AMENDMENT NO. 1 TO INVESTMENT AGREEMENT
THIS AMENDMENT NO. 1 TO INVESTMENT AGREEMENT (this “Amendment”), dated as of September 25, 2019 and effective as of October 1, 2019 (the “Effective Date”), is entered into by and between Cohen & Company, LLC, a Delaware limited liability company (the “Company”), and Cohen Bros. Financial LLC, a Delaware limited liability company (“Investor”). Capitalized terms used herein but otherwise not defined shall have the meanings ascribed to such terms in the Investment Agreement (as defined below).
RECITALS:
WHEREAS, on September 29, 2017, the Company and Investor entered into the Investment Agreement (the “Investment Agreement”), pursuant to which, among other things, Investor agreed to invest $8,000,000 into the Company in exchange for the Investment Return Monthly Payments to be made by the Company to Investor pursuant to the terms and conditions of the Investment Agreement; and
WHEREAS, in accordance with Section 19 of the Investment Agreement, the Company and Investor desire to amend the Investment Agreement to, among other things, (i) decrease the Investment Amount from $8,000,000 to $6,500,000; and (ii) amend the definition of “Investment Return,” in each case, subject to the terms and conditions of this Amendment.
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 hereto, intending to be legally bound, agree as follows:
1. Amendment to Background Section of the Investment Agreement. Effective as of the Effective Date of this Amendment, the sole recital in the “BACKGROUND” section of the Investment Agreement is hereby deleted in its entirety and replaced with the following language:
“WHEREAS, Investor has invested $6,500,000 into the Company in exchange for the Investment Return Monthly Payments (as defined below) to be made by the Company to Investor pursuant to the terms and conditions of this Agreement.”
2. Amendment to Section 1(o) of the Investment Agreement. Effective as of the Effective Date of this Amendment, Section 1(o) of the Investment Agreement is hereby deleted in its entirety and replaced with the following language:
“(o) Investment Return” shall mean an annual return equal to (i) for any Annual Period comprising the Initial Period, 3.75% of the Investment Amount, plus (x) 11.47% of the Revenue of the Business for any Annual Period in which the Revenue of the Business is greater than zero but less than or equal to $5,333,333, (y) $611,765 for any Annual Period in which the Revenue of the Business is greater than $5,333,333 but less than or equal to $8,000,000, or (z) 7.65% of the Revenue of the Business for any Annual Period in which the Revenue of the Business is greater than $8,000,000, and (ii) for any Annual Period following the expiration of the Initial Period, (x) for any Annual Period in which the Revenue of the Business is greater than zero, the greater of 20% of the
Investment Amount or 15.29% of the Revenue of the Business, or (y) for any Annual Period in which the Revenue of the Business is zero or less than zero, 3.75% of the Investment Amount. The Investment Return shall be paid in accordance with Section 5 hereof and each Investment Return Monthly Payment shall be calculated in accordance with the Calculation Methodology.”
3. Amendment to Section 4 of the Investment Agreement. Effective as of the Effective Date of this Amendment, Section 4 of the Investment Agreement is hereby deleted in its entirety and replaced with the following language:
“4. Investment. For purposes of this Agreement, the term “Investment Amount” shall mean an amount equal to $6,500,000.”
4. Amendment to Exhibit A of the Investment Agreement. Effective as of the Effective Date of this Amendment, Exhibit A of the Investment Agreement is hereby deleted in its entirety and replaced with Exhibit A attached hereto.
5. One-Time Payment. In consideration of the amendments contemplated by this Amendment, including the decrease of the Investment Amount from $8,000,000 to $6,500,000, on the Effective Date of this Amendment, the Company shall make a one (1)-time payment to Investor equal to $1,500,000 by wire transfer of immediately available funds to such account as Investor shall specify in writing to the Company.
6. No Other Changes. Except as expressly amended by this Amendment, all of the terms and conditions of the Investment Agreement shall continue in full force and effect and shall be unaffected by this Amendment.
7. Amendment. This Amendment may not be amended or modified except by a written agreement executed by the Company and Investor.
8. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THE PARTIES FURTHER AGREE THAT ANY ACTION BETWEEN THEM SHALL BE HEARD IN NEW YORK, NEW YORK, AND EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK, FOR THE ADJUDICATION OF ANY CIVIL ACTION ASSERTED PURSUANT TO THIS AMENDMENT. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AMENDMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9. Headings. The sections and other headings contained in this Amendment are for reference purposes only and shall not affect the meaning or interpretation of this Amendment.
10. Binding Effect. This Amendment shall be binding upon and inure to the benefit of the Company and the Noteholder and their respective heirs, successors and permitted assigns.
11. Counterparts. This Amendment 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 Amendment 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 Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 to Investment Agreement as of the date first written above.
| COMPANY: | ||
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| COHEN & COMPANY, LLC | ||
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| By: | /s/ Joseph W. Pooler, Jr. | |
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| Name: | Joseph W. Pooler, Jr. |
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| Title: | Executive Vice President, Chief Financial Officer and Treasurer |
| INVESTOR: | ||
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| COHEN BROS. FINANCIAL LLC | ||
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| By: | /s/ Daniel G. Cohen | |
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| Name: | Daniel G. Cohen |
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| Title: | Managing Member |
EXHIBIT A
Calculation Methodology
During the Term, following the end of each calendar month the Company shall evaluate the projected Revenue of the Business for the current Annual Period. The Company shall calculate the projected Revenue of the Business for such Annual Period by annualizing the actual Revenue of the Business from the beginning of such Annual Period through the end of the prior calendar month. The Company shall then determine the applicable Investment Return Monthly Payment based on such evaluation of the projected Revenue of the Business for the relevant Annual Period. Following its evaluation, the Company shall make the applicable Investment Return Monthly Payment as follows:
(A) during the Initial Period, with respect to any calendar month:
(I) in any Annual Period in which the Revenue of the Business is projected to be greater than zero but less than or equal to Five Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars ($5,333,333), an amount equal to the sum of (x) 0.3125% multiplied by the Investment Amount, plus (y) 0.9559% of the Revenue of the Business;
(II) in any Annual Period in which the Revenue of the Business is projected to be greater than Five Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three ($5,333,333) but less than or equal to Eight Million Dollars ($8,000,000), an amount equal to the sum of (x) 0.3125% multiplied by the Investment Amount, plus (y) Fifty Thousand Nine Hundred Eighty Dollars ($50,980);
(III) in any Annual Period in which the Revenue of the Business is projected to be greater than Eight Million Dollars ($8,000,000), an amount equal to the sum of (x) 0.3125% multiplied by the Investment Amount, plus (y) 0.6373% of the Revenue of the Business; or
(IV) in any Annual Period in which the Revenue of the Business is projected to be negative, an amount equal to 0.3125% multiplied by the Investment Amount;
(B) following the expiration of the Initial Period, with respect to any calendar month:
(I) in any Annual Period in which the Revenue of the Business is projected to be positive, an amount equal to the greater of (x) 1.2745% multiplied by the Revenue of the Business, or (y) 1.6666% multiplied by the Investment Amount; or
(II) in any Annual Period in which the Revenue of the Business is projected to be zero or negative, 0.3125% multiplied by the Investment Amount;
For purposes of this Exhibit A, each of the foregoing is referred to as an “Investment Return Tier.”
For purposes of clarification, an example of the foregoing is set forth below (assuming an Investment Amount of $6,500,000).
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| YTD Revenue |
| Monthly Revenue |
| Monthly Coupon |
| Total Investment |
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| Revenue of the Business |
| Investment |
| Based Portion of |
| Based Portion of |
| Portion of Inv |
| Return Monthly |
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Month |
| Monthly |
| YTD |
| Annualized |
| Return Tier (1) |
| Investment Return |
| Investment Return |
| Return (1) |
| Payment |
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1 |
| 95,395 |
| 95,395 |
| 1,144,737 |
| 11.47 | % | 10,942 |
| 10,942 |
| 20,313 |
| 31,254 |
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2 |
| 190,789 |
| 286,184 |
| 1,717,105 |
| 11.47 | % | 32,825 |
| 21,884 |
| 20,313 |
| 42,196 |
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3 |
| 286,184 |
| 572,368 |
| 2,289,474 |
| 11.47 | % | 65,651 |
| 32,825 |
| 20,313 |
| 53,138 |
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4 |
| 381,579 |
| 953,947 |
| 2,861,842 |
| 11.47 | % | 109,418 |
| 43,767 |
| 20,313 |
| 64,080 |
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5 |
| 476,974 |
| 1,430,921 |
| 3,434,211 |
| 11.47 | % | 164,127 |
| 54,709 |
| 20,313 |
| 75,021 |
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6 |
| 572,368 |
| 2,003,289 |
| 4,006,579 |
| 11.47 | % | 229,777 |
| 65,651 |
| 20,313 |
| 85,963 |
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7 |
| 667,763 |
| 2,671,053 |
| 4,578,947 |
| 11.47 | % | 306,370 |
| 76,592 |
| 20,313 |
| 96,905 |
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8 |
| 763,158 |
| 3,434,211 |
| 5,151,316 |
| 11.47 | % | 393,904 |
| 87,534 |
| 20,313 |
| 107,847 |
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9 |
| 858,553 |
| 4,292,763 |
| 5,723,684 |
| 611,765 |
| 458,824 |
| 64,920 |
| 20,313 |
| 85,232 |
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10 |
| 956,908 |
| 5,249,671 |
| 6,299,605 |
| 611,765 |
| 509,804 |
| 50,980 |
| 20,313 |
| 71,293 |
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11 |
| 956,908 |
| 6,206,579 |
| 6,770,813 |
| 611,765 |
| 560,785 |
| 50,980 |
| 20,313 |
| 71,293 |
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12 |
| 956,908 |
| 7,163,487 |
| 7,163,487 |
| 611,765 |
| 611,765 |
| 50,980 |
| 20,313 |
| 71,293 |
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| 7,163,487 |
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| 611,765 |
| 243,750 |
| 855,515 |
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(1) In accordance with the definition of Investment Return.