Exhibit 10.1

 

April 18, 2011

 

Mr. Thomas J. Hughes

 

Dear Tom:

 

I am pleased to confirm the terms of your employment with Gleacher &
Company, Inc.  (the “Company”).

 

1.             Term.  The term of this letter shall commence on May 2, 2011 (the
“Effective Date”) and shall expire on the third anniversary thereof, subject to
earlier termination as set forth herein.  The period during which you are
employed by the Company pursuant to this letter shall be referred to herein as
the “Term”.

 

2.             Position.  On the Effective Date, you will begin to serve as
Chief Executive Officer of the Company.  In that capacity, you will report
directly to the Board of Directors of the Company (the “Board”) and have the
customary authority, duties and responsibilities that accompany this position. 
While employed as Chief Executive Officer during the Term, you will be nominated
for election to the Board, with the first such nomination to occur in connection
with the annual meeting of shareholders to occur in spring 2011.

 

3.             Location.  During the Term, you will perform your duties at the
Company’s headquarters in New York, New York (and such travel to other locations
as business requires).

 

4.             Annual Base Salary.  During the Term, your annual base salary
will be $750,000 per year (the “Annual Base Salary”), payable at the times
consistent with the Company’s general policies regarding compensation of
executives.

 

5.             Annual Bonus Opportunity.  You will be eligible to be awarded an
annual bonus that will be determined by the Executive Compensation Committee of
the Board (the “Committee”) based on the achievement of performance goals
(established or as may be established by the Committee) and the terms of the
Company’s applicable incentive plan as in effect from time to time and otherwise
consistent with the Committee’s procedures and methodologies with respect to
determinations and awards for similarly situated senior executive officers of
the Company; provided that the actual bonus for the 2011 fiscal year will be
prorated for the portion of the fiscal year beginning on the Effective Date and
ending December 31, 2011.  The actual annual bonus, if any, will be payable in
two components (i) a cash component of up to $250,000 and (ii) any annual bonus
in excess of $250,000 will be payable in equity (stock options or restricted
stock units in respect of Company common stock) that will be subject to the same
terms and conditions as equity-based annual compensation awarded to similarly
situated senior executives of the Company.

 

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6.             Initial Equity Award.  As an inducement to commence employment
with the Company, on the first business day after the day on which the 24-hour
period immediately following the Company’s public release of earnings in respect
of the Company’s last completed fiscal quarter prior to the Effective Date
expires (the “Grant Date”), you will be granted (i) a stock option to acquire
3,000,000 shares of Company common stock with an exercise price equal to the
Fair Market Value (as defined in the Company’s 2007 Incentive Compensation Plan
(the “Stock Plan”)) on the Grant Date (the “Initial Option Award”) and (ii) an
award of 1,000,000 restricted stock units that settle in shares of Company
common stock (the “Initial RSU Award” and together with the Initial Option
Award, the “Initial Equity Awards”).  The Initial Equity Awards shall be granted
pursuant to the terms of the award agreements in respect of such awards, forms
of which are attached hereto as Exhibits A, B and C (collectively, the “Equity
Award Agreements”).  Without regard to whether the Initial Equity Awards are
granted under the Stock Plan, except as otherwise specified herein or in the
Equity Award Agreements, the terms of the Stock Plan shall govern such awards.

 

7.             Severance Protection.

 

(a)     Prior to a Change in Control.  If (i) your employment is terminated by
the Company other than for Cause (as defined on Annex A), death or Disability
(as defined on Annex A) or (ii) you resign from employment with the Company for
Good Reason (as defined on Annex A), subject to your execution and delivery
within 45 days of your termination of employment (and non-revocation) of a
release of claims against the Company in the form requested by the Company and
your continued compliance with the restrictive covenants set forth in paragraph
10, you will be entitled to continue to receive payment of your Annual Base
Salary for twelve months following the date of your termination of employment in
accordance with the Company’s normal payroll practices (and in no event less
frequently than monthly), beginning on the 60th day following your date of
termination (with any amounts that accrued and were not paid prior to such date
to be accumulated and paid in a lump sum with your first severance payment). 
Notwithstanding the foregoing, payments under this paragraph 7(a) are subject to
any delay that is required by Section 409A (as defined below) as described in
the Tax Matters provision in paragraph 12 of this letter.

 

(b)     Following a Change in Control.  If, during the two-year period following
a Change in Control (as defined on Annex A) either (i) your employment is
terminated by the Company other than for Cause, death or Disability or (ii) you
resign from employment with the Company for Good Reason, subject to your
execution and delivery within 45 days of your termination of employment (and
non-revocation) of a release of claims against the Company in the form requested
by the Company and your continued compliance with the restrictive covenants set
forth in paragraph 10, you will be entitled to receive cash payments equal to
1.5 times the sum of (i) your Annual Base Salary and (ii) 125% of your Annual
Base Salary, with such amount to be paid in equal installments over the
twelve-month period ending on the first anniversary of the date of your
termination of employment in accordance with the Company’s normal payroll
practices (and in no event less frequently than monthly), with such payments to
begin on the 60th day following your date of termination (with any amounts that
accrued and were not paid prior to such date to be accumulated and paid in a
lump sum with your first severance payment).

 

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Notwithstanding the foregoing, payments under this paragraph 7(b) are subject to
any delay that is required by Section 409A (as defined below) as described in
the Tax Matters provision in paragraph 12 of this letter.

 

8.             Employee and Fringe Benefits.  You will be entitled to employee
and fringe benefits on the same basis as those provided from time to time to
similarly situated senior executives of the Company.

 

9.             Company Policies; Regulatory and Licensing Requirement.  You will
be subject to all policies of the Company, including, without limitation, any
stock ownership guidelines and incentive compensation clawback policy applicable
to senior executives of the Company, as each policy is adopted or amended from
time to time.  By signing this letter you agree that your continued employment
is contingent upon compliance with applicable regulatory, registration and
licensing requirements, if any, now or in the future required of your position,
including passing the appropriate exams or transferring existing license(s), if
any, or completing any registration requirements, within any reasonable time
limits imposed by the Company, and your compliance with applicable regulatory,
registration and licensing.

 

10.           Restrictive Covenants.

 

·      Confidentiality.  Except (i) as required in order to perform your
obligations to the Company, (ii) as may otherwise be required by law or any
legal process, or (iii) as is necessary in connection with any adversarial
proceeding against the Company (in which case you shall use your reasonable best
efforts in cooperating with the Company in obtaining a protective order against
disclosure by a court of competent jurisdiction), you shall not, without the
express prior written consent of the Company, disclose or divulge to any other
person or entity, or use or modify for use, directly or indirectly, in any way,
for any person or entity any of Company’s or an Affiliate’s (as defined in Annex
A) Confidential Information (as defined below) at any time during or after your
employment with the Company or any of its Affiliates.  For purposes of this
letter, “Confidential Information” shall mean any valuable, competitively
sensitive, proprietary or non-public data and information related to business
carried on by the Company or any Affiliate (the “Business”), including, without
limitation, Trade Secrets (as defined below), that are not generally known by or
readily available to the Company’s or any Affiliate’s competitors.  “Trade
Secrets” shall mean information or data of Company or any of its Affiliates in
connection with the Business, including, but not limited to, technical or
non-technical data, financial information, strategies, forecasts, new products,
programs, devices, methods, techniques, drawings, processes, financial plans,
product plans, or any information related to actual or potential customers or
suppliers, that: (a) derive economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from their disclosure or use; and
(b) are the subject of efforts that are reasonable under the circumstances to
maintain their secrecy.  You acknowledge and agree that (A) the Confidential
Information and Trade Secrets have been developed and created by the Company at
substantial expense and constitute valuable proprietary assets, (B) the Company
will suffer irreparable harm which will be difficult to compute if you violate
the provisions in this paragraph and (C) the provisions of this paragraph are
reasonable and necessary for the protection of the business of the Company.

 

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·      Non-Competition.  You agree that while employed by the Company and at all
times during the one-year period following your termination of employment for
any reason (the “Restricted Period”), you will not, directly or indirectly,
(i) be employed by, engaged as a consultant, director or advisor for or provide
any services or assistance in any capacity to any company or other entity, firm
or organization that provides, sells or markets products or services that
compete or will compete with the products and/or services provided, marketed,
sold or being developed by the Company or its Affiliates (a “Competitor”),
(ii) organize, establish or operate as a Competitor or manage or direct persons
engaged in any business in competition with the businesses of the Company or any
of its Affiliates, or (iii) acquire or have an ownership interest in any entity
that derives revenues from any business in competition with the business of the
Company or any of its Affiliates (except for passive ownership of five percent
(5%) or less of an entity).

 

·      Non-Solicitation of Customers.  You acknowledge and agree that during the
Restricted Period you will not, directly or indirectly, solicit, induce or
persuade or attempt to solicit, induce or persuade any customer, client,
investor (excluding anyone who is an investor solely as a holder of shares of
Company common stock),  supplier, licensee or other business relation (in each
case, whether former, current or prospective) of the Company or any of its
Affiliates to cease doing business with the Company or such Affiliate, or in any
way interfere with the relationship between any such customer, client, investor,
supplier, licensee or business relation, on the one hand, and the Company or any
Affiliate, on the other hand.

 

·      Non-Solicitation/No Hire of Employees.  You acknowledge and agree that,
without the Company’s written consent, during the Restricted Period, you will
not, directly or indirectly, solicit, induce or persuade or attempt to solicit,
induce or persuade any individual who is (or was, during the preceding twelve
months) employed by or providing services to the Company or one of its
Affiliates to terminate or refrain from renewing or extending such employment or
services, or to become employed by or become a consultant to any other
individual, entity, firm or organization other than the Company or its
Affiliates.  In addition, during the Restricted Period, you will not, without
the Company’s written consent, directly or indirectly, hire any person who is
(or who was during the preceding twelve months) an employee of the Company or
its Affiliates.

 

·      Enforcement; Remedies.  You understand that the provisions of this
paragraph 10 may limit your ability to earn a livelihood in a business similar
to the business of the Company, but you nevertheless agree that such provisions
do not impose a greater restraint than is necessary to protect the goodwill or
other business interests of the Company, are reasonable limitations as to scope
and duration and are not unduly burdensome to you.  You further agree that the
Company would be irreparably harmed by any actual or threatened breach of the
covenants in this paragraph 10 and that, in addition to any other remedies at
law including money damages and the right to withhold payments otherwise due to
you, the Company will be entitled to seek a preliminary injunction, temporary
restraining order, or other equivalent relief, restraining you from any actual
or threatened breach of this letter in any court which may have competent
jurisdiction over the matter in dispute pending arbitration as described in
paragraph 12 below.  With respect to any provision of this paragraph 10 finally
determined by a court of competent jurisdiction to be unenforceable, you

 

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hereby agree that a court shall have jurisdiction to reform such provisions,
including the duration or scope of such provisions, as the case may be, so that
they are enforceable to the maximum extent permitted by law.  If any of the
covenants of this paragraph 10 are determined to be wholly or partially
unenforceable in any jurisdiction, such determination will not be a bar to or in
any way diminish the rights of the Company to enforce any such covenant in any
other jurisdiction.

 

11.           Representations.  You acknowledge and warrant that you are
currently free to commence employment with the Company pursuant to the terms of
this letter and you are not restricted in any way, including by way of
restrictive covenants with prior employers, from fulfilling all of the duties
set forth in this letter.

 

12.           Miscellaneous.

 

·      Entire Agreement; Amendment.  This letter shall supersede any other
agreement or understanding, written or oral, with respect to the matters covered
herein.  This letter may not be amended or modified otherwise than in writing
signed by the parties hereto; provided, however, that, notwithstanding the
foregoing, the Company may amend or modify this letter if it determines it is
necessary to do so in order to comply with applicable legal and/or regulatory
requirements or guidance or any changes in applicable law, rules or regulations
or in the formal and conclusive interpretation thereof by any regulator or
agency of competent jurisdiction.  In the event such modification has a material
adverse impact upon the employment benefits you received under this letter
agreement, the Company and you will cooperate diligently and in good faith to
amend the terms of this letter to preserve your employment benefits under this
letter.

 

·      Severability.  The invalidity or unenforceability of any provision of
this letter will not affect the validity or enforceability of any other
provision of this letter, and this letter will be construed as if such invalid
or unenforceable provision were omitted (but only to the extent that such
provision cannot be appropriately reformed or modified).

 

·      Governing Law.  This letter will be governed by, and construed under and
in accordance with, the internal laws of the State of New York, without
reference to rules relating to conflicts of laws.  The Company’s obligations
hereunder are subject to compliance with any applicable standards and
restrictions imposed under law or regulation as in effect from time to time.

 

·      Tax Matters.  The Company may withhold from any amounts payable to you
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.  It is intended that the payments
and benefits provided under this letter shall comply with the provisions of
Section 409A of the Internal Revenue Code of 1986, as amended ( “Section 409A”)
and the regulations relating thereto, or an exemption to Section 409A, and this
letter shall be interpreted accordingly.  Any payments or benefits that qualify
for the “short-term deferral” exception or another exception under Section 409A
shall be paid under the applicable exception.  Each payment under this letter
will be treated as a separate payment for purposes of Section 409A.  All
payments that constitute nonqualified deferred compensation under Section 409A
that are to be made upon a termination of employment under this letter may only
be made upon a “separation from service”

 

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under Section 409A of the Code.  If you become entitled to a payment of
nonqualified deferred compensation as a result of your termination of employment
and at such time you are a “specified employee” (within the meaning of
Section 409A and as determined in accordance with the methodology established by
the Company as in effect on your date of termination), such payment will be
postponed to the extent necessary to satisfy Section 409A, and any amounts so
postponed will be paid in a lump sum on the first business day that is six
months and one day after your separation from service (or any earlier date of
your death).  If the compensation and benefits provided under this letter would
subject you to taxes or penalties under Section 409A, the Company and you will
cooperate diligently to amend the terms of this letter to avoid such taxes and
penalties, to the extent possible under applicable law; provided that, in no
event shall the Company be responsible for any Section 409A taxes or penalties
that arise in connection with any amounts payable or benefits provided under
this letter or otherwise.

 

·      Dispute Resolution.  Subject to paragraph 10 of this letter, all disputes
arising out of, or related to, this letter, or the breach thereof, shall be
subject to and resolved by arbitration in New York, New York through the
facilities and in accordance with the rules of the Financial Industry Regulatory
Authority (“FINRA”), and the parties agree to submit to the jurisdiction of
FINRA with respect to any such controversy or dispute.

 

·      Successors.  This letter is personal to you and without the prior written
consent of the Company will not be assignable by you.  This letter and any
rights and benefits hereunder will inure to the benefit of and be enforceable by
your legal representatives, heirs or legatees.  This letter and any rights and
benefits hereunder will inure to the benefit of and be binding upon the Company
and its successors and assigns.

 

·      Headings.  The headings in this letter are for convenience of reference
only and do not affect the interpretation of this letter.

 

·      Counterparts.  This letter may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same.

 

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If this letter correctly sets forth our agreement, please return a signed copy
of this letter to the Company.

 

We look forward to your leadership.

 

 

 

Sincerely,

 

 

 

 

 

Gleacher & Company, Inc.

 

 

 

 

 

 

 

 

By:

/s/ Eric J. Gleacher

 

 

 

Name: Eric J. Gleacher

 

 

 

Title: Chairman of the Board of Directors

 

 

 

 

 

 

Accepted and agreed to this

 

 

18 day of April 2011.

 

 

 

 

 

/s/ Thomas J. Hughes

 

 

Thomas J. Hughes

 

 

 

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Annex A

 

For purposes of this letter and the Equity Award Agreements, the following terms
shall have the meanings set forth below:

 

“Affiliate” means an entity in control of, controlled by or under common control
with Company.

 

“Cause” means: (i) your conviction of, or plea of guilty or “no contest” to, any
felony; (ii) your conviction of, or plea of guilty or “no contest” to, a
violation of criminal law involving the Company and its business; (iii) your
commission of an act of fraud or theft, or material dishonesty in connection
with the performance of your duties to the Company and its Affiliates; or
(iv) your willful refusal or gross neglect to perform the duties reasonably
assigned to you and consistent with your position with the Company and its
Affiliates or otherwise to comply with the material terms of any agreement
between the Company or any of its Affiliates and you, which refusal or gross
neglect continues for more than fifteen (15) days after you receive written
notice thereof from the Company providing reasonable detail of the asserted
refusal or gross neglect (and which is not due to a physical or mental
impairment).

 

“Change in Control” means the first to occur of the following events:

 

(a)        The acquisition, after the Effective Date, by an individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either (i) the shares of Company Common
Stock (the “Common Stock”), or (ii) the combined voting power of the voting
securities of the Company entitled to vote generally in the election of
directors (the “Voting Securities”); provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any acquisition by
any individual, entity or group (within meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) who, on the Effective Date, beneficially owned 10%
or more of the Common Stock, (B) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any of its
subsidiaries, (C) any acquisition by any underwriter in connection with any firm
commitment underwriting of securities to be issued by the Company, or (D) any
acquisition by any corporation (or other entity) if, immediately following such
acquisition, more than 50% of the then outstanding shares of common stock of
such corporation (or other entity) and the combined voting power of the then
outstanding voting securities of such corporation (or other entity) entitled to
vote generally in the election of directors, is beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who,
immediately prior to such acquisition, were the beneficial owners of the Common
Stock and the Voting Securities in substantially the same proportions,
respectively, as their ownership, immediately prior to such acquisition, of the
Common Stock and Voting Securities; or

 

(b)        Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease thereafter for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by at least a majority of
the directors then serving and comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents;
or

 

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(c)        Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”), other than a Corporate Transaction with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, immediately prior to such Corporate Transaction, of the
Common Stock and Voting Securities beneficially own, directly or indirectly,
immediately after such Corporate Transaction, more than 50% of the then
outstanding common stock and voting securities (entitled to vote generally in
the election of directors) of the corporation (or other entity) resulting from
Corporate Transaction in substantially the same proportions as their respective
ownership, immediately prior to such Corporate Transaction, of the Common Stock
and the Voting Securities; or

 

(d)        Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.

 

“Disability” means disability as defined in the Company’s long-term disability
plan as in effect from time to time.

 

“Good Reason” means without your prior written consent:  (i) a material
reduction in your Annual Base Salary (as defined in the letter); (ii) the
assignment to you of duties or responsibilities that represent a material
diminution from the duties or responsibilities associated with the position of
Chief Executive Officer; or (iii) the relocation of your primary place of
employment to a location 50 or more miles from the Company’s headquarters.  In
order to invoke a termination for Good Reason, you must provide written notice
to the Company of the existence of one or more of the conditions described in
clauses (i) through (iii) within thirty (30) days following the initial
existence of such condition or conditions, and the Company shall have thirty
(30) days following receipt of such written notice (the “Cure Period”) during
which it may remedy the condition.  In the event that the Company fails to
remedy the condition constituting Good Reason during the Cure Period, you must
terminate employment, if at all, within 90 days following the Cure Period in
order for such termination to constitute a termination for Good Reason.

 

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