cohen, the Company considered his years of
executive leadership with Cohen & Company, LLC as well as other companies, his extensive investment experience and his expertise in strategic planning and business expansion. With regard
to Mr. Dawson, the Company considered his experience as a director of the Company and its predecessors as well as his prior experience as the Chief Financial Officer of a public company and as
an independent director for other public companies. With regard to Mr. DiMaio, the Company considered his significant experience in the financial services industry, including serving in
management positions of other financial institutions, and his unique perspective with respect to corporate strategy and business development. With regard to Mr. Haraburda, the Company
considered his experience as a director of the Company and its predecessors as well as his extensive knowledge of the securities industry. With regard to Ms. Liberto, the Company considered her
legal background and knowledge of corporate governance matters.
Rights of Certain Stockholders to Nominate Directors
On May 9, 2013, the Company entered into a Securities Purchase Agreement (the "CBF Purchase Agreement") regarding a strategic investment
in the Company by Cohen Bros.
Financial, LLC, of which Daniel G. Cohen, President and Chief Executive of the Company's European operations and Chairman of the Company's Board of Directors and Cohen &
Company, LLC's Board of Managers, is the sole member ("CBF"). Pursuant to the CBF Purchase Agreement, the Company agreed, among other things, that at any meeting at which the Company's
stockholders may vote for the election of directors, for so long as CBF and certain of its affiliates collectively own 10% or more of the Company's outstanding common stock (as calculated under the
CBF Purchase Agreement), CBF may designate one individual to stand for election at such meeting.
In
accordance with the CBF Purchase Agreement, the Company has nominated Daniel G. Cohen to stand for election to the Board at the meeting and the Board is (a) recommending to the
Company's stockholders the election of Mr. Cohen at the meeting, and (b) soliciting proxies for Mr. Cohen in connection with the meeting to the same extent as it is soliciting
proxies for the other Director Nominees.
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Legal Proceedings
None of our directors or executive officers has been involved in any events enumerated under Item 401(f) of Regulation S-K during
the past ten years that are material to an evaluation of the ability or integrity of such persons to be our directors or executive officers.
No
material proceedings exist in which any of our directors or executive officers is an adverse party to the Company or any of its subsidiaries or has a material interest adverse to the
Company or any of its subsidiaries.
Family Relationships
There is no family relationship between any of our directors or executive officers.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE FIVE DIRECTOR NOMINEES
RECOMMENDED BY THE BOARD OF DIRECTORS' NOMINATING AND CORPORATE GOVERNANCE COMMITTEE AND UNANIMOUSLY APPROVED FOR NOMINATION BY THE BOARD OF DIRECTORS. IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY,
PROXIES SOLICITED IN CONNECTION WITH THIS PROXY STATEMENT WILL BE VOTED FOR EACH OF THE FIVE DIRECTOR NOMINEES.
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INFORMATION REGARDING THE POTENTIAL ISSUANCE OF UP TO 2,242,954 SHARES OF COMMON STOCK IN CONNECTION WITH THE 2019 LLC UNITS ISSUED PURSUANT TO THE 2019 UNIT PURCHASE AGREEMENT
As described in greater detail below, on December 30, 2019, the Company entered into the 2019 Unit Purchase Agreement, by and among the
Company, Cohen & Company, LLC, Daniel G. Cohen and The DGC Family Fintech Trust (the "DGC Trust"), pursuant to which, among other things, Cohen & Company, LLC issued to
Daniel G. Cohen and the DGC Trust an aggregate of 22,429,541 LLC Units (collectively, the "2019 LLC Units").
Pursuant
to the Amended and Restated Limited Liability Company Agreement of Cohen & Company, LLC, dated as of December 16, 2009, as amended (the "LLC Agreement"), a
holder of LLC Units, including the 2019 LLC Units, may cause Cohen & Company, LLC to redeem (each, a "Unit Redemption") such LLC Units at any time for, at the
Company's option, (A) cash or (B) one share of the Company's common stock for every ten LLC Units. Accordingly, the 2019 LLC Units
(i.e., 22,429,541 LLC Units) are redeemable into up to 2,242,954 shares of our common stock (collectively, the "2019 Redemption Shares") upon a
potential Unit Redemption of the 2019 LLC Units. The implied value of each 2019 Redemption Share was $4.00 as of December 30, 2019 (as discussed in greater detail below (see Background
of the Transactions below)).
Our
common stock is listed on the NYSE American. Section 713(a) of the NYSE American Company Guide requires stockholder approval as a prerequisite to approval of applications to
list additional shares that are issued in connection with a transaction involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into common stock)
representing 20% or more of such issuer's presently outstanding stock for less than the greater of book or market value of the stock.
The
diluted book value per share of our common stock as of December 30, 2019 was $22.29. The diluted book value per share is calculated by dividing $39.7 million,
representing the total permanent equity from our consolidated balance sheet as of September 30, 2019, by 1,781,033, representing the 1,119,909 shares of our common stock issued and outstanding,
plus the outstanding unrestricted and restricted LLC Units, exchangeable into 587,409 shares of our common stock, plus our outstanding equity awards consisting of 73,715 restricted shares of
common stock.
The
potential issuance of the 2019 Redemption Shares is subject to stockholder approval pursuant to Section 713(a) of the NYSE American Company Guide because (i) such
issuance represented more than 20% of our common stock as of December 30, 2019 (based on the 1,193,624 shares of common stock issued and outstanding as of December 30, 2019); and
(ii) the implied value of $4.00 per share of each 2019 Redemption Share represented a price which was lower than the book value per share of the common stock in accordance with GAAP as of
December 30, 2019 (which book value was $22.29 as of December 30, 2019).
Accordingly,
pursuant to Proposal Two, we are asking our stockholders to approve, in accordance with Section 713(a) of the NYSE American Company Guide, the potential issuance of
the 2019 Redemption Shares (i.e., the potential issuance of up to 2,242,954 shares of our common stock) in connection with a potential Unit Redemption
with respect to all of the 2019 LLC Units.
Background of the Transaction
On October 24, 2019, at a meeting of the Board of Directors with members of the Company's senior management present, the Board discussed
the Company's challenges and constraints, including those resulting from the counterparties in the Company's matched book repo financing business, which continued to assess the Company' capital
balances, as well as constraints imposed by the Fixed Income Clearing Corporation (FICC), of which the Company's U.S. broker-dealer subsidiary, J.V.B. Financial
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Group, LLC
("JVB"), is a full netting member, BNY Mellon, as settlement agent for JVB's GCF matched book repo business, Fifth Third Bank, as lender in the Company's $25 million credit
facility, all of which require JVB to maintain certain minimum capital balances. The Board also discussed JVB's
need for additional capital to support business initiatives and that the Company's management had been looking for ways to obtain additional capital without increasing the Company's outstanding debt.
At
such meeting, the Board also discussed that the then-current market environment had not significantly improved since the Company had hired a financial advisor, Northland Capital
Markets (the "Financial Advisor"), in the third quarter of 2016 in an effort to find potential investors in the Company. The Board discussed the fact that, during the third and fourth quarters of 2016
and the first quarter of 2017, the Financial Advisor had contacted 54 potential investors, none of which had responded with an indication of interest in such an investment. The Board then agreed with
the Company's senior management's assessment that it remained unlikely that any third-party investors would be interested in investing in the Company on favorable terms. Daniel G. Cohen then recused
himself from the meeting, and Mr. Brafman brought to the Board's attention a potential transaction (the "Transaction") in which Mr. Cohen and the DGC Trust would contribute shares of
common stock, par value $0.0001 ("IMXI Common Stock"), of International Money Express, Inc. (NASDAQ: IMXI) to Cohen & Company, LLC (and potentially JVB) in exchange for LLC
Units. Mr. Brafman informed the Board that from time to time during 2019 and prior to the October 24, 2019 meeting of the Board, Messrs. Brafman and Cohen had discussed the
Company's continued need for additional capital. Mr. Brafman noted that during these discussion, Mr. Cohen had expressed his desire to continue to support the Company's business and had
offered to contribute certain shares in IMXI which Mr. Cohen owned in exchange for LLC Units. The Board then discussed, among other things, the number of shares of IMXI Common Stock
which might be contributed to Cohen & Company in the proposed Transaction and the transfer restrictions on such securities. Mr. Brafman noted that the shares of IMXI Common Stock which
were being proposed to be transferred in the Transaction represented approximately a $10 million equity infusion in the Company based on the then-current value of such IMXI Common Stock. Given
Mr. Cohen's potential interest in the potential Transaction and understanding that such a transaction would be a related party transaction, the Board then approved the formation of a special
committee of the Board of Directors (the "Special Committee"), comprised of the Company's three independent directors, G. Steven Dawson, Jack Haraburda and Diana Louise Liberto, to consider and, if
necessary, negotiate the potential Transaction.
On
October 28, 2019, the Special Committee held a telephonic meeting, with members of the Company's senior management (excluding Mr. Cohen) and outside counsel present, to
discuss the potential Transaction. During the meeting, the Special Committee discussed the possibility of engaging a financial advisor to advise the Special Committee with respect to the potential
Transaction and to deliver a fairness opinion with respect to the Transaction. The Special Committee then discussed the Company's need for capital and proposed that the Company's senior management
(excluding Mr. Cohen), on behalf of the Committee, draft a term sheet for the Special Committee's and the Financial Advisor's review. The Special Committee then appointed Jack Haraburda as the
Chairperson of the Special Committee.
On
November 4, 2019, the Special Committee held a telephonic meeting, with members of the Company's senior management (excluding Mr. Cohen) and outside counsel present, to
discuss the engagement of a financial advisor with respect to the potential Transaction. The Board then discussed the financial advisors being considered, one of which was the Financial Advisor. The
Special Committee noted, among other things, that the Financial Advisor had previously been engaged by the Company. The Special Committee then directed the Company's senior management (excluding
Mr. Cohen) to negotiate and to execute an engagement letter with, the Financial Advisor with respect to the potential Transaction.
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Following
this date, the Company's senior management team (excluding Mr. Cohen) and the Financial Advisor had multiple discussions regarding the Financial Advisor's engagement and
the capital needs of the Company.
On
November 14, 2019, the Company executed an engagement letter with the Financial Advisor, pursuant to which the Financial Advisor agreed to serve as the financial advisor in
connection with the potential capital raise transaction and to, if requested by the Company, provide a fairness opinion in connection with the proposed Transaction.
On
December 3, 2019, the Special Committee held a telephonic meeting with representatives of the Financial Advisor and the Company's outside legal counsel present, pursuant to
which the representatives of the Financial Advisor discussed in detail a presentation which the Financial Advisor had prepared for the Special Committee regarding the proposed Transaction. During this
presentation, the Financial Advisor's representatives discussed, among other things, the value and terms of the LLC Units proposed to be issued by Cohen & Company, LLC in the
proposed Transaction and the value of the Company's common stock underlying such LLC Units upon a redemption thereof, the value of the IMXI Common Stock based on the historic public trading of
such stock and a separate valuation report that the Company received on a regular basis related to certain restricted tranches of IMXI Common Stock that it would be receiving, the information included
in the Financial Advisor's presentation regarding capital raise transactions that had been consummated by similarly situated companies (as compared to Cohen & Company, LLC) and the
potential terms of the potential Transaction. The Special Committee then discussed in detail the Financial Advisor's presentation, including the price of the common stock underlying the LLC
Units being issued in the proposed Transaction (assuming a Unit Redemption of such LLC Units for shares of the Company's common stock (i.e., the
per share price of the 2019 Redemption Shares)), which the Special Committee would present to Mr. Cohen in its term sheet regarding the Transaction. Following this discussion, the Committee
concluded that the proposed term sheet to be presented to Mr. Cohen should include a price of $4.50 per share (the "Per Share Price") for each 2019 Redemption Share. The Special Committee then
discussed the remaining terms of such term sheet and approved the term sheet to be presented to Mr. Cohen.
Between
December 3, 2019 and December 13, 2019, the Company's senior management, at the direction of the Special Committee, shared the proposed term sheet (which had been
approved by the Special Committee) regarding the proposed Transaction and held multiple telephone calls with the Financial Advisor and Mr. Cohen's legal counsel with respect thereto.
On
December 13, 2019, the Special Committee held a telephonic meeting with the Company's senior management team (excluding Mr. Cohen) present, pursuant to which
Mr. Haraburda updated the Special
Committee with respect to his negotiations with Mr. Cohen's legal counsel regarding the proposed Transaction. Mr. Haraburda informed the Special Committee that Mr. Cohen's legal
counsel had requested that the Per Share Price be based on a simple average of the 30-, 60- and 90-day volume weighted average price ("VWAP") of the Company's common stock as reported by the NYSE
American Stock Exchange. The Special Committee then asked the Company's senior management to calculate the Per Share Price based on the proposed VWAP and present such calculations to the Special
Committee. The Special Committee then discussed the then-current term sheet regarding the Transaction.
Between
December 13, 2019 and December 23, 2019, Mr. Haraburda, in his capacity as Chairperson of the Special Committee, again held multiple telephone calls with
Mr. Cohen's legal counsel with respect to the proposed Transaction, including the negotiation of the Per Share Price. During this time, the Special Committee and the Company's outside legal
counsel reviewed an initial draft of a securities purchase agreement with respect to the proposed Transaction and, following Mr. Haraburda's approval thereof on behalf of the Special Committee,
delivered such agreement to Mr. Cohen and his legal counsel. Following such date, drafts of the transactional documents to be
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entered
into pursuant to the Transaction were circulated among the parties and their respective legal counsel, as well as to the Special Committee.
On
December 23, 2019, the Special Committee held a telephonic meeting with representatives of the Financial Advisor and the Company's senior management team (excluding
Mr. Cohen) present. During this meeting, representatives of the Financial Advisor reviewed the presentation which it had prepared for the Special Committee regarding the proposed Transaction,
which updated the information in the Financial Advisor's presentation provided to the Special Committee at its meeting on December 3, 2019. During this presentation, the Financial Advisor
indicated that the Special Committee had initially proposed that the Per Share Price be $4.50, that Mr. Cohen had proposed a $3.00 Per Share Price in response to the Special Committee's initial
proposal, and that Mr. Haraburda, on behalf of the Special Committee, and Mr. Cohen's counsel had ultimately agreed that the Per Share Price should be based on a simple average of the
30-, 60- and 90-day VWAP of the Company's common stock as reported by the NYSE American, which was $4.00 at that time. The Special Committee then discussed the then-current term sheet, which had not
changed in any material respects as compared to the term sheet reviewed by the Special Committee during its meeting on December 3, 2019. The Financial Advisor then delivered to the Board of
Directors its oral opinion, to be followed by delivery of the Financial Advisor's written opinion, that, as of December 23, 2019, the acquisition of an equity stake via contributed shares of
the IMXI Common Stock in exchange for the contemplated LLC Units which could be exchanged on a ten-for-one basis at an implied per share value of $4.00 into shares of the Company's common stock
was fair to the Company's stockholders from a financial point of view. The Company's senior management then provided the Special Committee with an update with respect to the status of the transaction
documents related to the proposed Transaction and indicated that such documents were close to being in their final forms. At this time, following a discussion regarding the transaction documents and
the related transaction documents, the Special Committee authorized and directed the
Company's senior management (excluding Mr. Cohen) to finalize the negotiations with Mr. Cohen relating to the proposed Transaction at the Per Share Price based on the simple average of
the VWAP, subject to the receipt of a fairness opinion from the Financial Advisor relating to the proposed Transaction, and to execute such transaction documents provided that there were no material
changes thereto and to consummate the proposed Transaction.
On
December 26, 2019, the Financial Advisor provided the Special Committee with its written opinion letter, which concluded that, as of December 23, 2019, the acquisition
of an equity stake via contributed shares of the IMXI Common Stock in exchange for the contemplated LLC Units which could be exchanged on a ten-for-one basis at an implied per share value of
$4.00 into shares of the Company's common stock was fair to the Company's stockholders from a financial point of view. The full text of the Financial Advisor's written opinion, dated
December 26, 2019, is attached as Annex B to this proxy statement.
Following
certain final immaterial changes to the 2019 Purchase Agreement, the 2019 Purchase Agreement and related Transaction documents were executed on December 30, 2019.
Description of 2019 Unit Purchase Agreement
On December 30, 2019, the Company entered into the 2019 Unit Purchase Agreement, by and among the Company, Cohen &
Company, LLC, Daniel G. Cohen, and the DGC Trust, a trust established by Daniel G. Cohen. Mr. Cohen is the President and Chief Executive of the Company's European operations and Chairman
of the Company's Board of Directors and Cohen & Company, LLC's Board of Managers.
Pursuant
to the 2019 Unit Purchase Agreement, on December 30, 2019, Mr. Cohen and the DGC Trust purchased (i) from the Cohen & Company, LLC an
aggregate of 22,429,541 newly issued LLC
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Units
(collectively, the "2019 LLC Units"); and (ii) 22,429,541 newly issued shares of our Series F Preferred Stock.
In
consideration of the issuance of the 2019 LLC Units and the Series F Preferred Stock to Mr. Cohen and the DGC Trust, on December 30, 2019, Mr. Cohen
and the DGC Trust transferred to Cohen & Company, LLC an aggregate of 662,361 shares of the common stock, par value $0.0001 per share ("IMXI Common Stock"), of International Money
Express, Inc. (formerly FinTech Acquisition Corp. II), a Delaware corporation ("IMXI"), of which (a) 264,021 shares are subject to certain restrictions on transfer until the closing
price per share of IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $15.00 for any twenty trading days within a consecutive thirty trading day period or immediately upon certain
change of control events involving IMXI, as set forth in the letter agreement, dated January 19, 2017 (the "Letter Agreement"), by and among IMXI, Mr. Cohen, the DGC Trust and the other
parties named therein, and (b) 264,023 shares are subject to certain restrictions on transfer until the closing price per share of IMXI Common Stock (as reported by The Nasdaq Capital Market)
exceeds $17.00 for any twenty trading days within a consecutive thirty trading day period or immediately upon certain change of control events involving IMXI, as set forth in the Letter Agreement.
The
IMXI Common Stock is listed on The Nasdaq Capital Market ("Nasdaq") under the trading symbol "IMXI." Prior to the merger of IMXI with and into a special purpose acquisition company
in a transaction which resulted in the listing of IMXI on Nasdaq, Mr. Cohen served as the Chief Executive Officer and member of the Board of Directors of special purpose acquisition company.
The
2019 Unit Purchase Agreement contains customary representations and warranties on the part of the parties and the parties provide customary indemnifications thereunder.
Pursuant
to the 2019 Unit Purchase Agreement, effective as December 30, 2019, if the Company owns a number of LLC Units representing less than a majority of the votes
entitled to be cast at any meeting or any other circumstances upon which a vote, agreement, consent (including unanimous written consents) or other approval is sought from the holders of LLC
Units (each, a "Cohen & Company, LLC Meeting"), then for so long as the Company owns a number of LLC Units representing less than a majority of the votes entitled to be cast at
any Cohen & Company, LLC Meeting, Mr. Cohen and the DGC Trust have agreed to grant a voting proxy to the Company pursuant to which the Company may vote at any Cohen &
Company, LLC Meeting the number of LLC Units owned by Mr. Cohen and the DGC Trust necessary to give the Company a majority of the votes at such Cohen & Company, LLC
Meeting.
As
noted above, pursuant the LLC Agreement, a holder of LLC Units, including the 2019 LLC Units, may cause Cohen & Company, LLC to redeem pursuant to a
Unit Redemption, such LLC Units at any time for, at the Company's option, (A) cash or (B) one share of the Company's common stock for every ten LLC Units. Accordingly, the
2019 LLC Units (i.e., 22,429,541 LLC Units) are redeemable for the 2019 Redemption Shares
(i.e., 2,242,954 shares of our common stock) in connection with a potential Unit Redemption of all of the 2019 LLC Units.
However,
pursuant to the 2019 Unit Purchase Agreement, Mr. Cohen and the DGC Trust agreed that, until the Company's stockholders approve the potential issuance of the 2019
Redemption Shares (which approval is being sought pursuant to Proposal Two), Mr. Cohen and the DGC Trust will not cause a
Unit Redemption with respect to any portion of the 2019 LLC Units if such Unit Redemption would result in the Company issuing a number of shares of its common stock that, when aggregated with
any shares of the Company's common stock previously issued in connection with any Unit Redemption of the 2019 LLC Units equals or exceeds 19.99% of the outstanding common stock of the Company
as of December 30, 2019.
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Pursuant
to the 2019 Unit Purchase Agreement, Mr. Cohen and the DGC Trust also agreed to not cause a Unit Redemption with respect to any portion of the 2019 LLC Units if
Board of Directors determines that the satisfaction of such Unit Redemption by the Company with shares of its common stock would jeopardize or endanger the availability to the Company of its net
operating loss and net capital loss carryforwards and certain other tax benefits under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code").
Pursuant
to the 2019 Unit Purchase Agreement, at the 2020 annual meeting of the Company's stockholders, the Company agreed to cause its stockholders to vote on proposals regarding the
issuance of all of the 2019 Redemption Shares for purposes of Section 713 of the NYSE American's Company Guide. Further, pursuant to the 2019 Unit Purchase Agreement, the Company's Board of
Directors is required to recommend to the Company's stockholders that such stockholders approve the potential issuance of the 2019 Redemption Shares, and may not modify or withdraw such resolution.
Accordingly,
in accordance with to the 2019 Unit Purchase Agreement, pursuant to Proposal Two, the Company is asking its stockholders to approve, under Section 713(a) of the NYSE
American Company Guide, the potential issuance of the 2019 Redemption Shares (i.e., the potential issuance of up to 2,242,954 shares of our common
stock) in connection with a potential Unit Redemption with respect to all of the 2019 LLC Units.
The
foregoing description of the 2019 Unit Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the 2019 Unit Purchase
Agreement, a copy of which is attached hereto as Annex A and is incorporated herein by reference.
Opinion of the Financial Advisor
On November 14, 2019, the Company executed an engagement letter with the Financial Advisor, pursuant to which the Financial Advisor
agreed to provide fairness opinion services in connection with a potential capital raise transaction. The Financial Advisor agreed, as requested by the Company, to provide an opinion as to the
fairness, from a financial point of view, to the Company or the holders of the Company's stock, as the case me be, of the consideration paid in a Transaction (or if the Transaction involves an
exchange of securities, the exchange ratio).
The
Financial Advisor is a full-service, research-driven capital markets group focused on growth companies and their institutional investors. As a customary part of the Financial
Advisor's investment banking business, the Financial Advisor continually engages in performing financial analyses with respect to businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and
other purposes.
The
Financial Advisor supplied certain financial information to the Special Committee limited to public comparables analysis deemed relevant in one or more respects to the Company in
connection with the Transaction but had no direct participation in the negotiations leading to the Transaction. At a meeting of the Board of Directors on December 23, 2019, the Board of
Directors reviewed the proposed terms of the Transaction, and the Financial Advisor delivered to the Board of Directors its oral opinion, followed by delivery of the Financial Advisor's written
opinion, that, as of December 23, 2019, the acquisition of an equity stake via contributed shares of International Money Express, Inc. (Nasdaq: IMXI) ("IMXI") for LLC Units which
can be exchanged on a ten-for-one basis at an implied per share value of $4.00 into shares of the Company's common stock is fair to the Company's stockholders from a financial point of view. The full text of the Financial
Advisor's written opinion, dated December 26, 2019, is attached as Annex B to this proxy statement. The opinion outlines the
procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by the Financial Advisor in rendering its opinion. The description of the opinion
set forth below is qualified in its entirety by reference to the full text of the opinion. The Company's
16
Table of Contents
stockholders are urged to read the entire opinion carefully in connection with their consideration of the Proposed Issuance.
The Financial Advisor's opinion speaks only as of the date of the opinion. The Financial Advisor assumed no responsibility for updating or revising its opinion
based on circumstances or events occurring after the date of its opinion. The Financial Advisor's opinion was directed to the Special Committee and the Company and addressed solely the fairness, from
a financial point of view, of the issuance of LLC Units in exchange for the contribution of the IMXI Common Stock in connection with the Transaction to the Company's stockholders. The Financial
Advisor's opinion did not address any other terms or agreement relating to the Transaction or the 2019 Unit Purchase Agreement and is not a recommendation to any the Company stockholder as to how such
stockholder should vote at the annual meeting with respect to the Proposed Issuance or any other matter.
In
rendering its December 23, 2019 opinion, the Financial Advisor performed a variety of financial analyses. The following is a summary of the material analysis performed by the
Financial Advisor, but is not a complete description of all the analyses underlying the Financial Advisor's opinion. The summary includes information presented in tabular format. In order to fully understand the financial
analyses, these tables must be read together with the accompanying text and the full text of the Financial Advisor's written opinion
attached as Annex B to this proxy statement. The tables alone do not constitute a complete description of the financial analyses performed by the Financial Advisor.
A
summary of the opinion, as well as a summary of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by the
Financial Advisor in rendering such opinion, is set forth below. The order in which these analyses are presented below, and the results of those analyses, should not be taken as an indication of the
relative importance or weight given to these analyses by the Financial Advisor or the Special Committee.
At
the direction of the Company, for the purposes of the Financial Advisor's opinion, the Financial Advisor assumed that the per share price of the Company's common stock was equal to
$4.00 per share which was the simple average of the Company's common stock on NYSE American for the 30-day, 60-day, and 90-day volume weighted average closing prices ("VWAP") as of December 13,
2019. The Company further informed the Financial Advisor that the value of the LLC Units and the shares of the Company's common stock were equal due to (i) the current conversion rate of
the LLC Units into the Company's common stock at ten-for-one, and (ii) the Company's belief that the other terms of the LLC Units do not provide any material additional value
to LLC Unit holders compared to the holders of the Company's common stock.
In
connection with the Financial Advisor's review of the Transaction and in arriving at its opinion, the Financial Advisor made such reviews, analyses and inquiries as it deemed
necessary and appropriate under the circumstances. Among other things, the Financial Advisor:
-
(i)
-
reviewed
a Proposed Term Sheet dated December 13, 2019 outlining the Transaction and key terms of the therein. Financial Advisor did not review a draft of the
2019 Unit Purchase Agreement and relied on Company's assertion that there would be no material changes to the terms as presented in the Proposed Term Sheet dated December 13, 2019;
-
(ii)
-
reviewed
certain publicly available business and financial information relating to the Company that the Financial Advisor deemed to be relevant, including certain
publicly available research analyst estimates with respect to the future financial performance of the Company or its industry including public companies that the Financial Advisor deemed to be
relevant;
-
(iii)
-
reviewed
certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to the
Financial Advisor by the Company, including audited historical financial statements for years ended December 31,
17
Table of Contents
In
conducting the Financial Advisor's review of the Transaction, financial analyses and in rendering its opinion, the Financial Advisor relied upon and assumed, without independent
verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available to the Financial Advisor, discussed with or reviewed by the Financial
Advisor, or publicly available, and did not assume any responsibility with respect to such data, material and other information. In addition, the Company's management advised the Financial Advisor,
and the Financial Advisor assumed, that the financial projections reviewed by the Financial Advisor were reasonably prepared in good faith on bases reflecting the best currently available estimates
and judgments of the management of the Company as to its future financial results and condition, and the Financial Advisor expressed no opinion with respect to such projections or the assumptions on
which they were based. If any of the foregoing assumptions were not accurate, the conclusion set forth in the Financial Advisor's opinion could be materially affected.
The
credit, financial and stock markets have from time to time experienced unusual volatility, including the volatility currently being experienced as a result of the novel coronavirus
(COVID-19), and the Financial Advisor expressed no opinion or view as to any potential effects of such volatility on the Transaction and the Financial Advisor's opinion did not purport to address
potential developments in any such markets.
The
Financial Advisor relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of
operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to the Financial Advisor
that would be material to its analyses or the Financial Advisor's opinion, and that there was no information or any facts that would make any of the information reviewed by the Financial Advisor
incomplete or misleading.
The
Financial Advisor assumed that the final form of the 2019 Unit Purchase Agreement would be substantially similar to the Proposed Term Sheet dated December 13, 2019, reviewed
by the Financial Advisor, without modification of material terms or conditions. The Financial Advisor assumed that the
Transaction would be consummated pursuant to the terms of the 2019 Unit Purchase Agreement without amendments thereto and without waiver by any party of any conditions or obligations thereunder. In
arriving at the Financial Advisor's opinion, the Financial Advisor assumed that all the necessary regulatory approvals and consents required for the Transaction would be obtained in a manner that
would not adversely affect the Company.
18
Table of Contents
In
arriving at the Financial Advisor's opinion, the Financial Advisor did not make an independent appraisal of the assets or liabilities (fixed, contingent or otherwise) of the Company
or concerning the solvency or appraised or fair value of the Company, and the Financial Advisor was not furnished with any such appraisal or valuation, and the Financial Advisor made no physical
inspection of the property or assets of the Company. The Financial Advisor expressed no opinion regarding the liquidation value or solvency of the Company. In addition, the Financial Advisor did not
perform any analysis with respect to any potential change of control implications that may or may not have arisen from the consummation of the Transaction.
The
Financial Advisor did not undertake an independent analysis of any pending or threatened litigation, governmental proceedings or investigations, possible unassisted claims or other
contingent liabilities, to which either the Company or its affiliates was a party or could be subject and at the Company's direction and with its consent, the Financial Advisor opinion made no
assumption concerning and therefore did not consider, the possible assertion of claims, outcomes, damages or recoveries arising out of any such matters. No company used in the analyses of comparable
companies for purposes of comparison to the value of the Company was identical or directly comparable to the Company. Accordingly, the Financial Advisor's analysis of the results of the comparisons
was not mathematical; rather, it involved complex considerations and judgments about differences in the companies to which the Company was compared and other factors that could affect the public
trading value.
The
Financial Advisor's opinion was necessarily based upon the financial, market, economic and other conditions that existed on, and the information made available to the Financial
Advisor as of, the date of the Financial Advisor's opinion. Subsequent developments may affect the Financial Advisor's opinion and the Financial Advisor disclaimed any undertaking or obligation to
advise any person of any change in any fact or matter affecting the Financial Advisor's opinion which may come or be brought to our attention after the date thereof. The Financial Advisor did not
express any opinion as to the price at which shares of the Company's common stock had traded or such stock may trade following announcement of the Transaction or at any future time. The Financial
Advisor did not undertake to reaffirm or revise its opinion or otherwise comment upon any events occurring after the date thereof and the Financial Advisor does not have any obligation to update,
revise or reaffirm its opinion.
The
Financial Advisor was not requested to opine as to, and its opinion did not address, the relative merits of the Transaction as compared to any alternative business transaction or
strategic alternative that might be available to the Company, nor did it address the underlying business decision of the Company to engage in the Transaction. No opinion was expressed whether any
alternative transaction might produce proceeds to the Company in an amount in excess of that received by the Company in the Transaction or on more favorable terms than the Transaction. The Financial
Advisor expressed no opinion as to the amount, nature or fairness of any consideration or compensation received in or as a result of the Transaction by officers, directors, employees, warrant holders,
option holders, creditors or any other class of such persons, or relative to or in comparison with the proceeds to be received by the Company. The Financial Advisor was not asked to consider, and its
opinion did not address, the price at which the Company's common stock would trade at any time or as to the impact of the Transaction on the solvency or viability of the Company to pay its obligations
when they come due. The Financial Advisor did not render any financial, legal, accounting or other advice and understood that the Company was relying on its legal counsel and accounting advisors as to
legal and accounting matters in connection with the Transaction.
Consistent
with applicable legal and regulatory requirements, the Financial Advisor has adopted policies and procedures to establish and maintain the independence of its research
department and personnel. As a result, the Financial Advisor's research analysts may hold opinions, make statements or recommendations, and/or publish research reports with respect to the Company,
Mr. Cohen and the
19
Table of Contents
DGC
Trust and the Transaction that differ from the views of the Financial Advisor's investment banking personnel.
The
Financial Advisor's opinion addressed solely the fairness, from a financial point of view, of the issuance of LLC Units in exchange for the contribution of IMXI Shares in
connection with the Transaction, to the Company's stockholders, and did not address any other terms or agreement relating to the Transaction or the 2019 Unit Purchase Agreement. The Financial Advisor
was not requested to opine as to, and its opinion did not address, the relative merits of the Transaction as compared to any alternative business transaction or strategic alternative that might be
available to the Company, nor did it address the underlying business decision of the Company to engage in the Transaction. No opinion was expressed whether any alternative transaction might produce
proceeds to the Company in an amount in excess of that received by the Company in the Transaction or on more favorable terms than the Transaction. The Financial Advisor was not asked to consider, and
its opinion did not address, the price at which the Company's common stock would trade at any time or as to the impact of the Transaction on the solvency or viability of the Company to pay its
obligations when they come due. The Financial Advisor did not render any financial, legal, accounting or other advice. The Financial Advisor was not requested to opine, and no opinion was rendered, as
to the value of International Money Express. For any analysis of IMXI, the Financial Advisor relied on the Company's management and, at the request of the Company's management, certain third party
sources. The Financial Advisor relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and information provided to it by the Company's management
and any third party sources.
The
preparation of a fairness opinion is a complex, analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, the Financial Advisor did not
attribute any particular weight to any particular analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Several
analytical methodologies were employed by the Financial Advisor in its analyses (as discussed in greater detail below), and no one method of analysis should be regarded as critical to the overall
conclusion reached by the Financial Advisor. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular
techniques. Accordingly, the Financial Advisor believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without
considering all analyses and factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by the Financial Advisor,
therefore, was based on the application of the Financial Advisor's own experience and judgment to all analyses and factors considered by the Financial Advisor, taken as a whole the Financial Advisor's
opinion was reviewed and approved by its fairness opinion committee.
Summary of Proposal
The Financial Advisor reviewed the financial terms of the proposed Transaction. According to the terms of the Proposed Term Sheet,
Mr. Cohen and the DGC Trust would contribute 662,361 shares of IMXI common stock in exchange for approximately 22,429,541 LLC Units exchangeable into approximately 2,242,954 shares of
the Company's common stock, the value of which was calculated using the average of the 30-day, 60-day and 90-day volume weighted average closing prices of the Company's common stock as of
December 13, 2019. As of December 13, 2019, gross Transaction value exchanged was equal to roughly $8,981,411 (USD). The shares of the IMXI Common Stock included three tranches of shares
including 134,317 freely tradable shares, 264,022 tranche 4 restricted shares, and 264,022 tranche 5 restricted shares. Mr. Cohen and the DGC Trust would have the option to
20
Table of Contents
convert
the LLC Units into shares of the Company's common stock on a ten-for-one basis subject to certain conversion provisions.
Valuation AnalysisOverview
To assess the fairness of the exchange of IMXI shares for LLC Units, the Financial Advisor utilized standard valuation methodologies,
including:
-
1.
-
COHN
Trading Range Analysis;
-
2.
-
Comparable
Public Company Analysis; and
-
3.
-
Discounted
Cash Flow Analysis.
In
addition to the valuation methodologies utilized, the Financial Advisor also considered other valuation methodologies including Precedent Transactions Analysis but, given the unique
nature of the Transaction, did not include this analysis. In addition to the valuation methodologies listed above, the Financial Advisor also considered qualitative factors for the purpose of the
opinion.
COHN Trading Range Analysis
As part of analyzing trading history, the Financial Advisor analyzed the last twelve months of trading in the Company's common stock as well as
IMXI's common stock. The Financial Advisor further compared the trading range of the Company as compared to comparable market indices, including the Russell 2000, S&P 500 and an index comprised
of public companies deemed by the Financial Advisor to be comparable to the Company (the "Comparable Group Index"), further described below under "Comparable Public Companies Analysis."
Company Trading Range Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Common Stock
|
|
IMXI Common Stock
|
|
Date (as of)
|
|
12/13/2019
|
|
12/20/2019
|
|
12/13/2019
|
|
12/20/2019
|
|
Last Sale Price
|
|
$
|
3.57
|
|
$
|
3.83
|
|
$
|
13.02
|
|
$
|
11.77
|
|
52 Week High / 52 Week Low Price
|
|
$
|
9.47 / $2.95
|
|
$
|
9.47 / $2.95
|
|
$
|
15.76 / $10.33
|
|
$
|
15.76 / $10.33
|
|
30 Day VWAP
|
|
$
|
3.94
|
|
$
|
3.90
|
|
$
|
13.48
|
|
$
|
13.06
|
|
60 Day VWAP
|
|
$
|
4.06
|
|
$
|
4.01
|
|
$
|
13.78
|
|
$
|
13.49
|
|
90 Day VWAP
|
|
$
|
4.02
|
|
$
|
3.97
|
|
$
|
13.78
|
|
$
|
13.65
|
|
Transaction Pricing (Average 30, 60, 90 Day VWAP 12/13/2019)
|
|
$
|
4.00
|
|
|
|
|
$
|
13.68
|
|
|
|
|
Company One Year Common Stock Performance
|
|
|
|
|
|
|
LTM as of
12/20/2019
|
|
Company
|
|
|
(53.5
|
%)
|
Comparable Group Index
|
|
|
14.8
|
%
|
Russell 2000 Index
|
|
|
29.9
|
%
|
S&P 500 Index
|
|
|
25.7
|
%
|
21
Table of Contents
Company Three Year Common Stock Performance Versus Comparable Public Companies
|
|
|
|
|
|
|
As of 12/20/2019
|
|
Company
|
|
|
(67.0
|
%)
|
Cowen Group, Inc.
|
|
|
1.5
|
%
|
Gain Capital Holdings, Inc.
|
|
|
(40.9
|
%)
|
JMP Group LLC
|
|
|
(47.4
|
%)
|
Ladenburg Thalmann Financial Services Inc.
|
|
|
23.8
|
%
|
Oppenheimer Holdings Inc.
|
|
|
46.3
|
%
|
Comparable Public Companies Analysis
The Financial Advisor reviewed selected historical financial data of the Company and estimated financial data of the Company based on
projections provided by the Company's management and compared them to corresponding financial data, where applicable, for U.S. listed public companies that the Financial Advisor deemed comparable to
the Company based on its professional judgment. The Financial Advisor selected companies in this sector based on information obtained by searching SEC filings, public company disclosures, press
releases, equity research reports, industry and popular press reports, databases and other sources. None of the selected companies used in this analysis as a comparison is identical to the Company.
Specifically, for purposes of evaluating public companies, the Financial Advisor utilized a group of financial services companies, each with a market capitalization of less than or equal to
$500 million which it deemed to be similar to the Company in one or more respects (which included, without limitation, the nature of the Company's business and the Company's size,
diversification and financial performance).
The
Company peer group consisted of the following selected companies:
-
-
Cowen Group, Inc.
-
-
Gain Capital Holdings, Inc.
-
-
JMP Group LLC
-
-
Ladenburg Thalmann Financial Services Inc.
-
-
Oppenheimer Holdings Inc.
The
financial data reviewed included:
-
-
Market Cap to Net Revenue (Historical and Projected)
-
-
Market Cap to Earnings Before Tax (EBT)
-
-
Market Cap to Net Income
-
-
Price to Tangible Book Value
The
Financial Advisor considered a broad range of financial information and corresponding valuation multiples for the Company and the Company peer group, but ultimately focused on the
following multiples as a means for implying share value: Market Cap / 2020E EBT, Price / 2020E Earnings Per Share, and Price / Adjusted Tangible Book Value Per Share. No company used in the analyses
of comparable companies for purposes of comparison to the value of the Company was identical or directly comparable to the Company. Accordingly, the Financial Advisor's analysis of the results of the
comparisons was not mathematical; rather, it involved complex considerations and
22
Table of Contents
judgments
about differences in the companies to which the Company was compared and other factors that could affect the public trading value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Public Companies
|
|
|
|
Company
($4.00 per
share)
|
|
1st
Quartile
|
|
Mean
|
|
Median
|
|
3rd
Quartile
|
|
Market Capitalization (in millions)
|
|
$
|
7
|
|
$
|
132
|
|
$
|
272
|
|
$
|
272
|
|
$
|
412
|
|
Stock Price as a Percentage of 52 Week High
|
|
|
42.2
|
%
|
|
66.8
|
%
|
|
75.8
|
%
|
|
78.9
|
%
|
|
87.9
|
%
|
Market Cap / 2020E EBT
|
|
|
|
|
|
5.6x
|
|
|
6.4x
|
|
|
6.5x
|
|
|
7.2x
|
|
Price / 2020E Earnings Per Share
|
|
|
|
|
|
6.1x
|
|
|
7.5x
|
|
|
6.6x
|
|
|
8.4x
|
|
LTM ROE (%)
|
|
|
(13.1
|
%)
|
|
(2.1
|
%)
|
|
0.0
|
%
|
|
1.8
|
%
|
|
3.9
|
%
|
Price / Adjusted Tangible Book Value
|
|
|
1.1x
|
|
|
0.9x
|
|
|
1.0x
|
|
|
0.9x
|
|
|
1.1x
|
|
Taking
into account the results of the selected public companies analysis, the Financial Advisor applied multiple ranges of 0.9x to 1.1x Adjusted Tangible Book Value, 5.6x to 7.2x Market
Cap to 2020E EBT, 6.1x to 8.4x Price to 2020E Earnings Per Share to corresponding data from the Company. The selected companies analysis indicated implied value reference ranges of $3.06 to $4.44 per
share based on multiples of Adjusted Tangible Book Value Per Share; $1.75 to $3.24 per share based on Price to 2020E Earnings Per Share; and $1.77 to $2.26 per share based on Market Cap to 2020E EBT
For
the purposes of its analysis, Adjusted Tangible Book Value, a Non-GAAP metric, was calculated as Book Value less goodwill & intangibles assets less debt discounts.
Additionally, the Financial Advisor based its analysis on an assumed $4.00 per share implied issue price with a pre-transaction as-converted share count of 1,805,033 shares outstanding at the
direction of the Company's management.
Discounted Cash Flow Analysis
The Financial Advisor also performed a discounted cash flow analysis of the Company with the purpose of deriving a net present value for the
Company. The Financial Advisor utilized both a perpetuity growth model as well as an adjusted earnings exit multiple model to generate a terminal value. The Financial Advisor utilized estimates as
provided by management of the Company through December 31, 2020. The Financial Advisor applied perpetuity growth rates of 2.0% to 4.0% and adjusted earnings multiples of 4.0x to 6.0x,
respectively. The net present value of Company's after-tax earnings based on the forecasts for Company and the range of implied terminal values were then calculated using discount rates ranging from
25.0% to 35.0%. The discounted cash flow analysis indicated implied per share value reference ranges for Company's current shares of common stock equivalents of approximately $3.90 to $6.50 and $4.43
to $7.33 based on the perpetuity growth model and the adjusted earnings exit multiple model, respectively, versus an implied issue price of $4.00 per share.
-
1.
-
As
directed by the Company, the Financial Advisor utilized after-tax adjusted earnings as a proxy for free cash flow and did not consider potential value ascribed
through changes in net working capital or capital expenditures.
-
2.
-
The
Financial Advisor did not adjust terminal value calculations for the potential of an increase in corporate tax rate upon the extinguishing of the NOL (current
federal NOL as of December 31, 2018) of $99 million with expiration dates ranging between 2028 and 2034. Any potential impacts to terminal value have been deemed immaterial based on the
discount rate and anticipated timing of using up the NOL. With the Company's approval, the Financial Advisor assumed this Transaction will not impact the value of the NOL.
23
Table of Contents
The Financial Advisor's Compensation and Other Relationships with the Company
The Financial Advisor's engagement has been limited to Fairness Opinion Services. The Company has also agreed to reimburse the Financial Advisor
for its reasonable out-of-pocket expenses, plus an additional fee if an updated opinion regarding the fairness of the Transaction was requested, and to indemnify the Financial Advisor against certain
liabilities arising out of its engagement. The Financial Advisor's fairness opinion was approved by the Financial Advisor's fairness opinion committee. In the ordinary course of their respective
broker and dealer businesses, the Financial Advisor may purchase securities from and sell securities to the Company and its affiliates.
Interest of Certain Persons in Matters to Be Acted Upon
Daniel G. Cohen, is the President and Chief Executive of the Company's European operations and Chairman of the Company's Board of Directors and
of the Board of Managers of Cohen & Company, LLC.
The
DGC Trust was established by Mr. Cohen. Mr. Cohen is neither a trustee nor a named beneficiary of the DGC Trust and does not have any voting or dispositive control of
securities held by the DGC Trust. However, Mr. Cohen may be deemed to be the beneficial owner of any securities (including any of the 2019 LLC Units) held by the DGC Trust as a result of
his ability to acquire at any time any of the DGC Trust's assets, including any securities held by the DGC Trust (and, in turn, the sole voting and sole dispositive power with respect to such
securities), by substituting other property of an equivalent value without the approval or consent of any person, including any trustee or beneficiary of the DGC Trust.
Daniel
G. Cohen has been identified as an interested person because he has an interest in the transactions being voted upon in Proposal Two and is a nominee for election as a director of
the Company pursuant to Proposal One.
Daniel
G. Cohen is a beneficial owner of shares of the Company's voting securities and has indicated to the Company that he intends to vote such shares in favor of Proposal Two (see
"Share Ownership of Certain Beneficial Owners and Management" below for additional details regarding the voting securities in the Company beneficially owned by Daniel G. Cohen).
If
Proposal Two is approved, Mr. Cohen and the DGC Trust will be able to redeem the 2019 LLC Units (i.e.,
22,429,541 LLC Units) into the 2019 Redemption Shares (i.e., 2,242,954 shares of our common stock) at any time.
Other
than with respect to Mr. Cohen, management is not aware of any substantial interest, direct or indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described herein.
24
Table of Contents
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2020 Annual Meeting of Stockholders must be received by our Secretary at our principal
executive offices no later than January 4, 2021, unless the date of the meeting is changed by more than 30 calendar days from the one-year anniversary date of this annual meeting, and must
satisfy the requirements of Rule 14a-8 under the Exchange Act.
Other
than a stockholder proposal included in the proxy statement pursuant to Rule 14a-8, in order to be presented at the 2020 Annual Meeting of Stockholders, a proposal of a
stockholder, including any proposed director nominations, must be received by our Secretary at our principal executive offices in the timeframe as provided in our Bylaws. To be timely, our Bylaws
currently require that such a stockholder's notice set forth all information required under Section 1.11 of our Bylaws and be delivered to our Secretary at our principal executive office not
earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of mailing of the notice for the preceding year's
annual meeting; provided, however, in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year's
annual meeting, notice by the stockholder to be timely must be delivered to our Secretary at our principal executive office not earlier than the 150th day prior to the date of such annual
meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Our Bylaws also currently provide that, in the event that our Board of Directors increases or decreases the maximum or minimum number of directors in
accordance with our Bylaws, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of mailing of the notice of the preceding year's
annual meeting, a stockholder's notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to our Secretary at
our principal executive office not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Company.
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ANNUAL REPORT ON FORM 10-K
Our Annual Report on Form 10-K for the year ended December 31, 2019 accompanies this proxy statement. The
Company will furnish a copy of its Annual Report on Form 10-K for the year ended December 31, 2019 free of charge to each stockholder who forwards a written request to our Secretary, at
Cohen & Company Inc., Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104. You also may access the EDGAR version of our Annual Report on
Form 10-K (with exhibits) on our website at http://www.cohenandcompany.com and on the SEC's website at http://www.sec.gov.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy these reports,
statements or other information filed by us at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
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Annex A
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 30, 2019 (the
"Effective Date"), is entered into by and among Cohen & Company Inc., a Maryland corporation
("Parent"), Cohen & Company, LLC, a Delaware limited liability company and a subsidiary of Parent (the
"Operating LLC"), Daniel G. Cohen, an individual ("Mr. Cohen"), and The DGC Family Fintech Trust, a
trust established by Mr. Cohen (the "DGC Trust" and
together with
Mr. Cohen, "Buyer"). Each of Parent, the Operating LLC, Mr. Cohen and the DGC Trust may be referred to herein, individually, as a
"Party," and, collectively, as the "Parties."
RECITALS:
WHEREAS, Mr. Cohen is the owner of 370,881 shares (collectively, the "Cohen IMXI Shares")
of the common stock, par value $0.0001 per share ("IMXI Common Stock"), of International Money Express, Inc. (formerly FinTech Acquisition Corp.
II), a Delaware corporation ("IMXI"), of which (a) 161,340 shares are subject to certain restrictions on transfer until the closing price per
share of IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $15.00 for any twenty (20) trading days within a consecutive thirty (30) trading day period or immediately
upon certain change of control events involving IMXI, as set forth in the letter agreement, dated January 19, 2017 (the "Letter Agreement"), by
and among IMXI, Mr. Cohen, the DGC Trust and the other parties named therein and (b) 161,341 shares are subject to certain restrictions on transfer until the closing price per share of
IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $17.00 for any twenty (20) trading days within a consecutive thirty (30) trading day period or immediately upon
certain change of control events involving IMXI, as set forth in the Letter Agreement;
WHEREAS,
the DGC Trust is the owner of 291,480 shares (collectively, the "Trust IMXI Shares" and, together with the Cohen IMXI Shares, the
"IMXI Shares") of IMXI Common Stock, of which (a) 102,681 shares are subject to certain restrictions on transfer until the closing price per
share of IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $15.00 for any twenty (20) trading days within a consecutive thirty (30) trading day period or immediately
upon certain change of control events involving IMXI, as set forth in the Letter Agreement and (b) 102,682 shares are subject to certain restrictions on transfer until the closing price per
share of IMXI Common Stock (as reported by The Nasdaq Capital Market) exceeds $17.00 for any twenty (20) trading days within a consecutive thirty (30) trading day period or immediately
upon certain change of control events involving IMXI, as set forth in the Letter Agreement;
WHEREAS,
the IMXI Common Stock is listed on The Nasdaq Capital Market under the trading symbol "IMXI;"
WHEREAS,
subject to the terms and conditions of this Agreement, (i) the Operating LLC desires to issue to Mr. Cohen an aggregate of 12,549,273 newly issued units of
membership interests in the Operating LLC (collectively, the "Cohen LLC Units"); (ii) Parent desires to issue to Mr. Cohen
12,549,273 shares of newly issued Series F Voting Non-Convertible Preferred Stock of Parent, par value $0.001 per share (collectively, the "Cohen
Series F Shares"); and (iii) in consideration of the issuance of the Cohen LLC Units and the Cohen Series F Shares to Mr. Cohen by the
Operating LLC and Parent, respectively, Mr. Cohen desires to transfer all of his right, title and interest in the Cohen IMXI Shares to the Operating LLC; and
WHEREAS,
subject to the terms and conditions of this Agreement, (i) the Operating LLC desires to issue to the DGC Trust an aggregate of 9,880,268 newly issued units of
membership interests in the Operating LLC (collectively, the "Trust LLC Units" and, together with the Cohen LLC Units, the
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"LLC Units"); (ii) Parent desires to issue to the DGC Trust 9,880,268 shares of newly issued Series F Voting Non-Convertible Preferred
Stock of Parent, par value $0.001 per share (collectively, the "Trust Series F Shares" and, together with the Cohen Series F Shares, the
"Series F Shares"); and (iii) in consideration of the issuance of the Trust LLC Units and the Trust Series F Shares to the
DGC Trust by the Operating LLC and Parent, respectively, the DGC Trust will transfer all of its right, title and interest in the Trust IMXI Shares to the Operating LLC.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01 Definitions. The following terms have the meanings specified or referred to in this
Section 1.01:
(a) "Action" means any proceedings, litigation, arbitrations, mediations, actions, claims, suits, disputes, controversies,
demands, petitions, hearings, inquiries, audits, notices of violation, disciplinary actions, indictments, citations, summons, subpoenas, charges, complaints, appeals, examinations and investigations
of any nature, whether at law or equity, or civil or criminal administrative, regulatory or otherwise in nature, including any matter commenced, brought, conducted or heard by or before any
Governmental Authority.
(b) "Additional Units" means the number of units of membership interests in the Operating LLC representing fifty-one
percent (51%) of the votes entitled to be cast at any Meeting, plus one (1) unit of membership interests in the Operating LLC, minus the number of units of membership interests in the
Operating LLC owned by Parent as of the record date of such Meeting.
(c) "Affiliate" of a Person means any other Person that directly or indirectly, through one (1) or more
intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" (including the terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
(d) "Board of Directors" means the board of directors of Parent.
(e) "Business Day" means any day except Saturday, Sunday or any other day on which commercial banks located in the State of
Delaware are authorized or required by Law to be closed for business.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Contract" means any contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings,
indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.
(h) "Conversion Shares" means the shares of Parent Common Stock into which the LLC Units may be redeemed upon a Unit
Redemption.
(i) "Encumbrance" means any lien, pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment,
restriction or other similar encumbrance, excluding any restrictions set forth in the Letter Agreement.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
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(k) "Governmental Authority" means any federal, state, local or foreign government or political subdivision thereof, or any
agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent
that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
(l) "Law" means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment,
decree, other requirement or rule of law of any Governmental Authority.
(m) "Losses" means actual out-of-pocket losses, damages, liabilities, costs or expenses, including reasonable attorneys'
fees.
(n) "Meeting" means any meeting of the holders of units of membership interests in the Operating LLC, or any
adjournment thereof or any other circumstances upon which a vote, agreement, consent (including unanimous written consents) or other approval is sought from the holders of units of membership
interests in the Operating LLC.
(o) "Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority,
unincorporated organization, trust, association or other entity.
(p) "Pro Rata Share" means an amount as of the applicable measurement date and expressed as a percentage equal to:
(i) with respect to Mr. Cohen, (1) the number of units of membership interests in the Operating LLC owned by Mr. Cohen, divided by (2) an amount equal to the
sum of (A) the number of units of membership interests in the Operating LLC owned by Mr. Cohen plus (B) the number of units of membership interests in the
Operating LLC owned by the DGC Trust, and (ii) with respect to the DGC Trust, (1) the number of units of membership interests in the Operating LLC owned by the DGC Trust,
divided by (2) an amount equal to the sum of (A) the number of units of membership interests in the Operating LLC owned by Mr. Cohen plus (B) the number of units of
membership interests in the Operating LLC owned by the DGC Trust.
(q) "SEC" means the United States Securities and Exchange Commission.
(r) "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(s) "Unit Redemption" means a redemption of units of membership interests by the holder thereof pursuant to and in accordance
with Section 12.2 of the LLC Agreement.
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Section 1.02 Additional Definitions. The following terms shall have the respective meanings ascribed to them in
the corresponding sections below:
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Term
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Section
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2020 Annual Meeting of Stockholders
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Section 5.01
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Agreement
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Preamble
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Buyer
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Preamble
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Closing
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Section 2.03
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Closing Date
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Section 2.03
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Cohen IMXI Shares
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Recitals
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Cohen LLC Units
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Recitals
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Cohen Series F Shares
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Recitals
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DGC Trust
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Preamble
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Effective Date
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Preamble
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IMXI
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Recitals
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IMXI Common Stock
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Recitals
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IMXI Shares
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Recitals
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Indemnified Party
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Section 6.04
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Indemnifying Party
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Section 6.04
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Letter Agreement
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Recitals
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LLC Agreement
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Section 3.02
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LLC Units
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Recitals
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Mr. Cohen
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Preamble
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Operating LLC
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Preamble
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Parent
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Preamble
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Parent Common Stock
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Section 3.03(a)
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Parent Proxy Statement
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Section 5.01
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Party(ies)
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Preamble
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Series F Shares
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Recitals
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Stockholder Proposal
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Section 5.01
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Trust IMXI Shares
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Recitals
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Trust LLC Units
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Recitals
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Trust Series F Shares
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Recitals
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ARTICLE II
PURCHASE AND SALE
Section 2.01 Purchase and Sale. Subject to the terms and conditions set forth herein and for the consideration
specified in Section 2.02, at the Closing:
(a) The
Operating LLC shall issue and shall sell to Mr. Cohen, and Mr. Cohen shall purchase from the Operating LLC, the Cohen LLC Units;
(b) The
Operating LLC shall issue and shall sell to the DGC Trust, and the DGC Trust shall purchase from the Operating LLC, the Trust LLC Units;
(c) Parent
shall issue and shall sell to Mr. Cohen, and Mr. Cohen shall purchase from Parent, the Cohen Series F Shares; and
(d) Parent
shall issue and shall sell to the DGC Trust, and the DGC Trust shall purchase from Parent, the Trust Series F Shares.
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Section 2.02 Purchase Price.
(a) At
the Closing and in consideration of the Operating LLC's and Parent's issuance and sale to Mr. Cohen of the Cohen LLC Units and the Cohen
Series F Shares, respectively, Mr. Cohen shall transfer to the Operating LLC all of Mr. Cohen's right, title and interest in and to the Cohen IMXI Shares, free and clear of
any Encumbrances.
(b) At
the Closing and in consideration of the Operating LLC's and Parent's issuance and sale to the DGC Trust of the Trust LLC Units and the Trust
Series F Shares, respectively, the DGC Trust shall transfer to the Operating LLC all of the DGC Trust's right, title and interest in and to the Trust IMXI Shares, free and clear of any
Encumbrances.
Section 2.03 Closing. The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place simultaneously with the execution hereof on the date of this Agreement (the "Closing
Date") at the offices of Parent, located at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104, or at such other time, date, place or means
(including electronically via email, facsimile transfer or other similar means of communication) as the Parties may mutually agree upon in writing. The consummation of the transactions contemplated by
this Agreement shall be deemed to occur at 12:01 a.m. on the Closing Date.
Section 2.04 Closing Deliveries. At the Closing:
(a) The
Operating LLC shall deliver to Mr. Cohen written evidence that the Cohen LLC Units have been issued by the Operating LLC to
Mr. Cohen and registered on the books and records of the Operating LLC, free and clear of any Encumbrances;
(b) The
Operating LLC shall deliver to the DGC Trust written evidence that the Trust LLC Units have been issued by the Operating LLC to the DGC Trust
and registered on the books and records of the Operating LLC, free and clear of any Encumbrances;
(c) Parent
shall deliver to Mr. Cohen a stock certificate evidencing the issuance of the Cohen Series F Shares by Parent to Mr. Cohen, free and clear of
any Encumbrances;
(d) Parent
shall deliver to the DGC Trust a stock certificate evidencing the issuance of the Trust Series F Shares by Parent to the DGC Trust, free and clear of any
Encumbrances;
(e) Mr. Cohen
shall deliver to the Operating LLC (or, at the direction of the Operating LLC, to IMXI's stock transfer agent) all stock certificates
evidencing the Cohen IMXI Shares, free and clear of any Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank and with all
required stock transfer tax stamps affixed; and
(f) The
DGC Trust shall deliver to the Operating LLC (or, at the direction of the Operating LLC, to IMXI's stock transfer agent) all stock certificates
evidencing the Trust IMXI Shares, free and clear of any Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank and with all
required stock transfer tax stamps affixed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Parent and the Operating LLC, jointly and severally, represent and warrant to Buyer that the statements contained in this
Article III are true and correct as of the date hereof.
Section 3.01 Organization and Authority of Parent and the Operating LLC; Enforceability.
(a) Parent
is a corporation duly organized, validly existing and in good standing under the Laws of the State of Maryland. Parent has full corporate power and authority to
enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to
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consummate
the transactions contemplated hereby. The execution, delivery, and performance by Parent of this Agreement and the documents to be delivered hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Parent. This Agreement and the documents to be delivered hereunder have been duly executed
and delivered by Parent, and (assuming due authorization, execution, and delivery by the remaining Parties) this Agreement and the documents to be delivered hereunder constitute legal, valid, and
binding obligations of Parent, enforceable against Parent in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.
(b) The
Operating LLC is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware. The
Operating LLC has full limited liability company power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery, and performance by the Operating LLC of this Agreement and the documents to be delivered hereunder and the consummation
of the transactions contemplated hereby have been duly authorized by all requisite limited liability company action on the part of the Operating LLC. This Agreement and the documents to be
delivered hereunder have been duly executed and delivered by the Operating LLC, and (assuming due authorization, execution, and delivery by the remaining Parties) this Agreement and the
documents to be delivered hereunder constitute legal, valid, and binding obligations of the Operating LLC, enforceable against the Operating LLC in accordance with their respective
terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity.
Section 3.02 No Conflicts; Consents. The execution, delivery, and performance by the Parent and the
Operating LLC of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict
with the Second Articles of Amendment and Restatement of Parent, as amended, or the Bylaws of Parent, (b) violate or conflict with the certificate of formation or Amended and Restated Limited
Liability Company Agreement of the Operating LLC, dated as of December 16, 2009, as amended ("LLC Agreement"); (c) violate or
conflict with any Law applicable to Parent or the Operating LLC; or (d) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under,
or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any Contract or other instrument to which Parent or the Operating LLC is a
party or bound, except where the conflict, violation, default, termination, cancellation, modification, or acceleration would not, individually or in the aggregate, have a material adverse effect on
Parent's or the Operating LLC's ability to consummate the transactions contemplated hereby on a timely basis. No consent, approval, waiver, or authorization is required to be obtained by Parent
or the Operating LLC from any Person in connection with the execution, delivery, and performance by Parent or the Operating LLC of this Agreement and the consummation of the transactions
contemplated hereby.
Section 3.03 Capitalization.
(a) The
authorized capital stock of Parent consists of: (a) 100,000,000 shares of Parent's common stock, par value $0.01 per share ("Parent
Common Stock") of which 1,193,624 shares of Parent Common Stock are issued and outstanding as of the Effective Date; (b) 10,000,000 shares of Preferred Stock, par value
$0.001 per share, all of which are designated as Series C Junior Participating Preferred Stock, none of which are issued or outstanding as of the Effective Date; and (c) 50,000,000
shares of Preferred Stock, par value $0.001 per share, of which (i) 4,983,557 shares are designated as Series E Voting Non-Convertible Preferred Stock, all of which are issued and
outstanding as of the Effective Date; and (ii) 25,000,000 shares are designated as Series F Voting Non-Convertible Preferred Stock,
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none
of which are issued and outstanding as of the Effective Date (assuming the Series F Shares have not yet been issued in accordance with the terms and conditions of this Agreement). All
outstanding shares of Parent Common Stock and Series F Voting Non-Convertible Preferred Stock have been duly authorized, validly issued and are fully paid and nonassessable. The Parent Common
Stock is currently quoted on the NYSE American under the trading symbol "COHN," and the Company has maintained all requirements on its part for the continuation of such quotation. No shares of Parent
Common Stock are subject to preemptive rights or any other similar rights.
(b) As
of the Effective Date (assuming the LLC Units have not yet been issued in accordance with the terms and conditions of this Agreement), 17,073,174 units of
membership interests in the Operating LLC are issued and outstanding. All outstanding units of membership interests in the Operating LLC have been duly authorized, validly issued and are
fully paid and nonassessable. No outstanding units of membership interests in the Operating LLC are subject to preemptive rights or any other similar rights.
(c) Except
as previously disclosed by Parent in its public filings with the SEC, as of the Effective Date, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any securities of the Parent or the Operating LLC, or Contracts,
commitments, understandings or arrangements by which Parent or the Operating LLC is or may become bound to issue additional securities of Parent or the Operating LLC, or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any securities of Parent or the Operating LLC.
Section 3.04 Brokers. Except for any fees owing to Northland Capital Markets, no broker, finder, or investment
banker is entitled to any brokerage, finder's, or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or
the Operating LLC.
Section 3.05 Unregistered Securities. Parent and Operating LLC acknowledge that the IMXI Shares are not
registered under the Securities Act or any state securities Laws, and that the IMXI Shares may not be transferred or sold except pursuant to the registration provisions of the Securities Act or
pursuant to an applicable exemption therefrom and subject to state securities Laws and regulations, as applicable, and in accordance with the terms and conditions of the Letter Agreement.
Section 3.06 No Other Representations or Warranties. Except for the representations and warranties contained in
this Article III, none of Parent or the Operating LLC or any stockholder, member, director, officer, employee, or agent of Parent or the Operating LLC has made or makes any other
express or implied representation or warranty, either written or oral, on behalf of Parent or the Operating LLC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Mr. Cohen and the DGC Trust, jointly and severally, represent and warrant to Parent and the Operating LLC that the statements
contained in this Article IV are true and correct as of the date hereof.
Section 4.01 Organization and Authority of Buyer; Enforceability.
(a) The
DGC Trust has full organizational power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution, delivery, and performance by the DGC Trust of this Agreement and the documents to be delivered hereunder and the
consummation of the transactions
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contemplated
hereby have been duly authorized by all requisite organizational action on the part of the DGC Trust. This Agreement and the documents to be delivered hereunder have been duly executed
and delivered by the DGC Trust, and (assuming due authorization, execution, and delivery by the remaining Parties) this Agreement and the documents to be delivered hereunder constitute legal, valid,
and binding obligations of the DGC Trust, enforceable against the DGC Trust in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.
(b) Mr. Cohen
has full power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out his obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Mr. Cohen, and (assuming due authorization,
execution, and delivery by the remaining Parties) this Agreement and the documents to be delivered hereunder constitute legal, valid, and binding obligations of the Mr. Cohen, enforceable
against Mr. Cohen in accordance with their respective terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws
affecting the enforcement of creditors' rights generally or by general principles of equity.
Section 4.02 No Conflicts; Consents. The execution, delivery, and performance by the DGC Trust and
Mr. Cohen of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not: (a) violate or conflict with
the organizational documents of the DGC Trust; (b) violate or conflict with any Law applicable to the DGC Trust or Mr. Cohen; or (d) conflict with, or result in (with or without
notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any Contract or
other instrument to which the DGC Trust or Mr. Cohen is a party or bound, except where the conflict, violation, default, termination, cancellation, modification, or acceleration would not,
individually or in the aggregate, have a material adverse effect on the DGC Trust's or Mr. Cohen's ability to consummate the transactions contemplated hereby on a timely basis. No consent,
approval, waiver, or authorization is required to be obtained by the DGC Trust or Mr. Cohen from any Person in connection with the execution, delivery, and performance by the DGC Trust or
Mr. Cohen of this Agreement and the consummation of the transactions contemplated hereby.
Section 4.03 Investment Purpose. Buyer is acquiring the LLC Units and the Series F Shares solely
for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that neither the LLC Units nor the
Series F Shares are registered under the Securities Act or any state securities Laws, and that the LLC Units and the Series F Shares may not be transferred or sold except pursuant
to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities Laws and regulations, as applicable, and in accordance with the
terms and conditions of this Agreement.
Section 4.04 Ownership of IMXI Shares. All of the IMXI Shares have been duly authorized, are validly issued,
fully paid and non-assessable, and are owned of record and beneficially by Buyer, free and clear of any Encumbrances.
Section 4.05 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.
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ARTICLE V
POST-CLOSING COVENANTS AND AGREEMENTS
Section 5.01 Stockholder Meeting and Parent Proxy Statement. At the 2020 annual meeting of the Parent's
stockholders (the "2020 Annual Meeting of Stockholders"), Parent shall cause its stockholders to vote on, among other things, proposals (collectively,
the "Stockholder Proposal") regarding the issuance of the Conversion Shares for purposes of Section 713 of the NYSE American's Company Guide. The
Board of Directors shall recommend to the Parent's stockholders that such stockholders approve the Stockholder Proposal, and shall not modify or withdraw such resolution. In connection with the 2020
Annual Meeting of Stockholders, Parent shall promptly prepare and file with the SEC a Definitive Proxy Statement on Schedule 14A pursuant to Section 14(a) of the Exchange Act (the
"Parent Proxy Statement"), use its reasonable best efforts to solicit proxies for such stockholder approval and
to respond to any comments of the SEC or its staff and mail a definitive proxy statement related the 2020 Annual Meeting of Stockholders to the Parent's stockholders promptly after clearance by the
SEC. The Parent shall notify Buyer promptly of the receipt by Parent of any comments from the SEC or its staff with respect to the Parent Proxy Statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information and shall supply Buyer with copies of all correspondence between the Parent or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to such proxy statement. If at any time prior to the 2020 Annual Meeting of Stockholders there shall occur any event that is required to
be set forth in an amendment or supplement to the Parent Proxy Statement, the Parent shall promptly prepare and mail to its stockholders such an amendment or supplement. The Parent shall promptly
correct any information provided by it or on its behalf for use in the Parent Proxy Statement if and to the extent that such information shall have become false or misleading in any material respect,
and the Parent shall promptly prepare and mail to its stockholders an amendment or supplement to correct such information to the extent required by applicable Laws. The Board of Directors'
recommendation described in this Section 5.01 shall be included in the Parent Proxy Statement.
Section 5.02 Voting Proxy.
(a) Effective
as of the Effective Date, if the Parent owns a number of units of membership interests in the Operating LLC representing less than a majority of the
votes entitled to be cast at any Meeting, then for so long as the Parent owns a number of units of membership interests in the Operating LLC representing less than a majority of the votes
entitled to be cast at any Meeting, Mr. Cohen hereby grants to and appoints the Parent as Mr. Cohen's proxy and attorney-in-fact (with full power of substitution), for and in the name,
place and stead of Mr. Cohen, to vote at any Meeting the number of units of membership interests in the Operating LLC owned by Mr. Cohen as of the record date of such Meeting
equal to (i) the Additional Units, multiplied by (ii) Mr. Cohen's Pro Rata Share. Such attorney-in-fact may evidence the taking of any action, giving of any consent or the voting
of such Additional Units by the execution of any document or instrument for such purpose in the name of Mr. Cohen. Mr. Cohen hereby affirms that the proxy set forth in this
Section 5.02 is given in connection with, and in consideration of, this Agreement. Mr. Cohen hereby further affirms that this proxy is coupled with an interest and may not be revoked
unless otherwise terminated by the mutual consent of Mr. Cohen and Parent. Mr. Cohen hereby ratifies and confirms all that the proxy and attorney-in-fact appointed pursuant to this
Section 5.02 may lawfully do or cause to be done by virtue hereof.
(b) Effective
as of the Effective date, if the Parent owns a number of units of membership interests in the Operating LLC representing less than a majority of the
votes entitled to be cast at any Meeting, then for so long as the Parent owns a number of units of membership interests in the Operating LLC representing less than a majority of the votes
entitled to be cast at any Meeting, the DGC Trust hereby grants to and appoints the Parent as the DGC Trust's proxy and attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the DGC Trust, to vote at any
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Meeting
the number of units of membership interests in the Operating LLC owned by the DGC Trust as of the record date of such Meeting equal to (i) the Additional Units, multiplied by
(ii) the DGC Trust's Pro Rata Share. Such attorney-in-fact may evidence the taking of any action, giving of any consent or the voting of such Additional Units by the execution of any document
or instrument for such purpose in the name of the DGC Trust. The DGC Trust hereby affirms that the proxy set forth in this Section 5.02 is given in connection with, and in consideration of,
this Agreement. The DGC Trust hereby further affirms that this proxy is coupled with an interest and may not be revoked unless otherwise terminated by the mutual consent of the DGC Trust and Parent.
The DGC Trust hereby ratifies and confirms all that the proxy and attorney-in-fact appointed pursuant to this Section 5.02 may lawfully do or cause to be done by virtue hereof.
(c) No LLC
Units may be sold, assigned or otherwise transferred by Mr. Cohen or the DGC Trust to any Person unless the transferee of such LLC Units
agrees in writing in a form acceptable to Parent in its reasonable discretion to be bound by the provisions of this Section 5.02.
Section 5.03 Restrictions on Redemption.
(a) Mr. Cohen
shall not cause a Unit Redemption with respect to any portion of the Cohen LLC Units if the Board of Directors, after consultation with legal
counsel, determines in good faith and in its sole discretion that satisfaction of such Unit Redemption by Parent with shares of Parent Common Stock would jeopardize or endanger the availability to
Parent of its net operating loss and net capital loss carryforwards and certain other tax benefits under Section 382 of the Code.
(b) The
DGC Trust shall not cause a Unit Redemption with respect to any portion of the Trust LLC Units if the Board of Directors, after consultation with legal
counsel, determines in good faith and in its sole discretion that satisfaction of such Unit Redemption by Parent with shares of Parent Common Stock would jeopardize or endanger the availability to
Parent of its net operating loss and net capital loss carryforwards and certain other tax benefits under Section 382 of the Code.
(c) Until
the Company's stockholders approve the Stockholder Proposal, Mr. Cohen shall not cause a Unit Redemption with respect to any portion of the Cohen LLC
Units if such Unit Redemption would result in Parent issuing a number of shares of Parent Common Stock that, when aggregated with any shares of Parent Common Stock previously issued in connection with
any Unit Redemption of the Cohen LLC Units equals or exceeds 11.18% of the outstanding Parent Common Stock as of the Effective Date.
(d) Until
the Company's stockholders approve the Stockholder Proposal, the DGC Trust shall not cause a Unit Redemption with respect to any portion of the Trust LLC
Units if such Unit Redemption would result in Parent issuing a number of shares of Parent Common Stock that, when aggregated with any shares of Parent Common Stock previously issued in connection with
any Unit Redemption of the Trust LLC Units equals or exceeds 8.81% of the outstanding Parent Common Stock as of the Effective Date.
(e) No LLC
Units may be sold, assigned or otherwise transferred by Mr. Cohen or the DGC Trust to any Person unless the transferee of such LLC Units
agrees in writing in a form acceptable to Parent in its reasonable discretion to be bound by the provisions of this Section 5.03.
ARTICLE VI
INDEMNIFICATION
Section 6.01 Survival. Subject to the limitations and other provisions of this Agreement, the representations,
warranties, and covenants contained herein and all related rights to indemnification shall survive the Closing.
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Section 6.02 Indemnification by the Operating LLC. Subject to the other terms and conditions of this
Article VI, Parent and the Operating LLC shall, jointly and severally, defend, indemnify, and hold harmless Mr. Cohen, the DGC Trust and their Affiliates, and their respective
stockholders, members, directors, managers, officers, and employees and agents from and against:
(a) all
third party Losses arising from or relating to any inaccuracy in or breach of any of the representations or warranties of Parent or the Operating LLC
contained in this Agreement; or
(b) any
third party Loss arising from or relating to any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Parent or the
Operating LLC pursuant to this Agreement.
Section 6.03 Indemnification By Buyer. Subject to the other terms and conditions of this Article VI,
Mr. Cohen and the DGC Trust shall, jointly and severally, defend, indemnify, and hold harmless Parent, the Operating LLC and their Affiliates, and their respective stockholders, members,
directors, managers, officers, and employees and agents from and against:
(a) all
third party Losses arising from or relating to any inaccuracy in or breach of any of the representations or warranties of Mr. Cohen or the DGC Trust contained
in this Agreement; or
(b) any
third party Loss arising from or relating to any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Mr. Cohen or the DGC
Trust pursuant to this Agreement.
Section 6.04 Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the Person
entitled to indemnification under this Article VI (the "Indemnified Party") shall promptly provide written notice of such claim to the Party
against whom such claims are asserted under this Article VI (the "Indemnifying Party"). The failure to give prompt notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. In connection with
any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a Person who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon
written notice to the Indemnified Party, may assume the defense of any such Action with its counsel. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its
counsel and at its own cost and expense, subject to the Indemnifying Party's right to control the defense thereof. If the Indemnifying Party does not assume the defense of any such Action, the
Indemnified Party may, but shall not be obligated to, defend against such Action. Neither Party shall settle any Action without the other Party's prior written consent (which consent shall not be
unreasonably withheld or delayed).
Section 6.05 Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable
pursuant to this Article VI, the Indemnifying Party shall satisfy its obligations within thirty (30) Business Days of such agreement or final, non-appealable adjudication by wire
transfer of immediately available funds.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses. Except as otherwise provided in Section 7.02, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.
Section 7.02 Attorneys' Fees. If either Party commences an Action against the other Party arising out of or in
connection with this Agreement or the transactions contemplated hereby, the prevailing Party shall be entitled to have and recover from the losing Party reasonable attorneys' fees and costs of suit.
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Section 7.03 Further Assurances. Following the Closing, each of the Parties shall, and shall cause their
respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions
hereof and give effect to the transactions contemplated by this Agreement.
Section 7.04 Notices. All notices, requests, consents, claims, demands, waivers, and other communications
hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such
communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this
Section 7.04):
If
to Parent or the Operating LLC:
Cohen &
Company Inc.
Cira Centre
2929 Arch Street, Suite 1703
Philadelphia, Pennsylvania 19104
Attn: Joseph W. Pooler, Jr.
Facsimile: (215) 701-8280
E-mail: jpooler@cohenandcompany.com
and
to:
Cohen &
Company Inc.
3 Columbus Circle, 24th Floor,
New York, New York 10019
Attn: Rachael Fink
Facsimile: (866) 543-2907
E-mail: rfink@cohenandcompany.com
with
a copy to:
Duane
Morris LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103
Attn: Darrick M. Mix and Barry A. Steinman
Facsimile: (215) 405 2906 and (215) 754-4840
E-mail: dmix@duanemorris.com and bsteinman@duanemorris.com
If
to Mr. Cohen or the DGC Trust:
At
the address on the books and records of Parent.
Section 7.05 Headings. The headings in this Agreement are for reference only and shall not affect the
interpretation of this Agreement.
Section 7.06 Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in
any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any
other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to modify the Agreement so as to effect
the
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original
intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest
extent possible.
Section 7.07 Entire Agreement. This Agreement and the documents to be delivered hereunder constitute the sole and
entire agreement of the Parties with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to
such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in documents to be delivered hereunder, the statements in the body of this
Agreement will control.
Section 7.08 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the
Parties and their respective successors and permitted assigns. No Party may assign its rights or obligations hereunder without the prior written consent of the other Parties. No assignment shall
relieve the assigning Party of any of its obligations hereunder.
Section 7.09 No Third-Party Beneficiaries. Except as provided in Article VI, this Agreement is for the
sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable
right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 7.10 Amendment and Modification. This Agreement may only be amended, modified or supplemented by an
agreement in writing signed by each of the Parties.
Section 7.11 Waiver. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly
set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such
written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege
arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power, or privilege.
Section 7.12 Governing Law. This Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction).
Section 7.13 Submission to Jurisdiction. Any Action arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of Delaware in each case located in the city of City of Wilmington,
Delaware, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Action.
Section 7.14 Waiver of Jury Trial. Each Party acknowledges and agrees that any controversy which may arise under
this Agreement is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any
legal action arising out of or relating to this Agreement or the transactions contemplated hereby.
Section 7.15 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are
entitled at law or in equity. Each Party (i) agrees that it shall not oppose the granting of
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such
specific performance or relief; and (ii) hereby irrevocably waives any requirements for the security or posting of any bond in connection with such relief.
Section 7.16 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, or other means of electronic transmission shall be
deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have caused this Securities Purchase Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
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PARENT:
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Cohen & Company Inc.
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By:
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/s/ JOSEPH W. POOLER, JR.
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Name:
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Joseph W. Pooler, Jr.
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Title:
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Executive Vice President,
Chief Financial Officer and Treasurer
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OPERATING LLC:
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Cohen & Company, LLC
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By:
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/s/ JOSEPH W. POOLER, JR.
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Name:
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Joseph W. Pooler, Jr.
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Title:
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Executive Vice President,
Chief Financial Officer and Treasurer
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MR. COHEN:
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By:
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/s/ DANIEL G. COHEN
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Name:
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Daniel G. Cohen
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THE DGC TRUST:
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The DGC Family Fintech Trust
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By:
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/s/ RAPHAEL LICHT
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Name:
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Raphael Licht
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Title:
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Trustee
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By:
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/s/ JEFFREY D. BLOMSTOM
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Name:
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Jeffrey D. Blomstrom
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Title:
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Trustee
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Table of Contents
Annex B
December 26,
2019
Personal and Confidential
Special
Committee of the Board of Directors of
Cohen & Company Inc.
Cira Center Suite 1703
2929 Arch Street
Philadelphia, PA 19104
Dear
Members of the Special Committee of the Board of Directors:
We
understand that Cohen & Company Inc., a Maryland corporation ("Parent"), proposes to enter into an agreement with Daniel G. Cohen ("DGC") and the DGC Family Fintech Trust (the "DGC
FFT" and together with DGC, the "Contributors") relating to a proposed acquisition by the Contributors of an equity stake in Cohen & Company, LLC ("C&C"), a subsidiary of Parent, in the
aggregate amount of approximately $8.98 million (the "Transaction"). Parent is a public company that lists its shares of common stock on The NYSE American Stock Exchange under the symbol
"COHN." Subject to certain terms and conditions to be set forth in a binding securities purchase agreement (the "Purchase Agreement"), the Transaction will consist of: (i) a contribution by the
Contributors of freely tradeable and restricted shares (the "IMXI Shares") of International Money Express, Inc. (NASDAQ:IMXI) ("International Money Express") to C&C for which (ii) C&C
will issue to the Contributors C&C Operating LLC Units (the "LLC Units"), which can be exchanged upon the terms and conditions set forth in C&C's limited liability company operating agreement
on a ten-for-one-basis into shares of Parent common stock at an implied per share value of $4.00, and shares of Parent's Series F Preferred Stock. In connection with the Transaction, you have
requested that Northland Securities, Inc. ("Northland" or "we") provide our opinion as to the fairness to the stockholders of Parent, from a financial point of view, of the issuance
of LLC Units in exchange for the contribution of IMXI Shares in connection with the Transaction. The terms and conditions of the Transaction are more fully set forth in the Proposed Term Sheet,
dated as of December 13, 2019, by and among the Contributors, Parent and C&C (the "Proposed Term Sheet"). Capitalized terms not otherwise defined in this letter have the meaning ascribed to
them in the Proposed Term Sheet.
We,
as a customary part of our investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. We were retained to act as financial advisor to Parent in the Transaction. In
connection with such services, we have been engaged by Parent to render this opinion to the Special Committee of its
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Board
of Directors and we will receive a fee from Parent for providing this opinion, which is not contingent upon closing of the Transaction. Parent has further agreed to reimburse certain of our
expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement relating to advising Parent on the Transaction. We have in the past provided investment banking
services to Parent, and we may also in the future provide investment banking services to Parent or customary brokerage and trading services for the Contributors for which we would expect to receive
compensation.
At
the direction of Parent, for the purposes of our opinion, we have assumed that the price of Parent's common stock is equal to $3.83 per share, which is the last closing price on December 20,
2019, as well
as $4.00 per share, which is the simple average of the 30-day, 60-day, and 90-day volume weighted average price of Parent's common stock as of December 13, 2019. Unless noted otherwise, we have
based our opinion upon the terms as set forth in the Proposed Term Sheet.
We
have, at the request of Parent, assumed for purposes hereof that the value of the LLC Units and the shares of Parent's common stock are equal on an as converted basis.
In
connection with our review of the Transaction and in arriving at our opinion, we have made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
-
(i)
-
reviewed
a draft of the Proposed Term Sheet dated December 13, 2019;
-
(ii)
-
reviewed
certain publicly available business and financial information relating to Parent that we deemed to be relevant, including certain publicly available
research analyst estimates with respect to the future financial performance of Parent or its industry including public companies that we deemed to be relevant;
-
(iii)
-
reviewed
certain information relating to the historical, current and future operations, financial condition and prospects of Parent made available to us by Parent,
including historical unaudited financial information prepared by the management of Parent relating to Parent's interim financial period ended September 30, 2019, audited financial statements
for Parent's fiscal years ended December 31, 2016, 2017 and 2018 and projected financial statements for the fiscal years ending December 31, 2019 through 2023;
-
(iv)
-
compared
certain financial and stock market information regarding Parent to similar information for certain publicly traded companies deemed by us to be comparable
to Parent;
-
(v)
-
reviewed
the current and historical market prices and trading volume for Parent's shares of common stock;
-
(vi)
-
performed
a discounted cash flows analysis based on Parent's management projections; and
-
(vii)
-
conducted
such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate in arriving at our
opinion.
In
conducting our review of the Transaction, financial analyses and in rendering our opinion, we have relied upon and assumed, without independent verification, the accuracy and completeness of all
data, material and other information furnished, or otherwise made available, to us, discussed with or reviewed by us, or publicly available, and do not assume any responsibility with respect to such
data, material and other information. In addition, management of Parent has advised us, and we have assumed, that the financial projections reviewed by us have been reasonably prepared in good faith
on bases reflecting the best currently available estimates and judgments of the management of Parent as to the future financial results and condition of Parent, and we express no opinion with respect
to such projections or the assumptions on which they are based. If any of the foregoing assumptions are not accurate, the conclusion set forth in this opinion could be materially affected.
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As
you are aware, the credit, financial and stock markets have from time to time experienced unusual volatility and we express no opinion or view as to any potential effects of such volatility on the
Transaction and this opinion does not purport to address potential developments in any such markets.
We
have relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or
prospects of Parent since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to us that would be material to our analyses or this
opinion, and that there is no information or any facts that would make any of the information reviewed by us incomplete or misleading.
We
have assumed that the Transaction will be consummated pursuant to the terms of a purchase agreement that will substantially comply with the terms set forth in the Proposed Term Sheet without
amendments thereto and without waiver by any party of any conditions or obligations thereunder. In arriving at our opinion, we have assumed that all the necessary regulatory approvals and consents
required for the Transaction will be obtained in a manner that will not adversely affect Parent.
In
arriving at our opinion, we did not make an independent appraisal of the assets or liabilities (fixed, contingent or otherwise) of Parent or concerning the solvency or appraised or fair value of
Parent, and have not been furnished any such appraisal or valuation, and we have made no physical inspection of the property or assets of Parent. Our analyses of Parent did not include the liquidation
value or solvency of Parent. In addition, we did not perform any analysis with respect to potential change of control implications that may or may not arise from the consummation of the Transaction.
We
were not requested to opine, and no opinion is hereby rendered, as to the value of International Money Express. For any analysis on International Money Express we relied on a third-party valuation
analysis provided by Stout Risius Ross, LLC, dated as of October 10, 2019 and titled Valuation of Founder Shares in FinTech Acquisition Corp.
II. This report outlines the methodology and discount factor applied to the International Money Express restricted shares contributed in the Transaction. We have undertaken no
independent analysis of this report.
We
have undertaken no independent analysis of any pending or threatened litigation, governmental proceedings or investigations, possible unassisted claims or other contingent liabilities, to which
either Parent or its affiliates is a party or may be subject and at Parent's direction and with its consent, our opinion makes no assumption concerning and therefore does not consider, the possible
assertion of claims, outcomes, damages or recoveries arising out of any such matters. In addition, we were not requested to opine, and no opinion is hereby rendered, as to the potential tax
implications resulting from the Transaction. No company used in the analyses of comparable companies or for purposes of comparison to the value of Parent is identical or directly comparable to Parent
or the Transaction. Accordingly, an analysis of the results of the comparisons is not mathematical; rather, it involves complex considerations and judgments about differences in the companies to which
Parent was compared and other factors that could affect the public trading value of such companies. In our evaluation of the Transaction, we considered a broad scope of comparable transactions.
Ultimately, however, we elected not to include a set of comparable transactions in our evaluation of the Transaction because of the unique nature of the Transaction, including, but not limited to:
gross contributed value, market capitalizations, structure, company ownership, form of consideration, stage and liquidity profile.
This
opinion is necessarily based upon the financial, market, economic and other conditions that exist on, and the information made available to us as of, the date hereof. It should be understood that
subsequent developments may affect this opinion and that we disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting this opinion which may come or be
brought to our attention after the date of the opinion. We are not expressing any opinion herein as to the price at which shares of common stock of Parent have traded or such stock may trade following
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announcement
of the Transaction or at any future time. We have not undertaken to reaffirm or revise this opinion or otherwise comment upon any events occurring after the date hereof and do not have
any obligation to update, revise or reaffirm this opinion.
Consistent
with applicable legal and regulatory requirements, we have adopted policies and procedures to establish and maintain the independence of our research department and personnel. As a result,
our research analysts may hold opinions, make statements or recommendations, and/or publish research reports with respect to Parent, the Contributors and the Transaction that differ from the views of
our investment banking personnel.
This
opinion is furnished pursuant to our engagement letter dated as of November 14, 2019 (the "Engagement Letter"). This opinion is directed to the Special Committee and the Board of Directors
of Parent in connection with the fairness to the stockholders of Parent, from a financial point of view, of the issuance of LLC Units in exchange for the contribution of IMXI Shares in
connection with the Transaction. Notwithstanding the foregoing, the Special Committee and the Board of Directors of Parent are authorized to rely upon this opinion. Unless otherwise set forth in the
Engagement Letter, this opinion shall not be published or otherwise used, nor shall any public references to us be made, without our prior written approval.
This
opinion addresses solely the fairness to the stockholders of Parent, from a financial point of view, of the issuance of LLC Units in exchange for the contribution of IMXI Shares in
connection with the Transaction, and does not address any other terms or agreement relating to the Transaction. We were not requested to opine as to, and this opinion does not address, the relative
merits of the Transaction as compared to any alternative business transaction or strategic alternative that might be available to Parent, nor does it address the underlying business decision of Parent
to engage in the Transaction. No opinion is expressed whether any alternative transaction might produce proceeds to Parent in an amount in excess of that to be received by Parent in the Transaction or
on more favorable terms than the Transaction. We express no opinion as to the amount, nature or fairness of any consideration or compensation to be received in or as a result of the Transaction by
officers, directors, employees, warrant holders, option holders, securities holders, creditors or any other class of such persons, or relative to or in comparison with the LLC Units. We have
not been asked to consider, and this opinion does not address, the price at which Parent's common stock will trade at any time or as to the impact of the Transaction on the solvency or viability of
Parent to pay its obligations when they come due. We are not rendering any financial, legal, accounting or other advice and understand that Parent is relying on its legal counsel and accounting
advisors as to legal and accounting matters in connection with the Transaction.
The
preparation of a fairness opinion is a complex, analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances and is not necessarily susceptible to partial analysis or summary description. In arriving at this opinion, we did not attribute any particular weight to
any
particular analysis or factor considered by us, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Several analytical methodologies were employed
by us in our analysis, and no one method of analysis should be regarded as critical to the overall conclusion reached by us. Each analytical technique has inherent strengths and weaknesses, and the
nature of the available information may further affect the value of particular techniques. Accordingly, we believe that our analyses must be considered as a whole and that selecting portions of our
analysis and of the factors considered by us, without considering all analyses and factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying this
opinion. The conclusion reached by us, therefore, is based on the application of our own experience and judgment to all analyses and factors considered by us, taken as a whole. Our opinion was
reviewed and approved by Northland's fairness opinion committee.
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Based
upon and subject to the foregoing and based upon such other factors as we consider relevant, it is our opinion that, as of the date hereof, the issuance of LLC Units in exchange for the
contribution of IMXI Shares in connection with the Transaction is fair to the stockholders of Parent from a financial point of view.
Sincerely,
/s/
Northland Securities
Northland
Securities, Inc.
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Annex C
COHEN & COMPANY INC.
2020 LONG-TERM INCENTIVE PLAN
Cohen & Company Inc., a Maryland corporation (the "Company"), wishes to attract key employees, Directors, officers, advisors and
consultants to the Company and Subsidiaries, and induce key employees, Directors, officers, advisors, consultants and other personnel to remain with the Company and Subsidiaries and encourage them to
increase their efforts to make the Company's
business more successful whether directly or through Subsidiaries or other Affiliates. In furtherance thereof, the Cohen & Company Inc. 2020 Long-Term Incentive Plan (the "Plan") is
designed to provide equity-based incentives to certain Eligible Persons. Awards under the Plan may be made to Eligible Persons in the form of Options (including Stock Appreciation Rights), Restricted
Stock, Restricted Stock Units, Dividend Equivalent Rights and other forms of equity based Awards as contemplated herein.
1. DEFINITIONS
Whenever used herein, the following terms shall have the meanings set forth below:
"Affiliate"
means any entity other than a Subsidiary that is controlled by or under common control with the Company that is designated as an "Affiliate" by the Committee in its
discretion.
"Award"
except where referring to a particular category of grant under the Plan, shall include Options, Restricted Stock, RSUs, Dividend Equivalent Rights and other equity-based Awards
as contemplated herein.
"Award
Agreement" means a written agreement in a form approved by the Committee, as provided in Section 3. An Award Agreement may be, without limitation, an employment or other
similar agreement containing provisions governing grants hereunder, if approved by the Committee for use under the Plan.
"Board"
means the Board of Directors of the Company.
"Cause"
means, unless otherwise provided in the Participant's Award Agreement (i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect;
(ii) repeatedly failing to adhere to the directions of superiors or the Board or the written policies and practices of the Company, Subsidiaries or Affiliates; (iii) the commission of a
felony or a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company, Subsidiaries, or Affiliates; (iv) fraud, misappropriation or
embezzlement; (v) acts or omissions constituting a material failure to perform substantially and adequately the duties assigned to the Participant; (vi) any illegal act detrimental to
the Company, Subsidiaries or Affiliates; (vii) repeated failure to devote substantially all of the Participant's business time and efforts to the Company, Subsidiaries, or Affiliates if
required by the Participant's employment agreement; or (viii) the Participant's failure to competently perform his duties after receiving notice from the Company, a Subsidiary, or Affiliate,
specifically identifying the manner in
which the Participant has failed to perform; provided, however, that, if at any particular time the Participant is subject to an effective employment agreement with the Company, a Subsidiary or
Affiliate, then, in lieu of the foregoing definition, "Cause" shall at that time have such meaning as may be specified in such employment agreement.
"Change
in Control" means the happening of any of the following:
(i) any
"person," including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), but
excluding Daniel G. Cohen, any member of Daniel G. Cohen's immediate family, the DGC Family Fintech Trust, the Company,
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Cohen &
Company, LLC, any entity or person controlling, controlled by or under common control with Daniel G. Cohen, any member of Daniel G. Cohen's immediate family, the DGC Family
Fintech Trust, the Company, Cohen & Company, LLC, any employee benefit plan of the Company, Cohen & Company, LLC or any such entity, and any "group" (as such term is used
in Section 13(d)(3) of the Exchange Act) of which the any of the foregoing persons or entities is a member), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of either (A) the combined voting power of the Company's then outstanding securities or
(B) the then outstanding Common Stock (in either such case other than as a result of an acquisition of securities directly from the Company, Cohen & Company, LLC or any of their
respective subsidiaries); provided, however, that, in no event shall a Change in Control be deemed to have occurred upon an initial public offering or a subsequent public offering of the Common Stock
under the Securities Act of 1933, as amended; or
(ii) any
consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the
consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the
combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any);
(iii) there
shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of
the combined voting power of the voting securities of which are owned by "persons" (as defined above) in substantially the same proportion as their ownership of the Company immediately prior to such
sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; or
(iv) the
members of the Board of Directors of the Company at the beginning of any consecutive 24-calendar-month period (the "Incumbent Directors") cease for any reason other
than due to death to constitute at least a majority of the members of the Board of Directors of the Company; provided that any director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the members of the Board of Directors of the Company then still in office who were members of the Board of Directors of the Company at
the beginning of such 24-calendar-month period, shall be deemed to be an Incumbent Director.
Notwithstanding
the foregoing provisions of this definition of Change in Control, if at any time the Participant is subject to an effective employment agreement with the Company, a
Subsidiary or Affiliate which expressly provides for the definition of a change in control of the Company, then, in lieu of the foregoing definition, "Change in Control" shall at that time have such
meaning as may be specified, in such employment agreement, with respect to the Company.
Notwithstanding
the foregoing, if an event constitutes a Change in Control as described above but does not constitute a "change in the ownership", "change in effective control" or
"change in the ownership of a substantial portion of the assets" of the Company, as such terms are defined in Treasury Regulations § 1.409A-3 (or other applicable guidance issued
under Section 409A of the Code) then such event shall not be deemed a Change in Control to the extent that it would result in the imposition of the 20% excise tax as set forth in
Section 409A(a)(1)(B). Such event may however, continue to constitute a Change in Control to the extent possible (e.g., vesting without an acceleration of distribution) without causing
the imposition of such 20% tax.
"Code"
means the Internal Revenue Code of 1986, as amended.
"Committee"
means the Compensation Committee of the Board.
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"Common
Stock" means the Company's Common Stock, par value $.001 per share, either currently existing or authorized hereafter.
"Company"
means Cohen & Company Inc., a Maryland corporation.
"Director"
means a non-employee director of the Company or Subsidiary that is not an employee of the Company or a Subsidiary.
"Disability"
means, unless otherwise provided by the Committee in the Participant's Award Agreement, a disability which renders the Participant incapable of performing all of his or her
duties for a period of at least 180 consecutive or non-consecutive days during any consecutive twelve-month period. Notwithstanding the foregoing, no circumstances or condition shall constitute a
Disability to the extent that, if it were, a 20% tax would be imposed under Section 409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a
Disability to the maximum extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without causing the imposition of such 20% tax.
"Dividend
Equivalent Right" means a right awarded under Section 8 to receive (or have credited) the equivalent value of dividends paid on Common Stock.
"Eligible
Person" means (i) a key employee, Director, officer, advisor, consultant or other personnel of the Company or Subsidiaries or other person expected to provide
significant services (of a type expressly approved by the Committee as covered services for these purposes) to the Company or Subsidiaries or (ii) joint venture affiliates of the Company or
other entities designated in the discretion of the Committee, or officers, directors, employees, members, or managers of the foregoing. In the case of grants directly or indirectly to employees of
entities described in clause (ii) of the foregoing sentence, the Committee may make arrangements with such entities as it may consider appropriate in its discretion, in light of tax and other
considerations.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"Fair
Market Value" per Share as of a particular date means (i) if Shares are then listed on a national securities exchange, the closing sales price per Share on the exchange for
the last preceding date on which there was a sale of Shares on such exchange, as determined by the Committee, (ii) if Shares are not then listed on a national securities exchange but are then
traded on an over-the-counter market, the average of the closing bid and asked prices for the Shares in such over-the-counter market for the last preceding date on which there was a sale of such
Shares in such market, as determined by the Committee, or (iii) if Shares are not then listed on a national securities exchange or traded on an over-the-counter market, such value as the
Committee in its discretion may in good faith determine; provided that, where the Shares are so listed or traded, the Committee may make such discretionary determinations where the Shares have not
been traded for 10 consecutive trading days.
"Grantee"
means an Eligible Person granted Restricted Stock, RSUs, Dividend Equivalent Rights or such other equity-based Awards (other than an Option) as may be granted pursuant to
Section 9.
"Incentive
Stock Option" means an "incentive stock option" within the meaning of Section 422(b) of the Code.
"Non-Qualified
Stock Option" means an Option which is not an Incentive Stock Option.
"Option"
means the right to purchase, at a price and for the term fixed by the Committee in accordance with the Plan, and subject to such other limitations and restrictions in the Plan
and the applicable Award Agreement, a number of Shares determined by the Committee.
"Optionee"
means an Eligible Person to whom an Option is granted, or the Successors of the Optionee, as the context so requires.
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"Option
Price" means the price per Share, determined by the Board or the Committee, at which an Option may be exercised.
"Participant"
means a Grantee or Optionee.
"Performance
Goals" has the meaning set forth in Section 10.
"Plan"
means the Company's 2020 Long-Term Incentive Plan, as set forth herein and as the same may from time to time be amended.
"Restricted
Stock" means an award of Shares that are subject to restrictions hereunder.
"Restricted
Stock Unit" or "RSU" means a right, pursuant to the Plan, of the Grantee to payment of the RSU Value.
"RSU
Value," per RSU, means the Fair Market Value of a Share or, if so provided by the Committee, such Fair Market Value to the extent in excess of a base value established by the
Committee at the time of grant.
"Retirement"
means, unless otherwise provided by the Committee in the Participant's Award Agreement, the Termination of Service (other than for Cause) of a Participant on or after the
Participant's attainment of age 65 or on or after the Participant's attainment of age 55 with five consecutive years of service with the Company, Subsidiaries or Affiliates.
"Securities
Act" means the Securities Act of 1933, as amended.
"Settlement
Date" means the date determined under Section 7.4(c).
"Shares"
means shares of Common Stock of the Company.
"Stock
Appreciation Right" means an Option described in Section 5.7.
"Subsidiary"
means any corporation, partnership or other entity of which at least 50% of the economic interest in the equity is owned (directly or indirectly) by the Company or by
another subsidiary of the Company. In the event the Company becomes such a subsidiary of another company (directly or indirectly), the provisions hereof applicable to subsidiaries shall, unless
otherwise determined by the Committee, also be applicable to such parent company.
"Successor
of the Optionee" means the legal representative of the estate of a deceased Optionee or the person or persons who shall acquire the right to exercise an Option by bequest or
inheritance or by reason of the death of the Optionee.
"Termination
Event" means a Change in Control.
"Termination
of Service" means a Participant's termination of employment or other service (as a consultant or otherwise), as applicable, with the Company, Subsidiaries and Affiliates.
2. EFFECTIVE DATE AND TERMINATION OF PLAN
The effective date of the Plan is April 7, 2020. The Plan shall terminate on, and no Award shall be granted hereunder on or after, the 10-year anniversary
of the earlier of the approval of the Plan by (i) the Board or (ii) the stockholders of the Company; provided, however, that the Board may at any time prior to that date terminate the
Plan.
3. ADMINISTRATION OF PLAN
(a) The
Plan shall be administered by the Committee. The Committee, upon and after such time as it is subject to Section 16 of the Exchange Act, shall consist of at
least two individuals each of whom shall be a "nonemployee director" as defined in Rule 16b-3 as promulgated by the Securities and
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Exchange
Commission ("Rule 16b-3") under the Exchange Act and shall, at such times as the Company is subject to Section 162(m) of the Code (to the extent relief from the limitation of
Section 162(m) of the Code is sought with respect to Awards), qualify as "outside directors" for purposes of Section 162(m) of the Code; provided that no action taken by the Committee
(including, without limitation, grants) shall be invalidated because any or all of the members of the Committee fails to satisfy the foregoing requirements of this sentence. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is present, or acts approved in writing by a majority of the entire Committee, shall be the acts of the Committee for purposes of
the Plan. If and to the extent applicable, no member of the Committee may act as to matters under the Plan specifically relating to such member. Notwithstanding the other foregoing provisions of this
Section 3(a), any Award under the Plan to a person who is a member of the Committee shall be made and administered by the Board. If no Committee is designated by the Board to act for these
purposes, the Board shall have the rights and responsibilities of the Committee hereunder and under the Award Agreements.
(b) Subject
to the provisions of the Plan, the Committee shall in its discretion as reflected by the terms of the Award Agreements (i) authorize the granting of
Awards to Eligible Persons and (ii) determine the eligibility of Eligible Persons to receive an Award, as well as determine the number of Shares to be covered under any Award Agreement,
considering the position and responsibilities of the Eligible Persons, the nature and value to the Company of the Eligible Person's present and potential contribution to the success of the Company
whether directly or through Subsidiaries or Affiliates and such other factors as the Committee may deem relevant.
(c) The
Award Agreement shall contain such other terms, provisions and conditions not inconsistent herewith as shall be determined by the Committee. In the event that any
Award Agreement or other agreement hereunder provides (without regard to this sentence) for the obligation of the Company, Subsidiaries or Affiliates to purchase or repurchase Shares from a
Participant or any other person, then, notwithstanding the provisions of the Award Agreement or such other agreement, such obligation shall not apply to the extent that the purchase or repurchase
would not be permitted under governing state law. The Participant shall take whatever additional actions and execute whatever additional documents the Committee may in its reasonable judgment deem
necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Participant pursuant to the express provisions of the Plan and the Award Agreement.
4. SHARES AND UNITS SUBJECT TO THE PLAN.
4.1 In General.
(a) Subject
to adjustments as provided in Section 14, the total number of Shares subject to Awards granted under the Plan (including securities convertible into or
exchangeable for Shares), in the aggregate, may not exceed 600,000. Shares distributed under the Plan may be treasury Shares or authorized but unissued Shares. Any Shares that have been granted as
Restricted Stock or that have been reserved for distribution in payment for Options, RSUs or other equity-based Awards but are later forfeited or for any other reason are not payable under the Plan
may again be made the subject of Awards under the Plan.
(b) Shares
subject to Dividend Equivalent Rights, other than Dividend Equivalent Rights based directly on the dividends payable with respect to Shares subject to Options or
the dividends payable on a number of Shares corresponding to the number of RSUs awarded, shall be subject to the limitation of Section 4.1(a). Notwithstanding Section 4.1(a), except in
the case of Awards intended to qualify for relief from the limitations of Section 162(m) of the Code, there shall be no limit on the number of RSUs or Dividend Equivalent Rights to the extent
they are paid out in cash that may be granted under the Plan. If any RSUs, Dividend Equivalent Rights or other equity-based Awards under Section 9 are paid out in cash, then, notwithstanding
the first sentence of Section 4.1(a) above (but subject to the
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second
sentence thereof) the underlying Shares may again be made the subject of Awards under the Plan.
(c) The
certificates for Shares issued hereunder may include any legend which the Committee deems appropriate to reflect any rights of first refusal or restrictions on
transfer hereunder or under the Award Agreement, or as the Committee may otherwise deem appropriate.
4.2 Options.
Subject
to adjustments pursuant to Section 14, and subject to the last sentence of Section 4.1(a), Options with respect to an aggregate of no more than 600,000 Shares may
be granted under the Plan.
5. PROVISIONS APPLICABLE TO STOCK OPTIONS.
5.1 Grant of Option.
Subject
to the other terms of the Plan, the Committee shall, in its discretion as reflected by the terms of the applicable Award Agreement: (i) determine and designate from time
to time those Eligible Persons to whom Options are to be granted and the number of Shares to be optioned to each Eligible Person; (ii) determine whether to grant Options intended to be
Incentive Stock Options, or to grant Non-Qualified Stock Options, or both (to the extent that any Option does not qualify as an Incentive Stock Option, it shall constitute a separate Non-Qualified
Stock Option); provided that Incentive Stock Options may only be granted to employees of the Company, Subsidiaries or Affiliates; (iii) determine the time or times when and the manner and
condition in which each Option shall be exercisable and the duration of the exercise period; (iv) designate each Option as one intended to be an Incentive Stock Option or as a Non-Qualified
Stock Option; and (v) determine or impose other conditions to the grant or exercise of Options under the Plan as it may deem appropriate.
5.2 Option Price.
The
Option Price shall be determined by the Committee on the date the Option is granted and reflected in the Award Agreement, as the same may be amended from time to time. Any particular
Award Agreement may provide for different Option Prices for specified amounts of Shares subject to the Option; provided that the Option Price shall not be less than 100% of the Fair Market Value of a
Share on the day the Option is granted.
5.3 Period of Option and Vesting.
(a) Unless
earlier expired, forfeited or otherwise terminated, each Option shall expire in its entirety upon the 10th anniversary of the date of grant or shall have
such other term as is set forth in the applicable Award Agreement. The Option shall also expire, be forfeited and terminate at such times and in such circumstances as otherwise provided hereunder or
under the Award Agreement.
(b) Each
Option, to the extent that the Optionee has not had a Termination of Service and the Option has not otherwise lapsed, expired, terminated or been forfeited, shall
first become exercisable according to the terms and conditions set forth in the Award Agreement, as determined by the Committee at the time of grant. Unless otherwise provided in the Plan or the Award
Agreement, no Option (or portion thereof) shall ever be exercisable if the Optionee has a Termination of Service before the time at which such Option (or portion thereof) would otherwise have become
exercisable, and any Option that would otherwise become exercisable after such Termination of Service shall not become exercisable and shall be forfeited upon such termination. Notwithstanding the
foregoing provisions of this Section 5.3(b), Options exercisable pursuant to the schedule set forth by the Committee at the time of the grant may be fully or more rapidly exercisable or
otherwise vested at any time in the discretion of the Committee. Upon and after the death of an Optionee, such Optionee's
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Options,
if and to the extent otherwise exercisable hereunder or under the applicable Award Agreement after the Optionee's death, may be exercised by the Successors of the Optionee.
5.4 Exercisability Upon and After Termination of Optionee.
(a) Subject
to provisions of the Award Agreement, if an Optionee has a Termination of Service other than by the Company or Subsidiaries for Cause, or other than by reason of
death, Retirement or Disability, then no exercise of an Option may occur after the expiration of the three-month period to follow the termination, or if earlier, the expiration of the term of the
Option as provided under Section 5.3(a); provided that, if the Optionee should die after the Termination of Service, but while the Option is still in effect, the Option (if and to the extent
otherwise exercisable by the Optionee at the time of death) may be exercised until the earlier of (i) one year from the date of the Termination of Service of the Optionee, or (ii) the
date on which the term of the Option expires in accordance with Section 5.3(a).
(b) Subject
to provisions of the Award Agreement, in the event the Optionee has a Termination of Service on account of death, Disability or Retirement, the Option (whether
or not otherwise exercisable) may be exercised until the earlier of (i) one year from the date of the Termination of Service of the Optionee, or (ii) the date on which the term of the
Option expires in accordance with Section 5.3.
(c) Notwithstanding
any other provision hereof, unless otherwise provided in the Award Agreement, if the Optionee has a Termination of Service for Cause, the Optionee's
Options, to the extent then unexercised, shall thereupon cease to be exercisable and shall be forfeited forthwith.
5.5 Exercise of Options.
(a) Subject
to vesting, restrictions on exercisability and other restrictions provided for hereunder or otherwise imposed in accordance herewith, an Option may be exercised,
and payment in full of the aggregate Option Price made, by an Optionee only by written notice (in the form prescribed by the Committee) to the Company or its designee specifying the number of Shares
to be purchased.
(b) Without
limiting the scope of the Committee's discretion hereunder, the Committee may impose such other restrictions on the exercise of Options (whether or not in the
nature of the foregoing restrictions) as it may deem necessary or appropriate.
5.6 Payment.
(a) The
aggregate Option Price shall be paid in full upon the exercise of the Option. Payment must be made by one of the following methods:
(i) certified
or bank cashier's check;
(ii) subject
to Section 12(e), the proceeds of a Company loan program or third-party sale program or a notice acceptable to the Committee given as consideration under
such a program, in each case if permitted by the Committee in its discretion, if such a program has been established and the Optionee is eligible to participate therein;
(iii) if
approved by the Committee in its discretion, Shares of previously owned Common Stock, which have been previously owned for more than six months, having an aggregate
Fair Market Value on the date of exercise equal to the aggregate Option Price; or
(iv) if
approved by the Committee in its discretion, through the written election of the Optionee to have Shares withheld by the Company from the Shares otherwise to be
received, with such withheld Shares having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price; or
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(v) by
any combination of such methods of payment or any other method acceptable to the Committee in its discretion.
(b) Except
in the case of Options exercised by certified or bank cashier's check, the Committee may impose limitations and prohibitions on the exercise of Options as it
deems appropriate, including, without limitation, any limitation or prohibition designed to avoid accounting consequences which may result from the use of Common Stock as payment upon exercise of an
Option.
(c) The
Committee may provide that no Option may be exercised with respect to any fractional Share. Any fractional Shares resulting from an Optionee's exercise that is
accepted by the Company shall in the discretion of the Committee be paid in cash.
5.7 Stock Appreciation Rights.
(a) The
Committee, in its discretion, may also permit (taking into account, without limitation, the application of Section 409A of the Code, as the Committee may deem
appropriate) the Optionee to elect to receive upon the exercise of an Option a combination of Shares and cash, or, in the discretion of the Committee, either Shares or solely in cash, with an
aggregate Fair Market Value (or, to the extent of payment in cash, in an amount) equal to the excess of the Fair Market Value of the Shares with respect to which the Option is being exercised over the
aggregate Option Price, as determined as of the day the Option is exercised.
(b) Upon
the exercise of any Stock Appreciation Rights, the greater of (i) the number of shares subject to the Stock Appreciation Rights so exercised, and
(ii) the number of Shares, if any, that are issued in connection with such exercise, shall be deducted from the number of Shares available for issuance under the Plan.
(c) In
no event may a Stock Appreciation Right be transferred by a holder thereof for consideration without the prior approval of the Company's stockholders.
5.8 Exercise by Successors.
An
Option may be exercised, and payment in full of the aggregate Option Price made, by the Successors of the Optionee only by written notice (in the form prescribed by the Committee) to
the Company specifying the number of Shares to be purchased. Such notice shall state that the aggregate Option Price will be paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Committee, if and as applicable.
5.9 Nontransferability of Option.
Each
Option granted under the Plan shall be nontransferable by the Optionee except by will or the laws of descent and distribution of the state wherein the Optionee is domiciled at the
time of his death; provided, however, that the Committee may (but need not) permit other transfers, where the Committee concludes that such transferability (i) does not result in accelerated
U.S. federal income taxation, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, (iii) complies with
applicable law, including securities laws, and (iv) is otherwise appropriate and desirable. In no event may an Option be transferred by an Optionee for consideration without the prior approval
of the Company's stockholders.
5.10 Deferral.
The
Committee (taking into account, without limitation, the possible application of Section 409A of the Code, as the Committee may deem appropriate) may establish a program under
which Participants will have RSUs subject to Section 7 credited upon their exercise of Options, rather than receiving Shares at that time.
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5.11 Certain Incentive Stock Option Provisions.
(a) In
no event may an Incentive Stock Option be granted other than to employees of the Company or a "subsidiary corporation" or a "parent corporation," as each is defined
in Section 424(f) of the Code, with respect to the Company. The aggregate Fair Market Value, determined as of the date an Option is granted, of the Common Stock for which any Optionee may be
awarded Incentive Stock Options which are first exercisable by the Optionee during any calendar year under the Plan (or any other stock option plan required to be taken into account under
Section 422(d) of the Code) shall not exceed $100,000. To the extent the $100,000 limit referred to in the preceding sentence is exceeded, an Option will be treated as a Non-Qualified Stock
Option.
(b) If
Shares acquired upon exercise of an Incentive Stock Option are disposed of in a disqualifying disposition within the meaning of Section 422 of the Code by an
Optionee prior to the expiration of either two years from the date of grant of such Option or one year from the transfer of Shares to the Optionee pursuant to the exercise of such Option, or in any
other disqualifying disposition within the meaning of Section 422 of the Code, such Optionee shall notify the Company in writing as soon as practicable thereafter of the date and terms of such
disposition and, if the Company (or an Affiliate) thereupon has a tax-withholding obligation, shall pay to the Company (or such Affiliate) an amount equal to any withholding tax the Company (or
Affiliate) is required to pay as a result of the disqualifying disposition.
(c) The
Option Price with respect to each Incentive Stock Option shall not be less than 100%, or 110% in the case of an individual described in Section 422(b)(6) of
the Code (relating to certain 10% owners), of the Fair Market Value of a Share on the day the Option is granted. Also, in the case of such an individual who is granted an Incentive Stock Option, the
term of such Option shall be no more than five years from the date of grant.
6. PROVISIONS APPLICABLE TO RESTRICTED STOCK.
6.1 Grant of Restricted Stock.
(a) In
connection with the grant of Restricted Stock, whether or not performance goals (as provided for under Section 10) apply thereto, the Committee shall establish
one or more vesting periods with respect to the shares of Restricted Stock granted, the length of which shall be determined in the discretion of the Committee. Subject to the provisions of this
Section 6, the applicable Award Agreement and the other provisions of the Plan, restrictions on Restricted Stock shall lapse if the Grantee satisfies all applicable employment or other service
requirements through the end of the applicable vesting period.
(b) Subject
to the other terms of the Plan, the Committee may, in its discretion as reflected by the terms of the applicable Award Agreement: (i) authorize the
granting of Restricted Stock to Eligible Persons; (ii) provide a specified purchase price for the Restricted Stock (whether or not the payment of a purchase price is required by any state law
applicable to the Company); (iii) determine the restrictions applicable to Restricted Stock and (iv) determine or impose other conditions, including any applicable Performance Goals, to
the grant of Restricted Stock under the Plan as it may deem appropriate.
6.2 Certificates/Book Entry.
(a) Unless
otherwise provided by the Committee, a "book entry" (by computerized or manual entry) shall be made in the records of the Company (or, if applicable, the
Company's transfer agent) to evidence an award of Shares of Restricted Stock.
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(b) If
the Shares of Restricted Stock are not evidenced in "book entry" form in accordance with Section 6.2(a), each Grantee of Restricted Stock shall be issued a
stock certificate in respect of Shares of Restricted Stock awarded under the Plan. Each such certificate shall be registered in the name of the Grantee. Without limiting the generality of
Section 4.1(c), the certificates for Shares of Restricted Stock issued hereunder may include any legend which the Committee deems appropriate to reflect any restrictions on transfer hereunder
or under the Award Agreement, or as the Committee may otherwise deem appropriate, and, without limiting the generality of the foregoing, shall bear a legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE
COHEN & COMPANY INC. 2020 LONG-TERM INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND COHEN & COMPANY INC. COPIES OF SUCH PLAN AND AWARD
AGREEMENT ARE ON FILE IN THE OFFICES OF COHEN & COMPANY INC. AT CIRA CENTRE, 2929 ARCH STREET, SUITE 1703, PHILADELPHIA, PENNSYLVANIA 19104.
(c) The
Committee shall require that any stock certificates evidencing such Shares be held in custody by the Company or its designee until the restrictions hereunder shall
have lapsed, and that, as a condition of any Award of Restricted Stock, the Grantee shall have delivered to the Company or its designee a stock power, endorsed in blank, relating to the stock covered
by such Award. If and when such restrictions so lapse, the stock certificates shall be delivered by the Company to the Grantee or his or her designee as provided in Section 6.3 (and the stock
power shall cease to be of effect).
6.3 Restrictions and Conditions.
Unless
otherwise provided by the Committee, the Shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:
(i) Subject
to the provisions of the Plan and the Award Agreements, during a period commencing with the date of such Award and ending on the date the period of forfeiture
with respect to such Shares lapses, the Grantee shall not be permitted voluntarily or involuntarily to sell, transfer, pledge, anticipate, alienate, encumber or assign Shares of Restricted Stock
awarded under the Plan (or have such Shares attached or garnished). Subject to the provisions of the Award Agreements and clause (iii) below, the period of forfeiture with respect to Shares
granted hereunder shall lapse as provided in the applicable Award Agreement. Notwithstanding the foregoing, unless otherwise expressly provided by the Committee, the period of forfeiture with respect
to such Shares shall only lapse as to whole Shares.
(ii) Except
as provided in the foregoing clause (i), below in this clause (ii), or as otherwise provided in the applicable Award Agreement, the Grantee shall
have, in respect of the Shares of Restricted Stock, all of the rights of a shareholder of the Company, including the right to vote the Shares and the right to receive any cash dividends as and when
such dividends are declared and paid by the Company (or as soon as practicable thereafter); provided, however, that cash dividends on such Shares shall, unless otherwise provided by the Committee, be
held by the Company (unsegregated as a part of its general assets) until the period of forfeiture lapses (and forfeited if the underlying Shares are forfeited), and paid over to the Grantee (without
interest) as soon as practicable after such period lapses (if not forfeited). Certificates for Shares (not subject to restrictions) shall be delivered to the Grantee or his or her designee promptly
after, and only after, the period of forfeiture shall lapse without forfeiture in respect of such Shares of Restricted Stock.
(iii) Except
as otherwise provided in the applicable Award Agreement, and subject to clause (iv) below, if the Grantee has a Termination of Service by the Company and
Subsidiaries (or, if applicable, Affiliates) for Cause, or by the Grantee for any reason during the applicable period of forfeiture, then (A) all Shares still subject to restriction shall
thereupon, and with no further action, be forfeited by the
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Grantee,
and (B) the Company shall pay to the Grantee as soon as practicable (and in no event more than 30 days) after such termination an amount, equal to the lesser of (x) the
amount paid by the Grantee for such forfeited Restricted Stock as contemplated by Section 6.1, and (y) the Fair Market Value on the date of termination of the forfeited Restricted Stock.
(iv) Subject
to the provisions of the Award Agreement, in the event the Grantee has a Termination of Service on account of death, Disability or Retirement, or the Grantee
has a Termination of Service by the Company and Subsidiaries for any reason other than Cause, or in the event of a Termination Event (regardless of whether a termination follows thereafter), during
the applicable period of forfeiture, then restrictions under the Plan will immediately lapse on all Restricted Stock granted to the applicable Grantee.
7. PROVISIONS APPLICABLE TO RESTRICTED STOCK UNITS.
7.1 Grant of RSUs.
Subject
to the other terms of the Plan, the Committee shall, in its discretion as reflected by the terms of the applicable Award Agreement: (i) authorize the granting of RSUs to
Eligible Persons and (ii) determine or impose other conditions to the grant of RSUs under the Plan as it may deem appropriate.
7.2 Term.
The
Committee may provide in an Award Agreement that any particular RSU shall expire at the end of a specified term.
7.3 Vesting.
RSUs
shall vest as provided in the applicable Award Agreement.
7.4 Settlement of RSUs.
(a) Each
vested and outstanding RSU shall be settled by the transfer to the Grantee of one Share; provided that, the Committee at the time of grant (or, in the appropriate
case, as determined by the Committee, thereafter) may provide that, after consideration of possible accounting issues, an RSU may be settled (i) in cash at the applicable RSU Value,
(ii) in cash or by transfer of Shares as elected by the Grantee in accordance with procedures established by the Committee or (iii) in cash or by transfer of Shares as elected by the
Company.
(b) Payment
(whether of cash or Shares) in respect of RSUs shall be made in a single sum by the Company; provided that, with respect to RSUs of a Grantee which have a common
Settlement Date, the Committee may permit the Grantee to elect in accordance with procedures established by the Committee (taking into account, without limitation, Section 409A of the Code, as
the Committee may deem appropriate) to receive installment payments over a period not to exceed 10 years, rather than a single-sum payment.
(c) Unless
otherwise provided in the applicable Award Agreement, the "Settlement Date" with respect to an RSU is the first day of the month to follow the date on which the
RSU vests; provided that a Grantee may elect, in accordance with procedures to be established by the Committee, that such Settlement Date will be deferred as elected by the Grantee to the first day of
the month to follow the Grantee's Termination of Service, or such other time as may be permitted by the Committee. Unless otherwise determined by the Committee, elections under this
Section 7.4(c) must, except as may otherwise be permitted under the rules applicable under Section 409A of the Code, (A) be effective at least one year after they are made, or, in
the case of payments to commence at a specific time, be
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made
at least one year before the first scheduled payment and (B) defer the commencement of distributions (and each affected distribution) for at least five years.
(i) Notwithstanding
Section 7.4(c), the Committee may provide that distributions of RSUs can be elected at any time in those cases in which the RSU Value is
determined by reference to Fair Market Value to the extent in excess of a base value, rather than by reference to unreduced Fair Market Value.
(ii) Notwithstanding
the foregoing, and unless otherwise provided in the applicable Award Agreement, the Settlement Date, if not earlier pursuant to this
Section 7.4(c), is the date of the Grantee's death.
(d) Notwithstanding
the other provisions of this Section 7, and unless otherwise provided in the applicable Award Agreement, in the event of a Termination Event, the
Settlement Date shall be the date of such Termination Event and all amounts due with respect to RSUs to a Grantee hereunder shall be paid as soon as practicable (but in no event more than
30 days) after such Termination Event, unless such Grantee elects otherwise in accordance with procedures established by the Committee.
(e) Notwithstanding
any other provision of the Plan, a Grantee may receive any amounts to be paid in installments as provided in Section 7.4(b) or deferred by the
Grantee as provided in Section 7.4(c) in the event of an "Unforeseeable Emergency." For these purposes, an "Unforeseeable Emergency," as determined by the Committee in its sole discretion, is a
severe financial hardship to the Grantee resulting from a sudden and unexpected illness or accident of the Grantee or "dependent," as defined in Section 152(a) of the Code, of the Grantee, loss
of the Grantee's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Grantee. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved:
(i) through
reimbursement or compensation by insurance or otherwise,
(ii) by
liquidation of the Grantee's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or
(iii) by
future cessation of the making of additional deferrals under Section 7.4(b) and 7.4(c).
Without
limitation, the need to send a Grantee's child to college or the desire to purchase a home shall not constitute an Unforeseeable Emergency. Distributions of amounts because of an
Unforeseeable Emergency shall be permitted to the extent reasonably needed to satisfy the emergency need.
7.5 Other RSUs Provisions.
(a) Rights
to payments with respect to RSUs granted under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, garnishment, levy, execution, or other legal or equitable process, either voluntary or involuntary; and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, attach or garnish, or levy or execute on any right to payments or other benefits payable hereunder, shall be void.
(b) (b)
A Grantee may designate in writing, on forms to be prescribed by the Committee, a beneficiary or beneficiaries to receive any payments payable after his or her death
and may amend or revoke such designation at any time. If no beneficiary designation is in effect at the time of a Grantee's death, payments hereunder (if any) shall be made to the Grantee's estate. If
a Grantee with a vested RSU dies, such RSU shall be settled and the RSU Value in respect of such RSUs paid, and any payments deferred pursuant to an election under Section 7.4(c) shall be
accelerated and paid, as soon
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as
practicable (but no later than 60 days) after the date of death to such Grantee's beneficiary or estate, as applicable.
(c) The
Committee may establish a program under which distributions with respect to RSUs may be deferred for periods in addition to those otherwise contemplated by foregoing
provisions of this Section 7. Such program may include, without limitation, provisions for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Committee, provisions
under which Participants may select from among hypothetical investment alternatives for such deferred amounts in accordance with procedures established by the Committee.
(d) Notwithstanding
any other provision of this Section 7, any fractional RSU will be paid out in cash at the RSU Value as of the Settlement Date.
(e) No
RSU shall be construed to give any Grantee any rights with respect to Shares or any ownership interest in the Company. Except as may be provided in accordance with
Section 8, no provision of the Plan shall be interpreted to confer upon any Grantee any voting, dividend or derivative or other similar rights with respect to any RSU.
8. PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.
8.1 Grant of Dividend Equivalent Rights.
Subject
to the other terms of the Plan, the Committee shall, in its discretion as reflected by the terms of the Award Agreements, authorize the granting of Dividend Equivalent Rights to
Eligible Persons based on the regular cash dividends declared on Common Stock, to be credited as of the dividend payment dates, during the period between the date an Award is granted, and the date
such Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalent Rights shall be converted to cash or additional Shares by such formula and at such time and subject
to such limitation as may be determined by the Committee. With respect to Dividend Equivalent Rights granted with respect to Options intended to be qualified performance-based compensation for
purposes of Section 162(m) of the Code, such Dividend Equivalent Rights shall be payable regardless of whether such Option is exercised. If a Dividend Equivalent Right is granted in respect of
another Award hereunder, then, unless otherwise stated in the Award Agreement, in no event shall the Dividend Equivalent Right be in effect for a period beyond the time during which the applicable
portion of the underlying Award is in effect.
8.2 Certain Terms.
(a) The
term of a Dividend Equivalent Right shall be set by the Committee in its discretion.
(b) Unless
otherwise determined by the Committee, except as contemplated by Section 8.4, a Dividend Equivalent Right is exercisable or payable only while the
Participant is an Eligible Person.
(c) Payment
of the amount determined in accordance with Section 8.1 shall be in cash, in Common Stock or a combination of the two, as determined by the Committee.
(d) The
Committee may impose such employment-related conditions on the grant of a Dividend Equivalent Right as it deems appropriate in its discretion.
8.3 Other Types of Dividend Equivalent Rights.
The
Committee may establish a program under which Dividend Equivalent Rights of a type whether or not described in the foregoing provisions of this Section 8 may be granted to
Participants. For example, and without limitation, the Committee may grant a dividend equivalent right in respect of each Share subject to an Option or with respect to an RSU, which right would
consist of the right
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(subject
to Section 8.4) to receive a cash payment in an amount equal to the dividend distributions paid on a Share from time to time.
8.4 Deferral.
The
Committee may establish a program (taking into account, without limitation, the possible application of Section 409A of the Code, as the Committee may deem appropriate) under
which Participants (i) will have RSUs credited, subject to the terms of Sections 7.4 and 7.5 as though directly applicable with respect thereto, upon the granting of Dividend Equivalent
Rights, or (ii) will have payments with respect to Dividend Equivalent Rights deferred. In the case of the foregoing clause (ii), such program may include, without limitation, provisions
for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Committee, provisions under which Participants may select from among hypothetical investment alternatives for such
deferred amounts in accordance with procedures established by the Committee.
9. OTHER EQUITY-BASED AWARDS.
The
Committee shall have the right to grant (i) other Awards based upon the Common Stock having such terms and conditions as the Committee may determine, including, without
limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of Stock Appreciation Rights and (ii) interests (which may be
expressed as units or otherwise) in Subsidiaries, as applicable.
10. PERFORMANCE GOALS.
The
Committee, in its discretion, may in the case of Awards (including, in particular, Awards other than Options) (i) establish one or more performance goals ("Performance Goals")
as a precondition to the issuance or vesting of Awards, and (ii) provide, in connection with the establishment of the Performance Goals, for predetermined Awards to those Participants (who
continue to meet all applicable eligibility requirements) with respect to whom the applicable Performance Goals are satisfied. The Performance Goals shall be based upon the criteria set forth in
Exhibit A hereto which is hereby incorporated herein by reference as though set forth in full. Prior to the award or vesting, as applicable, of affected Awards hereunder, the Committee shall
have certified that any applicable Performance Goals, and other material terms of the Award, have been satisfied.
11. TAX WITHHOLDING.
11.1 In General.
The
Company shall be entitled to withhold from any payments or deemed payments any amount of tax withholding determined by the Committee to be required by law. Without limiting the
generality of the foregoing, the Committee may, in its discretion, require the Participant to pay to the Company at such time as the Committee determines the amount that the Committee deems necessary
to satisfy the Company's obligation to withhold federal, state or local income or other taxes incurred by reason of (i) the exercise of any Option, (ii) the lapsing of any restrictions
applicable to any Restricted Stock, (iii) the receipt of a distribution in respect of RSUs or Dividend Equivalent Rights or (iv) any other applicable income-recognition event (for
example, an election under Section 83(b) of the Code).
11.2 Share Withholding.
(a) Upon
exercise of an Option, the Optionee may, if approved by the Company in its discretion, make a written election to have Shares then issued withheld by the Company
from the Shares otherwise to be received, or to deliver previously owned Shares, in order to satisfy the liability for such withholding taxes. In the event that the Optionee makes, and the Company
permits, such an election,
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the
number of Shares so withheld or delivered shall have an aggregate Fair Market Value on the date of exercise sufficient to satisfy the applicable withholding taxes. Where the exercise of an Option
does not give rise to an obligation by the Company to withhold federal, state or local income or other taxes on the date of exercise, but may give rise to such an obligation in the future, the Company
may, in its discretion, make such arrangements and impose such requirements as it deems necessary or appropriate.
(b) Upon
lapsing of restrictions on Restricted Stock (or other income-recognition event), the Grantee may, if approved by the Company in its discretion, make a written
election to have Shares withheld by the Company from the Shares otherwise to be released from restriction, or to deliver previously owned Shares (not subject to restrictions hereunder), in order to
satisfy the liability for such withholding taxes. In the event that the Grantee makes, and the Company permits, such an election, the number of Shares so withheld or delivered shall have an aggregate
Fair Market Value on the date of exercise sufficient to satisfy the applicable withholding taxes.
(c) Upon
the making of a distribution in respect of RSUs or Dividend Equivalent Rights, the Grantee may, if approved by the Company in its discretion, make a written
election to have amounts (which may include Shares) withheld by the Company from the distribution otherwise to be made, or to deliver previously owned Shares (not subject to restrictions hereunder),
in order to satisfy the liability for such withholding taxes. In the event that the Grantee makes, and the Company permits, such an election, any Shares so withheld or delivered shall have an
aggregate Fair Market Value on the date of exercise sufficient to satisfy the applicable withholding taxes.
11.3 Withholding Required.
Notwithstanding
anything contained in the Plan or the Award Agreement to the contrary, the Participant's satisfaction of any tax-withholding requirements imposed by the Committee shall
be a condition precedent to the Company's obligation as may otherwise be provided hereunder to provide Shares to the Participant and to the release of any restrictions as may otherwise be provided
hereunder, as applicable; and the applicable Option, Restricted Stock, RSUs or Dividend Equivalent Rights shall be forfeited upon the failure of the Participant to satisfy such requirements with
respect to, as applicable, (i) the exercise of the Option, (ii) the lapsing of restrictions on the Restricted Stock (or other income-recognition event) or (iii) distributions in
respect of any RSU or Dividend Equivalent Right.
12. REGULATIONS AND APPROVALS.
(a) The
obligation of the Company to sell Shares with respect to an Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including
all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee.
(b) The
Committee may make such changes to the Plan as may be necessary or appropriate to comply with the rules and regulations of any government authority or to obtain tax
benefits applicable to an Award.
(c) Each
grant of Options, Restricted Stock, RSU (or issuance of Shares in respect thereof) or Dividend Equivalent Rights (or issuance of Shares in respect thereof), or
other Award under Section 9 (or issuance of Shares in respect thereof), is subject to the requirement that, if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of Options, Shares of Restricted Stock, RSUs, Dividend Equivalent Rights, other Awards or other Shares,
no payment shall be made, or RSUs or Shares issued or grant of
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Restricted
Stock or other Award made, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions in a manner acceptable
to the Committee.
(d) In
the event that the disposition of stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act, and is not
otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required under the Securities Act, and the Committee may require any individual receiving Shares
pursuant to the Plan, as a condition precedent to receipt of such Shares, to represent to the Company in writing that such Shares are acquired for investment only and not with a view to distribution
and that such Shares will be disposed of only if registered for sale under the Securities Act or if there is an available exemption for such disposition.
(e) Notwithstanding
any other provision of the Plan, the Company shall not be required to take or permit any action under the Plan or any Award Agreement which, in the
good-faith determination of the Company, would result in a material risk of a violation by the Company of Section 13(k) of the Exchange Act.
13. INTERPRETATION AND AMENDMENTS; OTHER RULES.
The
Committee may make such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate. Without limiting the generality of the
foregoing, the Committee may (i) determine the extent, if any, to which Options, RSUs or Shares (whether or not Shares of Restricted Stock) or Dividend Equivalent Rights shall be forfeited
(whether or not such forfeiture is expressly contemplated hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with such interpretations to be conclusive and binding on all
persons and otherwise accorded the maximum deference permitted by law, provided that the Committee's interpretation shall not be entitled to deference on and after a Termination Event except to the
extent that such interpretations are made exclusively by members of the Committee who are individuals who served as Committee members before the Termination Event; and (iii) take any other
actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof. In the event of any dispute
or disagreement as to the interpretation of the Plan or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Plan, the decision of the
Committee, except as provided in clause (ii) of the foregoing sentence, shall be final and binding upon all persons. Unless otherwise expressly provided hereunder, the Committee, with respect
to any grant, may exercise its discretion hereunder at the time of the Award or thereafter. The Board may amend the Plan as it shall deem advisable, except that no amendment may adversely affect a
Participant with respect to an Award previously granted without such Participant's written consent unless such amendments are required in order to comply with applicable laws; provided, however, that
the Plan may not be amended without stockholder approval in any case in which amendment in the absence of stockholder approval would cause the Plan to fail to comply with any applicable legal
requirement or applicable exchange or similar rule.
14. CHANGES IN CAPITAL STRUCTURE.
(a) If
(i) the Company or Subsidiaries shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of
all or substantially all of the assets or stock of the Company or Subsidiaries or a transaction similar thereto, (ii) any stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization or other similar change in the capital structure of the Company or Subsidiaries, or any distribution to holders of Common Stock
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other
than cash dividends, shall occur or (iii) any other event shall occur which in the judgment of the Committee necessitates action by way of adjusting the terms of the outstanding Awards,
then:
(i) the
maximum aggregate number and kind of Shares which may be made subject to Options and Dividend Equivalent Rights under the Plan, the maximum aggregate number and kind
of Shares of Restricted Stock that may be granted under the Plan, the maximum aggregate number of RSUs and other Awards which may be granted under the Plan may be appropriately adjusted by the
Committee in its discretion; and
(b) the
Committee may take any such action as in its discretion shall be necessary to maintain each Participants' rights hereunder (including under their Award Agreements)
so that they are substantially in their respective Options, RSUs and Dividend Equivalent Rights substantially proportionate to the rights existing in such Options, RSUs and Dividend Equivalent Rights
prior to such event, including, without limitation, adjustments in (A) the number of Options, RSUs and Dividend Equivalent Rights (and other Awards under Section 9) granted,
(B) the number and kind of shares or other property to be distributed in respect of Options, RSUs and Dividend Equivalent Rights (and other Awards under Section 9 as applicable),
(C) the Option Price and RSU Value, and (D) performance-based criteria established in connection with Awards; provided that, in the discretion of the Committee, the foregoing
clause (D) may also be applied in the case of any event relating to a Subsidiary if the event would have been covered under this Section 14(a) had the event related to the Company.
To
the extent that such action shall include an increase or decrease in the number of Shares (or units of other property then available) subject to all outstanding Awards, the number of
Shares (or units) available under Section 4 shall be increased or decreased, as the case may be, proportionately, as may be determined by the Committee in its discretion.
(c) Any
Shares or other securities distributed to a Grantee with respect to Restricted Stock or otherwise issued in substitution of Restricted Stock shall be subject to the
restrictions and requirements imposed by Section 6, including depositing the certificates therefor with the Company together with a stock power and bearing a legend as provided in
Section 6.2(c).
(d) If
the Company shall be consolidated or merged with another corporation or other entity, each Grantee who has received Restricted Stock that is then subject to
restrictions imposed by Section 6.3 may be required to deposit with the successor corporation the certificates, if any, for the stock or securities, or the other property, that the Grantee is
entitled to receive by reason of ownership of Restricted Stock in a manner consistent with Section 6.2(c), and such stock, securities or other property shall become subject to the restrictions
and requirements imposed by Section 6.3, and the certificates therefor or other evidence thereof shall bear a legend similar in form and substance to the legend set forth in
Section 6.2(c).
(e) If
a Termination Event shall occur, then the Committee, as constituted immediately before the Termination Event, may make such adjustments as it, in its discretion,
determines are necessary or appropriate in light of the Termination Event, provided that the Committee determines that such adjustments do not have an adverse economic impact on the Participant as
determined at the time of the adjustments.
(f) The
judgment of the Committee with respect to any matter referred to in this Section 14 shall be conclusive and binding upon each Participant without the need for
any amendment to the Plan.
(g) Other
than as otherwise permitted under this Section 14, without the prior approval of the Company's stockholders: (i) the Option Price, with respect to an
Option, or grant price, with respect to a Stock Appreciation Right, may not be reduced below the price established at the time of grant thereof and (ii) an outstanding Option or Stock
Appreciation Right may not be cancelled and replaced with a new Award with a lower exercise or grant price.
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15. MISCELLANEOUS.
15.1 No Rights to Employment or Other Service.
Nothing
in the Plan or in any grant made pursuant to the Plan shall confer on any individual any right to continue in the employ or other service of the Company, the Subsidiaries or
Affiliates or interfere in any way with the right of the Company, the Subsidiaries or Affiliates and their stockholders to terminate the individual's employment or other service at any time.
15.2 Right of First Refusal; Right of Repurchase.
At
the time of grant, the Committee may provide in connection with any grant made under the Plan that Shares received hereunder shall be subject to a right of first refusal pursuant to
which the Company shall be entitled to purchase such Shares in the event of a prospective sale of the Shares, subject to such terms and conditions as the Committee may specify at the time of grant or
(if permitted by the Award Agreement) thereafter, and to a right of repurchase, pursuant to which the Company shall be entitled to purchase such Shares at a price determined by, or under a formula set
by, the Committee at the time of grant or (if permitted by the Award Agreement) thereafter.
15.3 No Fiduciary Relationship.
Nothing
contained in the Plan (including without limitation Sections 7.5(c) and 8.4), and no action taken pursuant to the provisions of the Plan, shall create or shall be
construed to create a trust of any kind, or a fiduciary relationship between the Company or Subsidiaries, or their, officers or the Committee, on the one hand, and the Participant, the Company,
Subsidiaries or any other person or entity, on the other.
15.4 Section 409A.
This
Plan is intended to comply and shall be administered in a manner that is intended to comply with the requirement of Section 409A of the Code (including the Treasury
Department guidance and regulations issued thereunder), and shall be construed and interpreted in accordance with such intent. If the Committee determines that an Award, Award document, payment,
transaction or any other action or arrangement contemplated by the provisions of this Plan would, if undertaken, cause a Participant to become subject to any additional taxes or other penalties under
Section 409A of the Code, then unless the Committee specifically provides otherwise, such Award, Award document, payment, transaction or other Award documents will be deemed modified or, if
necessary, suspended in
order to comply with the requirements of Section 409A of the Code to the extent determined appropriate by the Committee, in each case without the consent of the Participant.
15.5 Claims Procedures.
(a) To
the extent that the Plan is determined by the Committee to be subject to the Employee Retirement Income Security Act of 1974, as amended, the Grantee, or his
beneficiary hereunder or authorized representative, may file a claim for payments with respect to RSUs under the Plan by written communication to the Committee or its designee. A claim is not
considered filed until such communication is actually received. Within 90 days (or, if special circumstances require an extension of time for processing, 180 days, in which case notice
of such special circumstances should be provided within the initial 90-day period) after the filing of the claim, the Committee will either:
(i) approve
the claim and take appropriate steps for satisfaction of the claim; or
(ii) if
the claim is wholly or partially denied, advise the claimant of such denial by furnishing to him a written notice of such denial setting forth (A) the
specific reason or reasons for the denial; (B) specific reference to pertinent provisions of the Plan on which the denial is based and,
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if
the denial is based in whole or in part on any rule of construction or interpretation adopted by the Committee, a reference to such rule, a copy of which shall be provided to the claimant;
(C) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of the reasons why such material or information is necessary; and
(D) a reference to this Section 15.5 as the provision setting forth the claims procedure under the Plan.
(b) The
claimant may request a review of any denial of such claim by written application to the Committee within 60 days after receipt of the notice of denial of such
claim.
Within
60 days (or, if special circumstances require an extension of time for processing, 120 days, in which case notice of such special circumstances should be provided
within the initial 60-day period) after receipt of written application for review, the Committee will provide the claimant with its decision in writing, including, if the claimant's claim is not
approved, specific reasons for the decision and specific references to the Plan provisions on which the decision is based.
15.6 No Fund Created.
Any
and all payments hereunder to any Grantee shall be made from the general funds of the Company, no special or separate fund shall be established or other segregation of assets made to
assure such payments, and the RSUs (including for purposes of this Section 15.6 any accounts established to facilitate the implementation of Section 7.4(c)) and any other similar devices
issued hereunder to account for Plan obligations do not constitute Common Stock and shall not be treated as (or as giving rise to) property or as a trust fund of any kind; provided, however, that the
Company may establish a mere bookkeeping reserve to meet its obligations hereunder or a trust or other funding vehicle that would not cause the Plan to be deemed to be funded for tax purposes or for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended. The obligations of the Company under the Plan are unsecured and constitute a mere promise by the Company to make
benefit payments in the future and, to the extent that any person acquires a right to receive payments under the Plan from the Company, such right shall be no greater than the right of a general
unsecured creditor of the Company. (If any Affiliate is or is made responsible with respect to any Awards, the foregoing sentence shall apply with respect to such Affiliate.) Without limiting the
foregoing, RSUs and any other similar devices issued hereunder to account for Plan obligations are solely a device for the measurement and determination of the amounts to be paid to a Grantee under
the Plan, and each Grantee's right in the RSUs and any such other devices is limited to the right to receive payment, if any, as may herein be provided.
15.7 Notices.
All
notices under the Plan shall be in writing, and if to the Company, shall be delivered to the Board or mailed to its principal office, addressed to the attention of the Board; and if
to the Participant, shall be delivered personally, sent by facsimile transmission or mailed to the Participant at the address appearing in the records of the Company. Such addresses may be changed at
any time by written notice to the other party given in accordance with this Section 15.7.
15.8 Exculpation and Indemnification.
The
Company shall indemnify and hold harmless the members of the Board and the members of the Committee from and against any and all liabilities, costs and expenses incurred by such
persons as a result of any act or omission to act in connection with the performance of such person's duties, responsibilities and obligations under the Plan, to the maximum extent permitted by law,
other than such liabilities, costs and expenses as may result from the gross negligence, bad faith, willful misconduct or criminal acts of such persons.
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15.9 Captions.
The
use of captions in this Plan is for convenience. The captions are not intended to provide substantive rights.
15.10 Governing Law.
THE
PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MARYLAND.
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EXHIBIT A
PERFORMANCE CRITERIA
Performance-Based Awards may be payable upon the attainment of objective performance goals that are established by the Committee and relate to
one or more Performance Criteria, in each case on specified date or over any period, up to 10 years, as determined by the Committee. Performance Criteria may (but need not) be based on the
achievement of the specified levels of performance under one or more of the measures set out below relative to the performance of one or more other corporations or indices.
Performance
Goals shall be based on one or more of the following business criteria (which may be determined for these purposes either by reference to the Company as a whole or by
reference to any
one or more of its subsidiaries, operating divisions or other operating units): stock price, revenues, pretax income, operating income, cash flow, earnings per share, return on equity, return on
invested capital or assets, cost reductions and savings, return on revenues, productivity, level of managed assets and near or long-term earnings potential, or any variation or combination of the
preceding business criteria.
The
foregoing Performance Goals may be stated in absolute terms or may be expressed relative to performance in a specified prior period or to the performance of other specified
enterprises. In addition, the Committee may utilize as an additional performance measure, the attainment by a Participant of one or more personal objectives and/or goals that the Committee deems
appropriate, including, but not limited to, implementation of Company policies, negotiation of significant corporate transactions, development of long-term business goals or strategic plans for the
Company, or the exercise of specific areas of managerial responsibility. To the extent specified by the Committee in an Award or by other action taken by the Committee at the time Performance Goals
for a performance period are established, the measurement of specified performance goals may be subject to adjustment to exclude items of gain, loss or expense that are determined to be extraordinary
or unusual in nature, infrequent in occurrence, related to a corporate transaction (including, without limitation, a disposition or acquisition) or related to a change in accounting principles, all as
determined in accordance with standards published by the Financial Accounting Standards Board (or any predecessor or successor body) from time to time. In addition, equitable adjustments will be made
to any performance goal related to Company stock (e.g., earnings per share) to reflect changes in corporate capitalization, including, without limitation, stock splits and reorganizations.
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