Exhibit 10.16


MANAGEMENT
AGREEMENT


This Management
Agreement (this “Agreement”) is entered into as of the 5th day of
August, by and between New Refco Group Ltd., LLC, a Delaware limited liability
company
(the “Company”), Refco Group Ltd., LLC, a Delaware limited liability
company (“Refco”), and THL Managers V, LLC, a Delaware limited liability
company (the “Sponsor”).


WHEREAS, certain affiliates of Thomas H. Lee Partners,
L.P. (“THL”) and certain other parties have made an equity investment in
the Company pursuant to the transactions contemplated by that certain Equity
Purchase and Merger Agreement, dated as of June 8, 2004, as amended by that
certain First Amendment to Equity Purchase and Merger Agreement, dated as of
July 9, 2004, by and among the Company, Refco, Refco Group Holdings, Inc., a
Delaware corporation, and THL Refco Acquisition Partners, a Delaware general
partnership (as amended, the “Purchase Agreement”).


WHEREAS, the Company is the sole owner of Refco.


WHEREAS, the Sponsor has staff specifically skilled in
corporate finance, strategic corporate planning, and other management skills
and advisory services.


WHEREAS, the Company will require the Sponsor’s
special skills and management advisory services in connection with its business
operations and execution of its strategic plan.


WHEREAS, the Sponsor is willing to provide such skills
and services to the Company.


NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:


1.             Services.  The Sponsor hereby agrees that if, during
the term of this Agreement (the “Term”), the Company or Refco reasonably
and specifically requests that the Sponsor provide the services set forth below
and the Sponsor agrees to provide such services, the Sponsor or one of its
affiliates will provide the following services to the Company and its
subsidiaries:


 


(a)           advice in connection with the
negotiation and consummation of agreements, contracts, documents and
instruments related to the Company’s or any of its subsidiaries’ finances or
relationships with banks or other financial institutions; or


(b)           advice with respect to the development
and implementation of strategies for improving the operating, marketing and
financial performance of the Company and , and other senior management matters
related to the business, administration and policies of the Company and its
subsidiaries.


The parties hereto
expressly acknowledge that the services to be performed hereunder by the
Sponsor shall not include investment banking or other financial advisory
services rendered by Sponsor or its affiliates to the Company or any of its
subsidiaries in connection with any specific acquisition, divestiture,
refinancing or recapitalization by the Company or any of its subsidiaries.  This Agreement shall in no way prohibit the
Sponsor or any of its affiliates or any of their respective partners (both
general and limited), members (both managing and otherwise), officers,

















 


directors,
employees, agents or representatives from engaging in other activities, whether
or not competitive with any business of the Company or any of its affiliates.


2.             Payment of Fees.  In exchange for the Sponsor’s arrangement of the equity financing
and agreement to provide the services set forth herein, Refco and the Company
hereby agree to pay to the Sponsor (or its designee) the following fees:


                                (a)           a transaction fee in connection with
the transactions contemplated in the Purchase Agreement payable at the Closing
(as defined in the Purchase Agreement) of $30,000,000; and


                                (b)           a management fee (the “Fee”)
equal to the greater of (i) $2,500,000 per year or (ii) 1% of EBITDA (as defined
in the Securityholders Agreement of even date herewith among the Company and
the securityholders of the Company described therein) before deducting the Fee
payable pursuant to this Section 2(b) (“Adjusted EBITDA”),
commencing at the Closing.  The Fee shall
be payable semi-annually in advance (based on the prior year’s Adjusted EBITDA)
on March 2nd and September 2nd of each year, with an adjustment of the Fee for
any fiscal year payable promptly following the determination of Adjusted EBITDA
for such fiscal year or on termination of this Agreement.  The first installment of the Fee shall be
payable at the Closing.  The initial Fee
shall be for the period through March 2, 2005 and shall include a pro rata
portion of the 2005 fiscal year based on the number of days in the 2005 fiscal
year following the Closing.  All
references to “per annum” or “annual” herein refer to the fiscal year of the
Company.


                Each payment made
pursuant to this Section 2 shall be paid by wire transfer of immediately
available funds to the accounts specified on Exhibit A attached hereto,
or to such other account(s) as the Sponsor may specify in writing to Refco.


3.             Term.  This
Agreement shall be effective as of the date hereof and shall continue in full
force and effect, unless and until (a) terminated by the Sponsor, (b)
terminated automatically on the date which the Sponsor and its affiliates no
longer beneficially own at least twenty-five percent (25%) of the equity
securities of the Company, or (c) terminated by the Sponsor upon the consummation
of any public offering of the equity securities of the Company or any successor
entity.  Upon any termination of this
Agreement, each of (A) the obligations of the Company under Section 4
below, (B) any and all owed and unpaid obligations of the Company under Section
2 above and (C) the provisions of Section 7 shall survive any
termination of this Agreement to the maximum extent permitted under applicable
law.  In the event that the Sponsor
terminates this Agreement in accordance with clause (c) above of this Section
3, Refco and the Company agree to pay the Sponsor a cash lump-sum
termination fee equal to the net present value of the fees that would have been
payable to such Sponsor (but for the termination hereof) pursuant to Section
2(b) hereof for a period of five (5) years from the date of such
termination calculated using the Fee paid for the fiscal year ended prior to
such termination and a discount rate equal to the ten-year treasury rate on the
date of such termination.  Such
termination fee shall be payable by wire transfer of immediately available
funds within ten (10) days after the date of termination to the account
specified on Exhibit A attached hereto, or to such other account(s) as
the Sponsor may specify in writing to Refco. 
As used herein, the term “Person” shall be construed in the
broadest sense and means and includes a natural person, a partnership, a
corporation, an association, a joint stock company, a limited liability
company, a trust, a joint venture, an unincorporated organization and any other
entity and any federal, state, municipal, foreign or other government,
governmental


 


2

















 


department,
commission, board, bureau, agency or instrumentality, or any private or public
court or tribunal.


4.             Expenses; Indemnification.


(a)           Expenses.  In addition to the fees set forth
in Section 2 hereof, Refco and the Company agree to pay on demand all
reasonable costs and expenses incurred by the Sponsor and its affiliates or any
of them in connection with this Agreement and in connection with performing
services hereunder including but not limited to air travel charged at charter
equivalent rates, legal, consulting, out of pocket and other expenses,
including but not limited to the fees and disbursements of Weil, Gotshal &
Manges LLP, counsel to the Sponsor, and any other consultants or advisors
retained by the Sponsor or its respective counsel arising in connection
therewith, including but not limited to the preparation, negotiation and execution
of this Agreement and the performance of services hereunder (including, without
limitation, fees and expenses of independent professionals, research,
transportation and per diem costs).


(b)           Indemnity
and Liability.  Refco and the Company will indemnify and
hold harmless the Sponsor, its affiliates and their respective partners (both
general and limited), members (both managing and otherwise), officers,
directors, employees, agents and representatives (each such Person being an “Indemnified
Party”) from and against any and all losses, claims, damages and
liabilities, whether joint or several, expenses of any nature (including
reasonable attorneys’ fees and disbursements), judgments, fines, settlements
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative, arbitral or
investigative, in which an Indemnified Party was involved or may be involved,
or threatened to be involved, as a party or otherwise (the “Liabilities”),
related to, arising out of or in connection with the advisory and consulting
services contemplated by this Agreement or the engagement of the Sponsor
pursuant to, and the performance by the Sponsor of the services contemplated
by, this Agreement, and any other action taken by an Indemnified Party on
behalf of the Company in connection with this Agreement, whether or not pending
or threatened, whether or not resulting in any liability and whether or not
such action, claim, suit, investigation or proceeding is initiated or brought
by the Company, provided that the Indemnified Party acted in good faith and in
the best interests of the Company, and provided further that any such losses,
claims, damages, liabilities, judgments, fines, or settlements did not result
from the Indemnified Party’s willful misconduct or gross negligence.  Refco and the Company will reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys’ fees and expenses) as they are incurred in connection with investigating,
preparing, pursuing, defending or assisting in the defense of any action,
claim, suit, investigation or proceeding for which the Indemnified Party would
be entitled to indemnification under the terms of the previous sentence, or any
action or proceeding arising therefrom, whether or not such Indemnified Party
is a party thereto, provided, that subject to the following sentence,
the Company shall be entitled to assume the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its reasonable
judgment.  Any Indemnified Party may, at
its own expense, retain separate counsel to participate in such defense; provided,
however, that with respect to any action, claim, suit, investigation or
proceeding in which both the Company and/or one or more of its subsidiaries, on
the one hand, and an Indemnified Party, on the other hand, is, or is reasonably
likely to become, a party, such Indemnified Party shall have the right to
employ separate counsel at the expense of Refco and the Company and to control
its own defense of such action, claim, suit, investigation or proceeding if, in
the reasonable opinion of counsel to such Indemnified Party, a conflict or
potential conflict exists between the Company, on the one


3

















 


hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that Refco and the
Company shall not be required to pay the fees of more than one separate counsel
for such Indemnified Parties in any jurisdiction in any single action or
proceeding.  The Company agrees that it
will not, without the prior written consent of the applicable Indemnified
Party, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, suit, investigation, action or proceeding relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the applicable
Indemnified Party and each other Indemnified Party from all liability arising
or that may arise out of such claim, suit, investigation, action or proceeding.  Provided the Company is not in breach of its
indemnification obligations hereunder, no Indemnified Party shall settle or
compromise any claim subject to indemnification hereunder without the consent
of the Company.  Neither Refco or the
Company will be liable under the foregoing indemnification provision with
respect to any Indemnified Party, to the extent that any loss, claim, damage,
liability, cost or expense is determined by a court, in a final judgment from
which no further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct by an Indemnified Party.  If an Indemnified Party is reimbursed
hereunder for any expenses, such reimbursement of expenses shall be refunded to
the extent it is finally judicially determined that the Liabilities in question
resulted from the gross negligence or willful misconduct of such Indemnified
Party.


Refco and the Company
agree that if any indemnification sought by any Indemnified Party pursuant to
this Section 4 is unavailable for any reason or is insufficient to hold
the Indemnified Party harmless against any Liabilities referred to herein, then
Refco and the Company shall contribute to the Liabilities for which such
indemnification is held unavailable or insufficient in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Indemnified Party, on the other hand, in connection with the
transactions which gave rise to such Liabilities or, if such allocation is not
permitted by applicable law, not only such relative benefits but also the
relative faults of the Company, on the one hand, and the Indemnified Party, on
the other hand, as well as any other equitable considerations, subject to the
limitation that in any event the aggregate contribution by the Indemnified
Parties to all Liabilities with respect to which contribution is available
hereunder shall not exceed the fees actually received by the Indemnified
Parties hereunder.


5.             Assignment, etc.  Except as provided below, none of the
Sponsor, the Company or Refco shall have the right to assign this
Agreement.  The Sponsor acknowledges
that its services under this Agreement are unique.  Accordingly, any purported assignment by the Sponsor shall be
void.  Notwithstanding the foregoing,
the Sponsor may assign all or part of its rights and obligations hereunder to
any affiliate of such Sponsor which provides services similar to those called
for by this Agreement.


6.             Amendments and Waivers. 
No amendment or waiver of any term, provision or condition of this
Agreement shall be effective, unless in writing and executed by the Sponsor,
the Company and Refco.  No waiver on any
one occasion shall extend to or effect or be construed as a waiver of any right
or remedy on any future occasion.  No
course of dealing of any Person nor any delay or omission in exercising any
right or remedy shall constitute an amendment of this Agreement or a waiver of
any right or remedy of any party hereto.


 


4

















 


7.             Miscellaneous.


(a)           Choice
of Law.  This Agreement shall
be governed by and construed in accordance with the domestic substantive laws
of the State of New York without giving effect to any choice or conflict of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.


(b)           Consent
to Jurisdiction.  Each of the
parties agrees that all actions, suits or proceedings arising out of or based
upon this Agreement or the subject matter hereof shall be brought and
maintained exclusively in the federal and state courts of the State of New York
located in the Borough of Manhattan, City of New York.  Each of the parties hereto by execution
hereof (i) hereby irrevocably submits to the jurisdiction of the federal and
state courts in the State of New York located in the Borough of Manhattan, City
of New York, for the purpose of any action, suit or proceeding arising out of
or based upon this Agreement or the subject matter hereof and (ii) hereby
waives to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, suit
or proceeding, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that it is immune from extraterritorial injunctive relief
or other injunctive relief, that its property is exempt or immune from
attachment or execution, that any such action, suit or proceeding may not be
brought or maintained in one of the above-named courts, that any such action,
suit or proceeding brought or maintained in one of the above-named courts
should be dismissed on grounds of forum  non  conveniens,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or proceeding
in any court other than one of the above-named courts, or that this Agreement
or the subject matter hereof may not be enforced in or by any of the
above-named courts.  Each of the parties
hereto hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by the laws of the State of New York, City
of New York, agrees that service of process by registered or certified mail,
return receipt requested, at the address specified in or pursuant to Section
10 is reasonably calculated to give actual notice and waives and agrees not
to assert by way of motion, as a defense or otherwise, in any such action, suit
or proceeding any claim that service of process made in accordance with Section
10 does not constitute good and sufficient service of process.  The provisions of this Section 7(b)
shall not restrict the ability of any party to enforce in any court any
judgment obtained hereunder.


(c)           Waiver
of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT
TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF
ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT
OR THE SUBJECT HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. 
Each of the parties hereto acknowledges that it has been informed by
each other party that the provisions of this Section 7(c) constitute a
material inducement upon which such party is relying and will rely in entering
into this Agreement and the transactions contemplated hereby.  Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any court as written
evidence of the consent of each of the parties hereto to the waiver of its
right to trial by jury.


 


5

















 


8.             Independent Contractor.  The parties agree and understand that the
Sponsor is and shall act as an independent contractor of the Company in the
performance of its duties hereunder. 
The Sponsor is not, and in the performance of its duties hereunder will
not hold itself out as, an employee, agent or partner of the Company.


9.             Merger/Entire Agreement.  This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any prior communication or agreement with respect thereto.


10.           Notice. 
All notices, demands, and communications of any kind which any party may
require or desire to serve upon any other party under this Agreement shall be
in writing and shall be served upon such other party and such other party’s
copied persons as specified below by personal delivery to the address set forth
for it below or to such other address as such party shall have specified by
notice to each other party or by mailing a copy thereof by certified or
registered mail, or by Federal Express or any other reputable overnight courier
service, postage prepaid, with return receipt requested, addressed to such
party and copied persons at such addresses. 
In the case of service by personal delivery, it shall be deemed complete
on the first business day after the date of actual delivery to such
address.  In case of service by mail or
by overnight courier, it shall be deemed complete, whether or not received, on
the third day after the date of mailing as shown by the registered or certified
mail receipt or courier service receipt. 
Notwithstanding the foregoing, notice to any party or copied Person of
change of address shall be deemed complete only upon actual receipt by an
officer or agent of such party or copied person.


	
   

  	
  If
  to the Company, to it at:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  New Refco Group Ltd., LLC

  
	
   

  	
  One World Financial Center

  
	
   

  	
  200 Liberty Street

  	
   

  
	
   

  	
  New York, NY 10281

  	
   

  
	
   

  	
  Attention:

  	
  Chief Executive Officer

  
	
   

  	
  Telecopier:

  	
  (212) 693-7686

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to Refco, to it at:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Refco Group Ltd., LLC

  	
   

  
	
   

  	
  One World Financial Center

  	
   

  
	
   

  	
  200 Liberty Street

  	
   

  
	
   

  	
  New York, NY 10281

  	
   

  
	
   

  	
  Attention:

  	
  Chief Executive Officer

  
	
   

  	
  Telecopier:

  	
  (212) 693-7686

  
					



 


6

















 


	
   

  	
   

  	
   

  
	
   

  	
  If to Sponsor, to it at:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THL Managers V, LLC

  	
   

  
	
   

  	
  c/o Thomas H. Lee
  Partners, L.P.

  	
   

  
	
   

  	
  100 Federal Street

  	
   

  
	
   

  	
  Boston, MA 02110

  	
   

  
	
   

  	
  Attention:

  	
  Mr. Scott A. Schoen

  
	
   

  	
   

  	
  Mr. Scott Jaeckel

  
	
   

  	
   

  	
  Mr. George Taylor

  
	
   

  	
  Telecopier:

  	
  (617) 227-3514

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Weil, Gotshal & Manges
  LLP

  	
   

  
	
   

  	
  100 Federal Street

  	
   

  
	
   

  	
  Boston, Massachusetts
  02110

  	
   

  
	
   

  	
  Attention:

  	
  James Westra, Esq.

  
	
   

  	
  Telecopier:

  	
  (617) 772-8333

  
					



 


11.           Severability.  If in any judicial or arbitral proceedings a
court or arbitrator shall refuse to enforce any provision of this Agreement,
then such unenforceable provision shall be deemed eliminated from this Agreement
for the purpose of such proceedings to the extent necessary to permit the
remaining provisions to be enforced.  To
the full extent, however, that the provisions of any applicable law may be
waived, they are hereby waived to the end that this Agreement be deemed to be a
valid and binding agreement enforceable in accordance with its terms, and in
the event that any provision hereof shall be found to be invalid or
unenforceable, such provision shall be construed by limiting it so as to be
valid and enforceable to the maximum extent consistent with and possible under
applicable law.


12.           Counterparts.  This Agreement may be executed in any number
of counterparts and by each of the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which together shall constitute one and the same agreement.


13.           Headings.  All descriptive headings in this Agreement
are inserted for convenience only and shall be disregarded in construing or
applying any provision of this Agreement.


14.           Prevailing Party. 
If any legal action or other proceedings is brought for a breach of this
Agreement or any of the warranties herein, the prevailing party shall be
entitled to recover its reasonable attorneys’ fees and other costs incurred in
bringing such action or proceeding, in addition to any other relief to which
such party may be entitled.


 


[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]


 


7

















 


IN WITNESS WHEREOF, each of the parties has caused
this Agreement to be executed on its behalf as an instrument under seal as of
the date first above written by its officer or representative thereunto duly
authorized.


	
   

  	
   

  	
   

  	
   

  	
  NEW
  REFCO GROUP LTD., LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  REFCO GROUP LTD., LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  THL
  MANAGERS V, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Thomas
  H. Lee Partners, L.P., its 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Managing
  Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  THL
  Equity Advisors V, L.P., its

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  General
  Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Scott A. Schoen

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Scott
  A. Schoen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
														



 


 


8