Exhibit 10.3

 

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
JURISDICTION. THIS NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. BY ACQUIRING THIS
NOTE, THE HOLDER REPRESENTS THAT THE HOLDER WILL NOT SELL OR OTHERWISE DISPOSE
OF THIS NOTE WITHOUT REGISTRATION OR EXEMPTION THEREFROM.

 

SENIOR PROMISSORY NOTE

 

$2,250,000  January 31, 2020

 

For value received Cohen & Company, LLC, a Delaware limited liability company
(together with its successors and assigns, the “Company”), promises to pay to RN
Capital Solutions LLC, a Delaware limited liability company (the “Holder”), the
principal amount of $2,250,000, together with all accrued and unpaid interest
thereon. This Senior Promissory Note (this “Note”) is subject to the following
terms and conditions:

 

1.            Defined Terms. The following terms used in this Note shall have
the following meanings:

 

(a)            “Affiliate” means, with respect to a Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person at any time during the period for which the determination of
affiliation is being made.  For purposes of this definition, the terms
“control,” “controlling,” “controlled” and words of similar import, when used in
this context, mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct, or cause the direction of, management
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.

 

(b)            “Assets” means all of the properties and assets of the Company or
of any subsidiary of the Company, whether real, personal or mixed, tangible or
intangible, wherever located, whether now owned or hereafter acquired.

 

(c)            “Change in Control” shall mean any one of the following events:
(i) any Person or group (other than the Holder, Daniel G. Cohen, any member of
Daniel G. Cohen’s immediate family, the DGC Family Fintech Trust and any
controlled Affiliates of the foregoing) is or becomes a beneficial owner,
directly or indirectly, of more than 50% of the aggregate voting power
represented by all issued and outstanding units of membership interests of the
Company or the outstanding capital stock Parent, or (ii) the members of the
Company approve a plan of liquidation or dissolution of the Company or Parent or
a sale of all or substantially all of the Company’s or Parent’s assets.

 

(d)            “Encumbrance” means any lien, security interest, pledge,
mortgage, easement, leasehold, assessment, tax, covenant, reservation,
conditional sale, prior assignment, or any other encumbrance, claim, burden or
charge of any nature whatsoever.

 

 

 

 

(e)            “Governmental Authority” means any foreign, federal, state or
local government, or any political subdivision thereof, or any court, agency or
other body, organization, group, stock market or exchange exercising any
executive, legislative, judicial, quasi-judicial, regulatory or administrative
function of government.

  

(f)            “Indebtedness” means, with respect to a specified Person: (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current accounts payable and accrued expenses incurred in the ordinary course of
business irrespective of when paid); (c) all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements, credit agreements or
other similar instruments; (d) all obligations and liabilities of such Person
created or arising under any conditional sales or other title retention
agreements with respect to property used and/or acquired by such Person; (e) all
capitalized lease obligations of such Person; (f) all aggregate mark-to-market
exposure of such Person under hedging agreements; (g) all obligations in respect
of letters of credit (whether drawn or supporting obligations that constitute
Indebtedness) and bankers’ acceptances; (h) all obligations referred to in
clauses (a) through (g) of this definition of another Person guaranteed by the
specified Person or secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) an Encumbrance
upon property owned by the specified Person, whether or not the specified Person
has assumed or become liable for the payment of such Indebtedness; provided,
however, that any amounts loaned under the JVB Loan Facility shall not be
considered Indebtedness of the Company for purposes hereof.

 

(g)            “Judgment” means any order, ruling, writ, injunction, fine,
citation, award, decree, or any other judgment of any nature whatsoever of any
Governmental Authority.

 

(h)            “JVB Loan Facility” means the Loan Agreement, by and among
Parent, the Company and J.V.B. Financial Group Holdings, LP, as guarantors,
J.V.B. Financial Group, LLC, as borrower, and C&Co PrinceRidge Holdings, LP, and
MB Financial Bank, N.A., as lender, as amended, and the Revolving Note and Cash
Subordination Agreement, dated January 29, 2019, by and between MB
Financial Bank, N.A. and J.V.B. Financial Group, LLC.

 

(i)             “Parent” means Cohen & Company Inc., a Maryland corporation.

 

(j)             “Person” means any individual, sole proprietorship, joint
venture, partnership, company, corporation, association, cooperation, trust,
estate, Governmental Authority, or any other entity of any nature whatsoever.

 

(k)            “Proceeding” means any demand, claim, suit, action, litigation,
investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.

 

(l)             “Senior” means that, in the event of any default in the payment
of the obligations represented by this Note or of any liquidation, insolvency,
bankruptcy, reorganization or similar proceedings relating to the Company, all
amounts payable under this Note shall first be paid in full before any payment
is made upon any other Indebtedness incurred following the date hereof
(including any Indebtedness guaranteed by the Company) or any subordinated or
junior subordinated Indebtedness of the Company outstanding as of the date
hereof, and, in any such event, any payment or distribution of any character
which shall be made in respect of any other Indebtedness of the Company shall be
paid to the Holder for application to the payment hereof, unless and until the
obligations under this Note shall have been paid and satisfied in full.

 

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2.            Note.

 

(a)            Maturity. The unpaid principal amount and all accrued but unpaid
interest hereunder shall be due and payable in full on January 31, 2022;
provided, however, that, at any time after January 31, 2021 and prior to
January 31, 2022, the Holder may, with at least thirty-one (31) days’ prior
written notice from the Holder to the Company, declare the entire unpaid
principal amount outstanding and all interest accrued and unpaid on the Note to
be immediately due and payable (the earlier of January 31, 2022 and the date the
Holder declares the entire unpaid principal amount outstanding and all interest
accrued and unpaid on the Note to be immediately due and payable in accordance
with this Section 2(a) shall be referred to herein as the “Maturity Date”).

 

(b)            Interest. Interest shall accrue from the date of this Note on the
unpaid principal amount at a rate equal to twelve percent (12%) per annum,
computed on the basis of the actual number of days elapsed and a year of 365
days from the date of this Note until the principal amount and all interest
accrued but unpaid thereon are paid. Interest shall be payable in cash quarterly
on each January 1, April 1, July 1, and October 1 (each, an “Interest Payment
Date”) until the Maturity Date, commencing on April 1, 2020. Upon the occurrence
of any Event of Default and after any applicable cure period as described in
Section 7 and for so long as such Event of Default continues, all principal,
interest and other amounts payable under this Note shall bear interest at a rate
equal to thirteen percent (13%) per annum (the “Default Rate”).

 

(c)            Prepayment Without Consent. This Note may not be prepaid in whole
or in part at any time or from time to time prior to January 31, 2021. This Note
may, with at least thirty-one (31) days’ prior written notice from the Company
to the Holder, be prepaid in whole or in part at any time or from time to time
following January 31, 2021 and prior to the Maturity Date without the prior
written consent of the Holder and without penalty or premium by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment.

 

3.            Covenants of the Company. The Company covenants to the Holder
that, from the date hereof until all principal, interest and other amounts
payable under this Note have been paid in full, the Company shall, except as
otherwise agreed in writing by the Holder:

 

(a)            punctually pay the principal and interest payable on this Note,
and any other amount due and payable under this Note in the manner specified in
this Note;

 

(b)            give written notice promptly to the Holder of any condition or
event that constitutes, or is reasonably expected to constitute, an Event of
Default;

 

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(c)            not avoid or seek to avoid the observance or performance of any
of the terms of this Note through any reorganization, recapitalization, transfer
of assets or other voluntary action; and

 

(d)            not create or incur any Encumbrance in or on its property or
Assets, whether now owned or hereinafter acquired, or upon any income or
revenues or rights therefrom, except:

 

(i)            Encumbrances existing on the date hereof and previously disclosed
to the Holder;

 

(ii)           Encumbrances for property taxes and assessments or other
governmental charges or levies and liens that are not overdue for more than
ninety (90) days; or

 

(iii)          Encumbrances of or resulting from any Judgment, the time for
appeal or petition for rehearing of which shall not have expired or in respect
of which the Company shall in good faith be prosecuting an appeal or other
Proceeding for a review and in respect of which a stay of execution pending such
appeal or Proceeding shall have been secured.

 

4.            Form of Payment. Except as otherwise set forth herein, all
payments due hereunder shall be made in lawful money of the United States of
America to such account or accounts as may be designated in writing by the
Holder from time to time. Payment shall be credited first to the accrued
interest then due and payable and the remainder applied to principal.

 

5.            Priorities. The indebtedness evidenced by this Note and the
payment of all principal, interest and any other amounts payable hereunder is a
senior obligation of the Company and shall be Senior to any Indebtedness of the
Company outstanding as of the date hereof other than (i) the Senior Promissory
Note, dated of even date herewith, issued by the Company to
JKD Capital Partners I LTD in the aggregate principal amount of $2,250,000, and
(ii) the Convertible Senior Secured Promissory Note, dated March 10, 2017,
issued by the Company to the DGC Family Fintech Trust in the aggregate principal
amount of $15,000,000, to which this Note shall rank pari passu.

 

6.            Events of Default. An “Event of Default” shall be deemed to have
occurred if:

 

(a)            subject to the accrual of interest as provided in
Section 1(b) hereof, the Company shall fail to pay as and when due any principal
or interest hereunder and such nonpayment shall continue uncured for a period of
five (5) business days;

 

(b)            except for an event described in Section 7(a), the Company fails
to perform any covenant or agreement hereunder, and such failure continues or is
not cured within five (5) business days after written notice by the Holder to
the Company;

 

(c)            the Company or any significant subsidiary (as such term is
defined in Rule 1-02(w) of Regulation S-X) of the Company (each, a “Significant
Subsidiary”) applies for or consents to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) makes a general assignment for the benefit of itself or any of
its creditors, or (iii) commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect;

 

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(d)            proceedings for the appointment of a receiver, trustee,
liquidator or custodian of the Company or any Significant Subsidiary, or of all
or a substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
the Company or any Significant Subsidiary, or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect are
commenced and an order for relief entered or such proceeding is not dismissed or
discharged within ninety (90) days of commencement;

 

(e)            there is entered against the Company or any subsidiary of the
Company a final Judgment for the payment of money in an aggregate amount
exceeding $300,000 and such Judgment shall remain unsatisfied or without a stay
in respect thereof for a period of thirty (30) days;

 

(f)            the Company or any subsidiary of the Company shall fail to pay
when due any obligation, whether direct or contingent, for Indebtedness
exceeding $300,000, or shall breach or default with respect to any term of any
loan agreement, mortgage, indenture or other agreement pursuant to which such
obligation for Indebtedness was created or securing such obligation if the
effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness (or a trustee on behalf of such holder or holders), to
cause that Indebtedness to become or be declared due and payable (or redeemable)
prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be; or

 

(g)            a Change in Control shall have occurred.

 

Upon the occurrence or existence of any Event of Default described in
Section 7(a), Section 7(b), Section 7(e), Section 7(f) or Section 7(g) and at
any time thereafter during the continuance of such Event of Default, the Holder
may, by written notice to the Company, declare the entire unpaid principal
amount outstanding and all interest accrued and unpaid on the Note to be
immediately due and payable without presentment, demand, protest or any other
notice or demand of any kind. Upon the occurrence or existence of any Event of
Default described in Section 7(c) or Section 7(d), immediately and without
notice, the entire unpaid principal amount outstanding and all interest accrued
and unpaid on the Note shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice or demand of any kind.
Upon the occurrence of any Event of Default and after any applicable cure period
as described herein and for so long as such Event of Default continues, all
principal, interest and other amounts payable under this Note shall bear
interest at the Default Rate. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right power or remedy granted to it by this Note or otherwise permitted to
it by law, either by suit in equity or by action at law, or both.

 

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7.            Covenants.

 

(a)            No Senior Indebtedness. Following the date hereof, the Company
shall not incur any Indebtedness that is a Senior obligation to this Note.

 

(a)            Notice of Indebtedness Under JVB Loan Facility. In the event that
any amounts of Indebtedness are incurred by J.V.B. Financial Group, LLC under
the JVB Loan Facility, the Company shall provide Holder with prompt written
notice thereof.

 

8.            Miscellaneous.

 

(a)            This Note and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of New York without regard
to its conflicts of law principles or the conflicts of law principles of any
other state in either case that would result in the application of the laws of
any other state.

 

(b)            All notices of request, demand and other communications hereunder
shall be addressed to the parties as follows:

 

If to the Company:  

Cohen & Company, LLC

Cira Centre

2929 Arch Street, Suite 1703

Philadelphia, Pennsylvania 19104

Attn: Joseph W. Pooler, Jr.

Facsimile: (215) 701-8279

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

Facsimile: (215) 405-2906

Email: dmix@duanemorris.com

      If to Holder:   At the address set forth on the books and records of the
Company.

 

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unless the address is changed by the party by like notice given to the other
parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed
by certified mail, return receipt requested, postage prepaid and properly
addressed to the address above, then three (3) business days after deposit of
same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by
Federal Express (FedEx), the United Parcel Service (UPS), or another nationally
recognized overnight courier service, next business morning delivery, then one
(1) business day after deposit of same in a regularly maintained receptacle of
such overnight courier; or (iii) if hand delivered, then upon hand delivery
thereof to the address indicated on or prior to 5:00 p.m., New York City time,
on a business day. Any notice hand delivered after 5:00 p.m. New York City time,
shall be deemed delivered on the following business day. Notwithstanding the
foregoing, notices, consents, waivers or other communications referred to in
this Note may be sent by facsimile, e-mail, or other method of delivery, but
shall be deemed to have been delivered only when the sending party has confirmed
(by reply e-mail or some other form of written confirmation from the receiving
party) that the notice has been received by the other party.

 

(c)            In the event any interest is paid on this Note which is deemed to
be in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate shall be
deemed a payment of principal and applied against the principal of this Note.

 

(d)            Amendments to any provision of this Note may be made or
compliance with any term, covenant, agreement, condition or provision set forth
in this Note may be waived (either generally or in a particular instance and
either retroactively or prospectively) only upon written consent of the Company
and the Holder. Any amendment or waiver effected in accordance herewith shall
apply to and be binding upon the Holder, upon each future holder of this Note
and upon the Company, whether or not this Note shall have been marked to
indicate such amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived or impair any right
consequent thereon.

 

(e)            This Note may not be assigned by any holder (except that the
Holder shall be permitted to assign this Note to Holder’s controlled Affiliates)
without the prior written approval of the Company.

 

(f)            The Company hereby waives diligence, presentment, protest and
demand, notice of protest, notice of dishonor, notice of nonpayment and any and
all other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The Company further waives, to
the full extent permitted by law, the right to plead any and all statutes of
limitations as a defense to any demand on this Note.

 

(g)            The Company agrees to pay all reasonable costs and expenses
actually incurred by the Holder in connection with an Event of Default,
including without limitation the fees and disbursements of counsel, advisors,
consultants, examiners and appraisers for the Holder, in connection with (i) any
enforcement (whether through negotiations, legal process or otherwise) of this
Note in connection with such Event of Default, (ii) any workout or restructuring
of this Note during the pendency of such Event of Default and (iii) any
bankruptcy case or proceeding of the Company or any appeal thereof.

 

 7 

 

 

(h)            The section and other headings contained in this Note are for
reference purposes only and shall not affect the meaning or interpretation of
this Note.

 

(i)            This Note 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 instrument.

 

Signature pages follow

 

 8 

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and
delivered by its authorized officer, as of the date first above written.

 

  COHEN & COMPANY, LLC

 

  By: /s/ Joseph W. Pooler, Jr.   Name: Joseph W. Pooler, Jr.   Title: Executive
Vice President, Chief Financial Officer and Treasurer

 

[Signature Page to Senior Promissory Note]

 

 

 

 

AGREED AND ACKNOWLEDGED:       RN CAPITAL SOLUTIONS LLC  

 

    By:  /s/ Nasser A. Ahmad   Name: Nasser A. Ahmad   Title: Authorized Person
 

 

[Signature Page to Senior Promissory Note]