**Exhibit10.16**

December  22, 2006

 

 

Kevin McCarthy

1221 Avenue of the Americas

NewYork, New York 10020

 

Dear Kevin:

Cowen Group, Inc. (“Cowen”or the “Company”) is pleased to continue your employment with the Company andwe look forward to a mutually rewarding and beneficial relationship.  This letter outlines the terms and conditionsof employment.  Please indicate youracceptance of these terms and conditions by signing and returning one copy ofthis letter.

**1.             Term. This letter providesthe details of your compensation until December 31, 2008 (the “Term”), andcertain other terms and conditions of your employment.  However, this letter is not a guarantee ofemployment for any term or duration, since your employment will be “at will,”as defined under New York law.**

2.             Position.

a.         Cowen shall employ you as a ManagingDirector and General Counsel.   In thatrole you will oversee the Legal and Compliance Department.  You shall perform your assigned duties atCowen or at one of its subsidiaries or affiliates.  You shall devote your full time and effortsduring normal business hours to the performance of all of the duties associatedwith that position and title as well as any and all other related duties Cowenmanagement maydesignate or assign.  Yourgoals, responsibilities, duties and/or authority may be reviewed and modifiedfrom time to time by the Company.

b.         During your employment you may not,without the prior written consent of Cowen, accept an appointment or continueto act, whether or not for remuneration, as a Director, Officer, Manager oremployee of a business entity that is not affiliated with the Company.

c.         During your employment you shall besubject to and must comply with all Company policies and procedures applicableto Cowen employees of similar rank and status, as now existing or as may bemodified or supplemented by Cowen in its sole discretion.

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3.             Compensation.

a.         Base Salary.  You will be paid a base salary at the rate ofTwo Hundred and Fifty Thousand Dollars ($250,000.00) per annum, less applicabletax and payroll deductions, payable in accordance with Cowen’s prevailingpayroll practices.  Any obligation to payyour Base Salary will cease upon the termination of your employment.

b.         Annual Bonus.  For the fiscal year ending December 31, 2006,you will be entitled to a guaranteed annual bonus of Seven Hundred ThousandDollars ($700,000), less any salary received from Cowen in 2006.   For the fiscal year ending December 31, 2007and December 31, 2008, you will be entitled to a guaranteed annual bonus suchthat your total compensation shall not be less than Seven Hundred ThousandDollars ($700,000.00).  The guaranteedannual bonus amounts for fiscal years 2006, 2007 and 2008 are subject to applicable tax and payroll deductions andare payable at the time all other Company bonuses are paid, but no later thanMarch 15, 2007, March 15, 2008 and March 15, 2009, respectively.  A portion of your total compensation from Cowen each year may be paidto you in restricted Cowen Group, Inc. equity, in such percentages as Cowenshall determine, in accordance with then-prevailing Company policies.

Bonusesin each year subsequent to fiscal year 2008 shall be at the sole discretion ofCowen management, payable in accordance with then-prevailing Company bonus policies.

4.             Benefits. You will be eligible to participate in and receive benefits on the samebasic terms and conditions as Cowen employees of similar position, rank andstatus in accordance with the terms and eligibility requirements of Cowen’sbenefit plans, which may be modified, suspended or terminated by Cowen in itssole discretion.

5.             Termination of Employment.  Your employment with Cowen may be terminatedfor any reason because your employment is “at will.”  If your employment is terminated for any reasonother than due to your Resignation/Voluntary Termination, your Death orDisability or for Cause, as defined below, prior to the date the bonuses forfiscal years ending December 31, 2006, and December 31, 2007 and December 31,2008 are paid, any bonuses guaranteed hereunder shall be payable at the timeall other Cowen bonuses are paid. Provided however, that if you sign our standard separation agreementthen you will be entitled to receive an acceleration of those bonus amounts.

a.         Death or Disability.  Your employment shall terminate on yourdeath.  If you become disabled, Cowen mayterminate your employment by giving you thirty (30) days written notice of itsintention to do so unless you return to full-time performance of your dutieswithin such thirty (30) day period.  “Disabled,”as used herein, shall mean your inability to perform the essential duties andresponsibilities of your job with or without reasonable accommodation, for acontinuous period of ninety (90) days or more, or for one hundred twenty (120)days or more in a twelve (12)-month period, due to a physical or mentalcondition.  Disputes on the issues ofdisability shall be determined by an impartial, reputable physician agreed uponby the parties or their respective doctors. Upon termination under this paragraph 5a, you or your estate shall beentitled to receive only that portion of your Base Salary earned, but unpaid,as of the date of termination and a pro-rata share of any Annual Bonus due forthe year in which your employment terminates.

b.         Cause.  Nothing herein shall prevent Cowen fromterminating your employment for cause.  “Cause”shall mean when Cowen, in good faith, determines that any of the followingoccurs:

i.              your conviction ofany crime (whether or not related to your duties at Cowen) with the exceptionof minor traffic offenses;

ii.             fraud, dishonesty,gross negligence or substantial misconduct in the performance of your dutiesand responsibilities;

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iii.            your violation ofor failure to comply with the Company’s internal policies or the rules andregulations of any regulatory or self-regulatory organization with jurisdictionover Cowen;

iv.            your failure toperform the material duties of your position, including, by way of example andnot of limitation, the failure or refusal to follow instructions reasonablygiven by your superiors in the course of employment.

Upontermination under this paragraph 5b, you shall be entitled to receive only thatBase Salary earned but unpaid as of the date of termination.  You shall not be entitled to any unpaid bonuscompensation whatsoever.

c.         Resignation/Voluntary Termination.In the event you resign or otherwise voluntarily terminate your employment withCowen prior to the date bonuses for the 2006, 2007 and 2008 fiscal years arepaid, you shall be limited to the rights, compensation and benefits provided inparagraph 5b (Termination for Cause).

d.         Offset.  In the event of termination, the Company mayoffset, to the fullest extent permitted by law, any amounts due to the Companyfrom you, or advanced or loaned to you by the Company, from any monies owed toyou or your estate by reason of your termination.

6.             Notice of Retirement/Resignation.  You shall not voluntarilyretire, resign or otherwise terminate your employment relationship with theCompany or any of its affiliates without first giving the Company at leastninety (90) days prior written notice of the effective day of your retirement,resignation or other termination.  Suchwritten notice shall be sent by certified mail to Cowen and Company, LLC,Attn:  Human Resources Department, 1221Avenue of the**Americas,**NewYork, NY  10020.  The Company retains the right to waive thenotice requirement in whole or in part or to place you on paid leave for all orpart of this ninety (90) day period.  Inthe alternative, at any time after you give notice, the Company may, but shallnot be obligated to, provide you with work and (i) require you to comply withsuch conditions as it may specify in relation to transitioning your duties andresponsibilities; (ii) assign you other duties; or (iii) withdraw any powersvested in, or duties assigned to you. This provision shall survive the expiration of the Term and continue ineffect during your employment with the Company.

7.             Non-Solicitation.  You agree that if you voluntarily terminateyour employment or if your employment is terminated for any reason, you shallnot, for a period of one hundred and eighty (180) days after such termination,without the Company’s prior written consent, directly or indirectly:  (a) solicit or induce, or cause others tosolicit or induce, any employees of the Company to leave the Company or in anyway modify their relationship with the Company; (b) hire or cause others tohire any employees of the Company; (c) encourage or assist in the hiringprocess of any employees of the Company or in the modification of any suchemployee’s relationship with the Company, or cause others to participate,encourage or assist in the hiring process of any employees of the Company; or(d) directly or indirectly solicit the trade or patronage of any clients orcustomers or any prospective clients or customers of the Company that youprovided services to, met with, or pitched business or services to whileemployed by the Company.  This provisionshall survive the expiration of the Term.

8.             Non-Disclosure of Confidential Information.  You shall not at any time, whether duringyour employment or following the termination of your employment, for any reasonwhatsoever, directly or indirectly disclose or furnish to any entity, firm,corporation or person, except as otherwise required by law, any confidential orproprietary information of the Company with respect to any aspect of itsoperations, business or clients.  “Confidentialor proprietary information” shall mean information generally unknown to thepublic to which you gain access by reason of your employment by the Company andincludes, but is not limited to, information relating to all present orpotential customers, business and marketing plans, sales, trading and financialdata and strategies, salaries and employment benefits, and operationalcosts.  This provision shall survive theexpiration of this Agreement.

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9.             Company Property. All records, files, memoranda, reports, customer information, clientlists, documents and equipment relating to the business of the Company, whichyou prepare, possess or come into contact with while you are an employee of theCompany, shall remain the sole property of the Company. You agree that upon thetermination of your employment, you shall provide to the Company all documents,papers, files or other material in your possession and under your control thatare connected with or derived from your services to the Company.  You agree that the Company owns all workproduct, patents, copyrights and other material produced by you during youremployment with the Company.  Thisprovision shall survive the expiration of this Agreement.

10.           InjunctiveRelief.  In the event of a breach byyou of your obligations under this Agreement, the Company, in addition to beingentitled to exercise all rights granted by law, including recovery of damages,will be entitled to specific performance of its rights under thisAgreement.  You acknowledge that theCompany shall suffer irreparable harm in the event of a breach or prospectivebreach of paragraphs 6, 7, 8 and/or 9 hereof and that monetary damages wouldnot be adequate relief.  Accordingly, theCompany shall be entitled to seek injunctive relief in any federal or statecourt of competent jurisdiction located in New York County, or in any state inwhich you reside.  You further agree thatthe Company and its affiliates shall be entitled to recover all costs andexpenses (including attorneys’ fees) incurred in connection with the enforcementof the Company’s rights hereunder.

11.           Arbitration.****Any and alldisputes arising out of or relating to your employment or the termination ofyour employment with Cowen, including any statutory claims based on allegeddiscrimination, will be submitted to and resolved exclusively by a panel ofarbitrators from either the New York Stock Exchange or the National Associationof Securities Dealers, Inc.* *The arbitration shall be held inthe City of New York.  In agreeing toarbitrate your claims, you recognize that you are waiving your right to a trialin court and by a jury.  The arbitrationaward shall be binding upon both parties, and judgment upon the award may beentered in a court of competent jurisdiction.

12.           Severability.  Should any provision herein be rendered ordeclared legally invalid or unenforceable by a court of competent jurisdictionor by the decision of an authorized governmental agency, such invalidation ofsuch part shall not invalidate the remaining portions thereof.

13.           Other Agreements.  You represent and warrant that you are not aparty to any agreement or bound by any obligation, restrictive covenant ornon-competition agreement that would prohibit you in any way from accepting andagreeing to this letter or from fully performing the obligations of youremployment with Cowen.

14.           Complete Agreement.  The provisions herein contain the entireagreement and understanding of the parties regarding compensation and youremployment and fully supersede any and all prior agreements, representations,promises or understandings, written or oral, between them pertaining to thesubject matter hereof, including your offer letter dated November 22, 2006. Theprovisions of this letter may not be changed or altered except in writingsigned by you and a duly authorized agent of Cowen.

15.           Choice of Law.  The interpretation and application of theterms herein, and your employment relationship at Cowen, shall be governed bythe laws of the State of New York without regard to principles of conflict oflaws.

16.           No Waiver.  Any failure by either party to exercise itsrights to terminate this letter or to enforce any of its provisions shall notprejudice such party’s rights of termination or enforcement for any subsequentor further violations, breaches or defaults by the other party.  A waiver of any provision of this lettershall not be valid or effective unless memorialized in writing and signed byboth parties to this Agreement.

17.           Assignment.  The rights and obligations of Cowen underthis letter will be transferable, and all of its covenants and agreements willbe binding upon and be enforceable by its successors and assigns.  You may not assign this letter and the termsand conditions stated herein.

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18.           Pre-Employment Verifications.  Your employment is contingent upon yoursatisfactory completion of a drug screening test, employment, education andreference checks, a credit and criminal background check, and verification ofyour identity and authorization to legally work in the United States, and allother Cowen practices and procedures applicable to the hiring process.  Your employment is also contingent upon yourobtaining all of the licenses necessary for you to conduct the functions ofyour job at Cowen.  Any failure to meetCowen’s pre-employment requirements and standards will nullify the employmentoffer or, in the event active employment has already commenced, may result inthe termination of employment without notice. Any such termination will bedeemed a termination for Cause under paragraph 5b herein. 

If your response to these terms and conditions isfavorable, please sign below as acceptance and return one copy.  Should you have any questions, please do nothesitate to contact me or Mr. William H. Dibble with Cowen’s Human ResourcesDepartment at (646) 562-1000.
|                       |   | Sincerely,        |
|-----------------------|--------|-------------------|
|                  |   |              |
|                  |   | COWEN GROUP, INC. |
|                  |   |              |
|                  |   | By:               |   |   |
|                  |   |              | Christopher A. White |
|                  |   |              | Vice President |
|                  |   |              |
|                  |   |              |
|                  |   |              |
| AGREED AND  ACCEPTED: |   |              |
|                  |   |              |
| Signed:               |   |              |   |   |
|                  |   |              |
| Date:                 |   |              |
|                       |        |                   |  |  |  |  |

 

 

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