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Exhibit 10.25    
    

 
 

EXECUTIVE EMPLOYMENT AND NON-COMPETITION
  AGREEMENT
  
    BY AND BETWEEN
  
    REFCO GROUP LTD., LLC
  
    AND
  
    GERALD M. SHERER
  
    DECEMBER 6, 2004    

 
EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT  

        This EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated as of
December 6, 2004, by and between REFCO GROUP LTD., LLC, a Delaware limited liability company (the "Company"), and Gerald M. Sherer (the
"Executive"), shall become effective upon the Effective Date (as defined below). 

WITNESSETH:  

        WHEREAS, the Company desires to employ Executive as Chief Financial Officer of the Company, and Executive desires to be employed by the Company in said capacity,
under the terms and pursuant to the conditions set forth herein; 

        WHEREAS,
in connection with his employment, the Executive will receive the opportunity to receive awards of Class B Common Units of New Refco Group Ltd., LLC (the
"Class B Common Units"); 

        WHEREAS,
the Company desires to be assured that the confidential information and goodwill of the Company will be preserved for the exclusive benefit of the Company; and 

        WHEREAS,
in consideration for (i) the employment of the Executive by the Company, (ii) the ability of the Executive to receive awards of Class B Common Units,
(iii) the mutual covenants and promises contained herein and intending to be legally bound thereby and (iv) for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged; 

        NOW,
THEREFORE, the Company and the Executive hereby agree as follows: 

        1.     EMPLOYMENT.    The Company agrees to employ the Executive, and the Executive agrees to be employed by the
Company, for the period set forth in Section 2, in the positions and with the duties and responsibilities set forth in  Section 3, and upon the
other terms and conditions provided herein. 

        2.     EMPLOYMENT TERM.    The employment of the Executive by the Company pursuant to this Agreement shall be for the
period commencing on December    , 2004 (such date, the "Effective Date") through and ending on February 28, 2007 unless earlier
terminated pursuant to the provisions of Section 5 hereof (as such period may be extended pursuant to the immediately following sentence, the
"Employment Term"). Beginning on February 28, 2007 and on the last day of each fiscal year of the Company thereafter (each a
"Reset Date"), the Employment Term shall be automatically extended so as to terminate one year after such Reset Date, unless earlier terminated pursuant
to the terms of this Agreement. 

        3.     POSITIONS AND DUTIES.

        (a)   During
the Employment Term, the Executive's position shall be Chief Financial Officer, or such other position of equivalent seniority as may be determined by the
Company's Board of Managers (the "Board"). The Executive's responsibilities shall be carried out with the advice and counsel of the Board, and the Chief
Executive Officer of the Company. 

        (b)   During
the Employment Term, the Executive shall devote his full business time and attention to the business and affairs of the Company and its affiliated companies (as
defined below), and shall utilize the Executive's best efforts to discharge faithfully and efficiently the duties and responsibilities delegated and assigned to the Executive, except for usual,
ordinary, and customary periods of vacation and absence due to illness; provided, however, that the Executive may (i) serve on
non-profit industry-related, civic or charitable boards or committees, (ii) deliver lectures and fulfill speaking engagements and (iii) manage the Executive's personal
investments, so long as such activities do not significantly interfere with the performance and fulfillment of the Executive's duties and responsibilities as an employee of the Company in accordance
with this 

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Agreement;  provided, however, that such activities will not, in the reasonable judgment of the Board, constitute an actual or potential conflict of
interest with the Company or an affiliated company. As used in this Agreement, the term "affiliated company," "affiliated
companies" or "affiliate" shall include any entity or person controlled by, controlling, or under common control with the
Company; provided, however, that such term shall not include any entity that is affiliated with the Company solely because such entity is controlled by
Thomas H. Lee Partners or any of its affiliates. 

        (c)   All
services that the Executive may render to the Company or any of its affiliated companies in any capacity during the Employment Term shall be deemed to be services
required by this Agreement and in consideration for the compensation provided for herein. 

        4.     COMPENSATION AND RELATED MATTERS.

        (a)   Base Salary.    During the Employment Term, the Executive shall receive an annual base salary
("Base Salary") of One Million Dollars ($1,000,000). The Base Salary shall be payable in installments in accordance with the Company's general payroll
practices for executives in effect at the time such payment is made, and shall be subject to all necessary withholding taxes, FICA contributions and similar deductions. During the Employment Term, the
Executive's Base Salary shall be subject to such increases (but not decreases) as may be determined from time to time by the Board in its sole discretion; provided,
however, that the Executive's Base Salary shall be reviewed by the Board at least annually, with a view to making such upward adjustment, if any, as the Board deems
appropriate. Any increased Base Salary shall become the new "Base Salary" for purposes of this Agreement. Payments of Base Salary to the Executive shall not be deemed exclusive and shall not prevent
the Executive from participating in any employee benefit plans, programs, or arrangements of the Company in which the Executive is entitled to participate. Payments of Base Salary to the Executive
shall not in any way limit or reduce any other obligation of the Company hereunder, and no other compensation, benefit, or
payment to the Executive hereunder shall in any way limit or reduce the obligation of the Company regarding the Executive's Base Salary hereunder. 

        (b)   Annual Bonus.    During the Employment Term, the Executive shall be eligible to receive an annual performance
bonus for each fiscal year of the Company, payable in cash (each an "Annual Bonus"), which shall be determined in accordance with the Management Bonus
Pool Plan, as amended, modified or supplemented from time to time. 

        (c)   Incentive Compensation Awards.    The Executive shall be eligible as of the Effective Date to participate in
equity-based compensation plans, including option plans, restricted or phantom membership interest plans and other equity incentive plans as shall be determined by the Board from time to time during
the Employment Term. It is acknowledged that on the Effective Date the Executive shall receive awards of Class B Common Units pursuant to a Restricted Unit Agreement in the form attached hereto
as Exhibit A. 

        (d)   Employee Benefits. 

        (i)    Incentive, Savings, and Retirement Plans.    During the Employment Term, the Executive shall be entitled to
participate in all incentive, savings, and retirement plans, programs, and arrangements applicable generally to other senior executives at the Company. 

        (ii)   Welfare Benefit Plans.    During the Employment Term, the Executive and/or the Executive's family, as the case
may be, shall be eligible to participate in and shall receive all benefits under all welfare benefits plans, programs, and arrangements provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life, accidental death, and travel accident insurance plans, programs, and arrangements) to the extent applicable generally
to other senior executives at 

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the
Company. The Company may, at its election and for its benefit, obtain insurance against the disability, accidental loss or death of the Executive (e.g. "Key Man Insurance") and the Executive shall
submit to such physical examinations and supply such information as may be reasonably required in connection with the obtainment thereof. 

        (e)   Expenses.    During the Employment Term, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in performing the Executive's duties and responsibilities hereunder. The Executive shall comply with such reasonable limitations and reporting
requirements with respect to such expenses as the Board may establish from time to time. 

        (f)    Vacation.    During the Employment Term, the Executive shall be entitled to twenty (20) business days
paid vacation in each calendar year, which shall be taken at such times as are consistent with the Executive's responsibilities hereunder. Any vacation days unused at the end of any calendar year
shall be forfeited. 

        (g)   Additional Compensation.    If, immediately following February 28, 2006 (the
"Look-Back Date"), the aggregate value of the Class B Common Units, and any other incentive equity of the Company or New Refco
Group Ltd., LLC ("New Refco") issued to the Executive, in each case which has vested as of the Look-Back Date, net of any amounts
that the Executive paid to the Company for such equity (the "Value of Vested Company Equity"), is less than Three Million Five Hundred Thousand Dollars
($3,500,000) then as soon as practicable after the Look-Back Date, but in no event later than March 15, 2006, the Company shall pay to the Executive additional cash compensation
equal in amount to the difference between the Value of Vested Company Equity and $3,500,000. In the event that the Executive is terminated by the Company other than for Cause prior to
February 28, 2006, and the aggregate value of the Class B Common Units, and any other incentive equity of the Company or New Refco issued to the Executive, in each case which has vested
as of the Date of Termination (as defined below), net of any amounts that the Executive paid to the Company for such equity (the "Value of Vested Company Equity Upon
Termination") is less than $3,500,000, then as soon as practicable after the Date of Termination, the Company shall make a cash payment to the Executive in an amount equal to
the difference between the Value of Vested Company Equity Upon Termination and $3,500,000. All determinations of value that are relevant for purposes of this Section 4(g) shall be made in good
faith by the Board of Managers of New Refco as soon as practicable following the Look-Back Date or the Date of Termination, as applicable. For purposes of this Section 4(g),
"Company" shall include any successor entity to the Company, "Board of Managers" shall include any
successor Board of Directors or other governing body of New Refco and "Class B Common Units" will include any equity of any successor entity of
New Refco. 

        (h)   Compensation for Partial Periods.    Except as otherwise noted herein, any payments payable to the Executive
pursuant to this Agreement shall be pro-rated for any partial period of service applicable to such payment. 

        5.     TERMINATION OF EMPLOYMENT.

        (a)   Death.    The Executive's employment shall terminate automatically upon the Executive's death during the
Employment Term. 

        (b)   Disability.    If the Board determines in good faith that the Disability (as defined below) of the Executive
has occurred during the Employment Term, the Company may give the Executive notice of its intention to terminate the Executive's employment (a "Disability Notice of
Termination"). In such event, the Executive's employment hereunder shall terminate effective on the 30th day after receipt of such Disability Notice of Termination by the
Executive (the "Disability Effective Date"), provided that, within the 30-day period after such receipt, the 

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Executive
shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall
mean the absence of the Executive or the inability of the Executive to perform his duties hereunder for an aggregate of one hundred eighty (180) days within any given period of three hundred
sixty (360) consecutive days, as a result of incapacity of the Executive, due to bodily injury or disease or any other mental or physical illness, which may be permanent with regard to the
Executive's ability to return to work in his full capacity; provided, however, that the Executive's return to work after receipt of a Disability Notice
of Termination shall not require or cause the resetting of the one hundred eighty (180) day measurement period set forth above for determining a Disability. Any determination of Disability
shall be made by the Board or the Chief Executive Officer of the Company in consultation with a qualified physician or physicians selected by the Board and/or the Company's insurers and reasonably
acceptable to the Executive (or, if applicable, his legal representative). During any period (not to exceed 360 days) in which the Board believes that the Executive's incapacity could
reasonably be expected to result in a Disability, the Board shall be entitled to appoint an interim Chief Financial Officer of the Company, without such appointment in and of itself triggering the
"Good Reason" termination provisions set forth herein. 

        (c)   Termination by the Company for Cause.    The Company may terminate the Executive's employment hereunder at any
time during the Employment Term for Cause (as defined below). 

        For
purposes of this Agreement, "Cause" shall mean only any of the following: 

        (i)    the
willful failure or refusal of the Executive to perform substantially the Executive's duties hereunder (other than any such failure resulting from the Executive being
disabled) that is not cured within thirty (30) days after a written demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in
which the Board believes the Executive has not substantially performed the Executive's duties; provided, however, that the Board's dissatisfaction with
the quality of the Executive's performance hereunder shall not constitute the failure of the Executive to substantially perform his duties within the meaning of this  Section 5(c)(i);

        (ii)   the
engaging by the Executive in illegal conduct or willful misconduct that, in either case, is materially detrimental to the Company, monetarily or reputationally; 

        (iii)  the
commitment by the Executive of any act of fraud, embezzlement or misappropriation of funds; 

        (iv)  the
conviction by the Executive of, or the plea by the Executive of nolo contendere to, any felony;  provided, however, that after indictment of the Executive,
the Company may place the Executive on paid leave of absence until resolution or dismissal of
such indictment; or 

        (v)   the
material breach by the Executive of Section 7 or  Section 8 hereof that is not cured by the Executive within thirty (30) days of written
notice of such breach by the Board. 

Any
act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests of the Company, and no act or failure to act, on the Executive's part, shall be deemed "willful" unless done by the
Executive not in good faith and without a reasonable belief that the Executive's actions or omissions were in the best interest of the Company. 

        (d)   Termination by the Company without Cause.    The Company may terminate the Executive's employment hereunder at
any time during the Employment Term without Cause. 

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        (e)   Termination by the Executive for Good Reason.    The Executive may terminate the Executive's employment
hereunder at any time during the Employment Term for Good Reason (as defined below). 

For
purposes of this Agreement, "Good Reason" shall mean only any of the following (without the Executive's written consent): 

        (i)    any
material diminution in the Executive's Base Salary or bonus opportunity, as contemplated by Sections 4(a) and  4(b) of this Agreement (other than as
provided in Section 5(b)), excluding for this purpose any
isolated, insubstantial, and inadvertent actions not taken in bad faith and which are remedied by the Company promptly after receipt of written notice thereof given by the Executive; 

        (ii)   any
failure by the Company to comply with any of its obligations under this Agreement, other than any isolated, insubstantial, and inadvertent actions not taken in bad
faith and which are remedied by the company promptly after receipt of written notice thereof given by the Executive: or 

        (iii)  the
Company's requiring the Executive to reside in or be based at any office or location other than the greater metropolitan areas of New York, New York. 

        (f)    Termination by the Executive Voluntarily.    The Executive may terminate the Executive's employment hereunder
at any time during the Employment Term for any reason other than Good Reason, or for no reason. 

        (g)   Notice of Termination.    Any termination of the Executive's employment hereunder by the Company or by the
Executive (other than a termination due to the Executive's death) shall be communicated by a Notice of Termination (as defined below) to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) in
the case of a termination for Disability, Cause, or Good Reason, sets forth the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so
indicated, and (iii) specifies the Date of Termination (as defined below); provided, however, that, notwithstanding any provision of this
Agreement to the contrary, a Notice of Termination given in connection with a termination for Good Reason shall be given by the Executive within a reasonable period of time, not to exceed sixty
(60) days, following the occurrence of the event giving rise to such right of termination. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Disability, Cause, or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from
asserting such fact or circumstance in enforcing the Company's or the Executive's rights hereunder. 

        (h)   Date of Termination.    For purposes of this Agreement, the "Date of
Termination" shall mean the effective date of termination of the Executive's employment hereunder, which date shall be: (i) if the Executive's employment is terminated
by the Executive's death, the date of the Executive's death; (ii) if the Executive's employment is terminated because of the Executive's Disability, the Disability Effective Date or such later
date (up to thirty (30) days) specified in the Disability Notice of Termination; (iii) if the Executive's employment is terminated by the Company for Cause or by the Executive for Good
Reason, the date on which the Notice of Termination is given; and (iv) if the Executive's employment is terminated by either party for any other reason, the date specified in the Notice of
Termination, which date shall in no event be earlier than the 30th day after the date such notice is given (such thirty (30) day period, the "Notice
Period"); provided, however, that in lieu of a thirty (30) day Notice Period, the Company may accept or give 

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a
shorter notice period (or no notice period) and place the Executive on paid leave during the Notice Period. 

        6.     OBLIGATIONS OF THE COMPANY UPON TERMINATION.

        (a)   Termination by the Company Without Cause or by the Executive for Good Reason.    If, during the Employment
Term, the Company shall terminate the Executive's employment hereunder without Cause, or the Executive shall terminate the Executive's employment for Good Reason, the Executive shall be entitled to
receive, as his exclusive right and remedy in respect of such termination: (i) the payment of (A) all Accrued Obligations plus
(B) at the time the Company pays its executives bonuses in accordance with its general payroll policies, the Pro Rata Bonus, plus
(C) severance pay equal to one-twelfth (1/12) of the Executive's Base Salary and Annual Bonus as of the Date of Termination for each of the first eighteen
(18) months from and following the Date of Termination, payable in accordance with the Company's regular pay schedule and policies and (ii) the provision of the Welfare Benefit
Continuation. 

         For
purposes of this Agreement, "Accrued Obligations" shall mean, (1) all Base Salary earned by the Executive but
unpaid as of the Date of Termination, (2) reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the
Executive through the Date of Termination and (3) all other payments and benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit
plan or program of the Company. For purposes of this Agreement, "Pro Rata Bonus" shall mean, as to any fiscal year of the Company in which the
Executive's employment with the Company is terminated, an amount equal to that pro rata portion of the Executive's Annual Bonus which, but for the Executive's termination of employment, would have
been earned by the Executive during such year. Such pro rata portion shall be determined based upon a formula, the denominator of which shall be 365 and the numerator of which shall be the number of
days during the Company's fiscal year in question which the Executive was employed by the Company on active status (including any period of paid leave in lieu of a notice period, as contemplated by  Section 5(h)
 of this Agreement). For purposes of this Agreement, "Welfare Benefit Continuation"
shall mean provision of welfare benefits such that the Executive shall continue to be covered, upon the same terms and conditions described in  Section 4(d)(ii) hereof, by the same or
equivalent medical, dental and life insurance coverage as in effect for the Executive and the
Executive's family immediately prior to the Date of Termination until the earlier of (x) the expiration of the period for which the Executive receives severance pay pursuant to this Agreement
and (y) the date the Executive has commenced new employment and has thereby become eligible for other benefits coverage, subject to the Executive's rights under the Consolidated Omnibus Budget
Reconciliation Act (COBRA). 

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        (b)   Death.    If the Executive's employment is terminated by reason of the Executive's death during the Employment
Term, this Agreement shall terminate without further obligations to the Executive's heirs, executors, administrators or other legal representatives under this Agreement, other than for payment of all
Accrued Obligations. 

        (c)   Disability.    If the Executive's employment is terminated by reason of the Executive's Disability during the
Employment Term, this Agreement shall terminate without further obligations to the Executive, other than for payment of all Accrued Obligations;  provided, however, that any amounts payable by the Company to the Executive pursuant to this  Section 6(c) shall be reduced by the amount of any disability insurance payments or benefits paid to the Executive
pursuant to insurance, if any
provided under Section 4(d) above. 

        (d)   Termination by the Company for Cause.    If the Executive's employment is terminated for Cause during the
Employment Term, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive his Accrued Obligations through the Date of Termination,
to the extent theretofore unpaid. 

        (e)   Termination by the Executive.    If the Executive voluntarily terminates the Executive's employment during the
Employment Term, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations. 

        (f)    Accrued Benefits.    Notwithstanding anything else herein to the contrary, all Accrued Obligations to which the
Executive (or his estate or beneficiary) is entitled shall be payable in cash promptly upon termination of his employment, except as otherwise specifically provided herein, or under the terms of any
applicable policy, plan or program. 

        (g)   Complete Payment.    The payments and other benefits to be made or to be extended to the Executive under the
provisions of this Section 6 upon termination of the Executive's employment shall be in complete satisfaction of any and all payments that would
otherwise be due the Executive had he remained employed by the Company during the remainder of the Employment Term and the Company shall have no further obligation to make any payment or extend any
benefit to the Executive pursuant to this Agreement or otherwise upon or after such termination. Except as specifically provided in this  Section 6, the Executive shall not be entitled to any
compensation, severance or other benefits from the Company or any of its subsidiaries or
affiliates upon the termination of this Agreement for any reason whatsoever. Acceptance by the Executive of performance by the Company shall constitute full settlement of any claims that the Executive
might otherwise assert against the Company, its affiliates or
any of their respective equityholders, partners, directors, officers, employees or agents relating to such termination. The Executive shall not be entitled to any severance or other payments upon
termination of employment except pursuant to this Agreement. 

        7.     PROPRIETARY
INFORMATION; INVENTIONS IN THE FIELD. 

        (a)   Proprietary Information.    In the course of service to the Company, the Executive will have access to
confidential information regarding the organization, business and finances of the Company and its affiliated companies, including products, services, designs, methods, techniques, systems,
specifications, know-how, strategic or technical data, marketing research data, product research and development data, sales techniques, confidential customer lists and information,
sources of supply and trade secrets, all of which are confidential and may be proprietary and are owned or used by the Company, or any of its affiliates. Such information shall hereinafter be called
"Proprietary Information" and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the
Company or any of its affiliated companies as to which the Executive may have access, whether conceived or developed by others 

8

 

or
by the Executive alone or with others during the period of service to the Company, whether or not conceived or developed during regular working hours. Proprietary Information shall not include any
records, data or information which are (i) in the public domain during or after the Employment Term provided the same are not in the public domain as a consequence of disclosure directly or
indirectly by the Executive in violation of this Agreement, (ii) required to be disclosed by law, or (iii) reasonably required to be disclosed in defending any suit, proceeding or
investigation to which the Executive is a party. 

        (b)   Fiduciary Obligations.    The Executive agrees that Proprietary Information is of critical importance to the
Company and a violation of this Section 7 would seriously and irreparably impair and damage the Company's business. The Executive agrees that he
shall keep all Proprietary Information in a fiduciary capacity for the sole benefit of the Company. 

        (c)   Non-Use and Non-Disclosure.    The Executive shall not during the Employment Term or at
any time thereafter: (i) disclose, directly or indirectly, any Proprietary Information to any person, other than any person who, in the reasonable judgment of the Executive, needs to know such
Proprietary Information or such other persons to whom the Executive has been specifically instructed to make disclosure by the Board and in all such cases only to the extent required in the course of
the Executive's service to the Company; or (ii) use any Proprietary Information, directly or indirectly, for the Executive's own benefit or for the benefit of any person or entity other than
the Company. 

        (d)   Assignment of Inventions.    The Executive agrees to assign and transfer to the Company or its designee,
without any separate remuneration or compensation, his entire right, title and interest in and to all Inventions in the Field (as defined below), together with all United States and foreign rights
with respect thereto, and, at the Company's expense, to execute and deliver all appropriate patent and copyright applications for securing United States and foreign patents and copyrights on
Inventions in the Field and to perform all lawful acts, including giving testimony, and to execute and deliver all such instruments that may be necessary or proper to vest all such Inventions in the
Field and patents and copyrights with respect thereto in the Company, and to assist the Company in the prosecution or defense of any interference which may be declared involving any of said patent
applications, patents, copyright applications or copyrights. For the purposes of this Agreement, the words "Inventions in the Field" shall include any
discovery, process, design, development, improvement, application, technique, or invention, whether patentable or copyrightable or not and whether reduced to practice or not, conceived, created,
discovered, invented or made by the Executive, individually or jointly with others (whether on or off the Company's premises or during or after normal working hours), while in the employ of the
Company or any of its affiliated companies, and which was or is directly or indirectly related to the business of the Company or any of its affiliated companies or suppliers or customers, or which
resulted or results from any work performed by, or use of any Documents, Property or other personal property of the Company (whether tangible or intangible and whether owned, leased or contracted for)
by, any executive, employee or agent of the Company or any of its affiliated companies. 

        (e)   Return of Documents.    All (i) notes, memoranda, reports, lists, letters, documents, records,
specifications, software programs, software code, data, tapes and other media of every kind, form and description relating to or within the scope of the business of the Company or any of its
affiliated companies and any copies, in whole or in part, thereof (collectively, the "Documents"), whether or not prepared by the Executive, and
(ii) all computers, cellular telephones, pagers, credit and/or calling cards, keys, access cards or other personal property of or relating to the Company or any of its affiliated companies
(collectively, the "Property") shall be the sole and exclusive property of the Company. The Executive shall safeguard all Documents and Property and
shall surrender to the Company within five (5) days of any Date of Termination, or 

9

 

at
such earlier time or times as the Board or its designee may specify, all Documents and Property then in the Executive's possession or control;  provided, however, that the Executive may retain a copy of any personnel-related materials relating to
his employment with the Company, including, but not limited to, this Agreement, any compensation or benefit plan or program, or any awards or evidence of participation in such plans or programs, or
any other communications to or from the Company related to Executive's employment. During the Employment Term, the Executive shall not make, use or permit to be used any Documents or Property
otherwise than for the benefit of the Company. After the Employment Term, the Executive shall not use or permit others to use any Documents or Property. 

        (f)    Acknowledgement.    This Section 7 shall not be
construed to unreasonably restrict the Executive's ability to disclose Proprietary Information in an arbitration or court proceeding regarding the assertion of, or defense against, any claim of breach
of this Agreement. 

        8.     RESTRICTIONS
ON ACTIVITIES OF THE EXECUTIVE. 

        (a)   Acknowledgments.    The Executive and Company acknowledge and agree that the Executive is being employed
hereunder in a key capacity with the Company and that the Company is engaged in a highly competitive business and that the success of the Company's business in the marketplace depends upon its
goodwill and reputation for quality and dependability. The Executive and the Company further acknowledge and agree that (i) reasonable limits may be placed on the Executive's ability to compete
against the Company and its affiliated companies as provided herein to the extent that they protect and preserve the legitimate business interests and goodwill of the Company and/or its affiliated
companies and (ii) such limits are (A) in consideration for and as an inducement for, among other things, the Executive's ability to receive awards of Class B Common Units, and
the continued employment of the Executive by the Company, (B) the result of arms-length negotiations between the parties, (C) reasonable in scope and duration, and
(D) necessary to protect the legitimate business interests of the Company and its affiliated companies. In addition, the Executive acknowledges (1) that the business of the Company and
its affiliated companies is international in scope and without geographical limitation and (2) notwithstanding the state of incorporation or formation or principal office or location of the
Company or any of its affiliated companies, or any of their respective executives or employees (including the Executive), it is expected that the Company will have business activities and have
valuable business relationships within its industry throughout the United States and the world. The Executive acknowledges that he has carefully read this Agreement and has given careful consideration
to the restraints imposed upon the Executive by this Agreement, and is in full accord as to their necessity for the reasonable and proper protection of the Proprietary Information, whether now
existing or to be developed in the future. The Executive expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, time
period and geographical area. 

        (b)   Non-Competition Restrictions.    During the Non-Competition Period (as defined below),
the Executive will not and will not permit any of his Affiliates (as defined below) to anywhere in the Territory (as defined below) engage or participate in, directly or indirectly, alone or as
principal, agent, employee, employer, consultant, investor or partner of, or assist in the management of, or provide advisory or other services to, or own any stock or any other ownership interest in,
or make any financial investment in, any business or entity which is Competitive with the Company (as defined below); provided,  however, that the ownership
of not more than two percent (2%) of the outstanding securities of any class of securities listed on a national exchange or
inter-dealer quotation system shall not constitute a violation of this Section 8(b). For purposes of this Agreement, a business or entity shall
be considered "Competitive with the Company" as of any point in time during the Non-Competition Period if it competes with (A) the
products then marketed or sold by the Company and/or any of its affiliated companies and as such products may 

10

 

be
improved and/or modified, (B) the services then marketed, sold or provided by the Company and/or any of its affiliated companies and as such services may be improved and/or modified or
(C) the products and/or services that the Company and/or any of its affiliated companies is then actively developing, designing, marketing, producing or supplying in the future including,
without limitation, the business of providing financial products or services, including those involving or related to exchange-traded derivatives, managed futures, prime brokerage services, fixed
income securities, foreign exchange, equities, over-the-counter derivatives and asset management of structured products related to the Company's core business. For purposes of
this Agreement, the "Non-Competition Period" shall mean the period commencing on the Effective Date and ending eighteen (18) months
after the date of termination of the Executive's employment with the Company, whether such termination is pursuant to this Agreement or otherwise. For purposes of this  Section 8(b), "Affiliates" shall mean, with respect to any person, any other person who directly
or indirectly controls, is controlled by or is under common control with such person. For purposes of this Agreement, "Territory" shall mean the States
of New York and Illinois and every other State or foreign country where the Company and/or any of its affiliated companies maintains employees, owns or leases property or otherwise conducts business
during the Non-Competition Period. 

        (c)   Non-Solicitation and No-Hire Restrictions.    During the Non-Competition
Period, the Executive will not and will not permit any of his Affiliates to (i) solicit, or attempt to solicit any officer, director, consultant or executive of the Company or any of its
affiliated companies (each such individual, a "Company Affiliate") to leave his or her engagement with the Company or such affiliated company,
(ii) hire any Company Affiliate or (iii) call upon, solicit, divert or attempt to solicit or divert from the Company or any of its affiliated companies any of their customers or
suppliers or potential or prospective customers or suppliers of whom the Executive was aware were potential customers prior to or during the Employment Term in any manner that harms or interferes with
such person's relationship with the Company; provided, however, that nothing in this  Section 8(c) shall
be deemed to prohibit the Executive from calling upon or soliciting a customer or supplier of the Company or any affiliated
company during the Non-Competition Period if such action relates solely to a business which is not Competitive with the Company; provided,  further, that
nothing in this Section 8(c) shall be deemed to prohibit the Executive from
(A) soliciting or hiring any Company Affiliate if such Company Affiliate is a member of the Executive's immediate family; (B) placing advertisements in newspapers or other media of
general circulation advertising employment opportunities; and (C) hiring any Company Affiliate who responds to such advertisements without any prior notice thereof by the Executive or any of
his Affiliates; provided that such Company Affiliate was not otherwise solicited by the Executive or any of his Affiliates in violation of this Agreement. 

        (d)   Non-Disparagement Restrictions.    Each of the Executive and the Company covenants and agrees that
during the Non-Competition Period, such party will not, directly or indirectly, either in writing or by any other medium, make any disparaging, derogatory or negative statement, comment or
remark about the other party or any of its affiliated companies, or Thomas H. Lee Partners or any of its affiliates, or any of their respective officers, directors, employees, affiliates,
subsidiaries, successors and assigns, as the case may be; provided, however, that either party may make
such statements, comments or remarks as are necessary to comply with law. 

        (e)   The Executive's Skills and Abilities.    THE EXECUTIVE REPRESENTS AND WARRANTS THAT THE KNOWLEDGE, SKILLS AND
ABILITIES HE POSSESSES AT THE TIME OF COMMENCEMENT OF EMPLOYMENT HEREUNDER ARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION OF HIS EMPLOYMENT HEREUNDER, TO EARN A LIVELIHOOD SATISFACTORY TO
HIMSELF WITHOUT VIOLATING ANY PROVISION OF SECTION 7 OR SECTION 8 HEREOF, FOR EXAMPLE, BY
USING SUCH 

11

 

KNOWLEDGE,
SKILLS AND ABILITIES, OR SOME OF THEM, IN THE SERVICE OF A BUSINESS THAT IS NOT COMPETITIVE WITH THE COMPANY. 

        (f)    The
Executive will not circumvent the purpose of any restriction contained in this Section 8 by engaging in
business outside the Territory through remote means such as telephone, correspondence or computerized communication. 

        9.     REPRESENTATIONS
AND WARRANTIES. 

        (a)   The
Company represents and warrants to the Executive that the execution, delivery, and performance by the Company of this Agreement have been duly authorized by all
necessary limited liability company action of the Company and do not and will not conflict with or result in a violation of any provision of, or constitute a default under, any material contract,
agreement, instrument, or obligation to which the Company is a party or by which it is bound. 

        (b)   The
Executive represents and warrants to the Company that the execution, delivery, and performance by the Executive of this Agreement do not and will not conflict with
or result in a violation of any provision of, or constitute a default under, any material contract, agreement, instrument, or obligation to which the Executive is a party or by which the Executive is
bound. 

        10.   INDEMNIFICATION;
DIRECTORS AND OFFICERS INSURANCE.    The Company agrees that in connection with the Executive's service to the Company pursuant hereto, the
Executive shall be entitled to the benefit of any indemnification provisions in the Company's Limited Liability Company Agreement and/or any of its affiliated companies and any director and officer
liability insurance coverage carried by the Company and/or any of its affiliated companies, if any. 

        11.   INJUNCTIVE
RELIEF.    In recognition of the fact that a breach by the Executive of any of the provisions of  Section 7 or Section 8
hereof will cause irreparable damage to the Company for which
monetary damages alone will not constitute an adequate remedy, the Company shall be entitled as a matter of right (without being required to prove damages or furnish any bond or other security) to
obtain a restraining order, an injunction, an order of specific performance, or other equitable or extraordinary relief from any court of competent jurisdiction restraining any further violation of
such provisions by the Executive or requiring the Executive to perform the Executive's obligations hereunder. Such right to equitable or extraordinary relief shall not be exclusive but shall be in
addition to all other rights and remedies to which the Company may be entitled at law or in equity, including without limitation the right to recover monetary damages for the breach by the Executive
of any of the provisions of this Agreement. 

        12.   GOVERNING
LAW.    This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of New
York. 

12

   
        13.   NOTICES.    All notices, requests and demands to or upon the parties hereto to be effective shall be in writing, by facsimile, by overnight courier or by
registered or certified mail, postage prepaid and return receipt requested, and shall be deemed to have been duly given or made upon: (a) delivery by hand, (b) one business day after
being sent by nationally recognized overnight courier; or (c) in the case of transmission by facsimile, when confirmation of receipt is obtained. Such communications shall be addressed and
directed to the parties as follows (or to such other address as either party shall designate by giving like notice of such change to the other party): 

        (i)    if
to the Company: 

Refco
Group Ltd., LLC

One World Financial Center

200 Liberty Street

New York, NY 10281

Attention: Board of Managers 

with
a copy (which shall not constitute notice to the Company) to: 

Weil,
Gotshal & Manges LLP

100 Federal Street

Boston, MA 02110

Attention: James Westra 

        (ii)   if
to the Executive: 

with
a copy (which shall not constitute notice to the Executive) to: 

or
to such other address as the party to whom notice is given may have previously furnished to the other in writing in the manner set forth above. 

        14.   BINDING
EFFECT; NO THIRD PARTY BENEFIT. 

        (a)   This
Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive. This Agreement shall inure to
the benefit of and shall be enforceable by the Executive and the Executive's legal representatives. 

        (b)   This
Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 

        (c)   The
Company shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all the business
and/or assets of the Company, by agreement in writing, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it
if no such succession or assignment had taken place. As used in this Agreement, the "Company" shall mean the Company as hereinabove defined and any successor or assign to its business and/or assets as
aforesaid which executes and delivers this Agreement provided for in this Section 14(c) or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. 

13

 

        (d)   Nothing
in this Agreement, express or implied, is intended to or shall confer upon any person other than the parties hereto, and their respective heirs, legal
representatives, successors, and permitted
assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement. 

        15.   MISCELLANEOUS.

        (a)   Amendment.    This Agreement may not be modified or amended in any respect except by an instrument in writing
signed by each of the Company and the Executive. No person, other than pursuant to a resolution of the Board or a committee thereof, shall have authority on behalf of the Company to agree to modify,
amend, or waive any provision of this Agreement or anything in reference thereto. 

        (b)   Waiver.    Any term or condition of this Agreement may be waived at any time by the party hereto which is
entitled to have the benefit thereof, but such waiver shall only be effective if evidenced by a writing signed by such party, and a waiver on one occasion shall not be deemed to be a waiver of the
same or any other type of breach on a future occasion. No failure or delay by a party hereto in exercising any right or power hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right or power. 

        (c)   Withholding Taxes.    The Company may withhold from any amounts payable under this Agreement such federal,
state, local, or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 

        (d)   Nonalienation of Benefits.    The Executive shall not have any right to pledge, hypothecate, anticipate, or in
any way create a lien upon any payments or other benefits provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or pursuant to the laws of descent and distribution. 

        (e)   Attorneys' Fees.    The Executive and the Company agree that in any court, arbitration or other dispute
resolution proceedings arising out of this Agreement, the prevailing party shall be entitled to its or his reasonable attorneys' fees and costs incurred by it or him in connection with resolution of
the dispute in question in addition to any other relief granted thereby. 

        (f)    Severability.    The parties agree that each provision herein shall be treated as a separate and independent
clause, and the unenforceability of any one clause shall in no way impair the enforceability of any other clauses of this Agreement. If any one or more provisions of this Agreement is held to be
invalid or unenforceable for any reason, including due to being overbroad in scope activity, subject or otherwise: (i) this Agreement shall be considered divisible; (ii) such provision
shall be deemed inoperative to the extent it is deemed invalid or unenforceable; and (iii) in all other respects this
Agreement shall remain full force and effect; provided, however, that if any such provision maybe made
valid or enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be valid and/or enforceable to the maximum extent permitted by applicable law. 

        (g)   Entire Agreement.    All of (i) this Agreement, (ii) the Company's Limited Liability Company
Agreement, (iii) that certain Securityholders' Agreement, dated as of the Effective Date, by and among the Company and certain of its securityholders, as amended, modified or supplemented from
time to time, and (iv) that certain Restricted Unit Agreement, to be dated as of the Effective Date and executed by the Executive and the Company in connection with an award of any
Class B Units to the Executive, constitute the entire agreement and understanding of the parties hereto concerning the Executive's employment with the Company and from and after the Effective
Date, this Agreement shall supersede any other prior negotiations, discussions, 

14

 

writings,
agreements or understandings, both written and oral, between the parties with respect to such subject matter. 

        (h)   Captions.    The captions herein are inserted for convenience of reference only, do not constitute a part of
this Agreement, and shall not affect in any manner the meaning or interpretation of this Agreement. 

        (i)    References.    All references in this Agreement to Sections, subsections and other subdivisions refer to the
Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. The words "this Agreement," "herein," "hereof'," "hereunder," and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly so limited. Whenever the words "include," "includes," and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation." Words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. 

        IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer, and the Executive has executed this Agreement, as of the date first
above set forth. 

	EXECUTIVE	 	REFCO GROUP LTD., LLC
	
 /s/  GERALD M. SHERER      
 Gerald M. Sherer	
 	

By:	

/s/  PHILLIP BENNETT      
 Name: Phillip Bennett

Title: President and CEO

15

QuickLinks

Exhibit 10.25

EXECUTIVE EMPLOYMENT AND NON-COMPETITION AGREEMENT BY AND BETWEEN REFCO GROUP LTD., LLC AND GERALD M. SHERER DECEMBER 6, 2004QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.26    
    

ESCROW AGREEMENT  

        THIS
ESCROW AGREEMENT (as the same may be amended or modified from time to time and including any and all written instructions given to the "Escrow
Agent" (hereinafter defined) pursuant hereto, this "Escrow Agreement") is made and entered into as of August 5, 2004 by and
among New Refco Group Ltd., LLC, a Delaware limited liability company (the "Company"), Refco Group Holdings, Inc., a Delaware corporation
("RGHI"), and THL Refco Acquisition Partners ("THL", and together with the Company and RGHI, sometimes
referred to herein collectively as the "Other Parties"), and HSBC Bank USA, National Association, a national banking corporation in New York City, New
York County, New York (the "Bank"). 

W I T N E S S E T H:  

        WHEREAS, pursuant to that certain Equity Purchase and Merger Agreement (the "Purchase
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, among THL, RGHI and the
other parties thereto, THL has agreed to acquire from RGHI, and RGHI has agreed to sell to THL, certain membership interests of Refco Group Ltd., LLC, which interests are thereafter being contributed
by THL to the Company in exchange for membership interests of the Company; 

        WHEREAS, pursuant to Section 2.3 of the Purchase Agreement, the Company shall deliver cash
equal to the Post Closing Earn-Out Escrow Amount (as defined in the Purchase Agreement) to the Escrow Agent at the closing of the transactions contemplated by the Purchase Agreement; 

        WHEREAS, it is a condition precedent to the closing of the transactions contemplated by the Purchase Agreement that the Company, THL, RGHI
and Bank execute and deliver this Escrow Agreement; 

        WHEREAS, unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Purchase
Agreement; and 

        NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained herein, the parties hereto hereby agree as
follows: 

        1.    Appointment of the Escrow Agent.    Each of the Company, THL and RGHI hereby appoints the Bank as the escrow
agent under this Escrow Agreement (the Bank in such capacity, the "Escrow Agent"), and the Escrow Agent hereby accepts such appointment. 

        2.    Funds.    In accordance with the terms of the Purchase Agreement, the Company shall deliver to the Escrow Agent
$36,370,751 constituting the Post Closing Earn-Out Escrow Amount (the "Funds") to be held by the Escrow Agent in a segregated escrow account in
accordance with the terms of the Purchase Agreement and the terms of 

        3.    this Escrow Agreement.    The Funds shall be allocated into six (6) separate accounts in the amounts set forth
on Schedule I hereto (each an "Earn-Out Account"). Subject to and in accordance with the terms and
conditions of this Escrow Agreement, the Escrow Agent agrees that it shall receive, hold in escrow, invest and reinvest, release and distribute the Funds. In no event shall the Escrow Agent receive,
hold in escrow, invest and reinvest, release or distribute the Funds except in accordance with this Escrow Agreement. 

        4.    Investment of the Funds.    Pending disbursement of the Funds in accordance with the terms of the Purchase
Agreement and this Escrow Agreement, the Escrow Agent shall invest and reinvest the Funds in Permitted Investments (as defined below). It is expressly agreed and understood by the parties hereto that
the Escrow Agent shall not in any way whatsoever be liable for losses on any investments, including, but not limited to, losses from market risks due to premature liquidation or resulting from other
actions taken pursuant to and consistent with this Escrow Agreement, except to the extent that 

 

such
losses are a result of the Escrow Agent's fraud, willful misconduct, gross negligence or breach of this Escrow Agreement. For purposes of this Escrow Agreement, "Permitted
Investments" shall mean (i) direct obligations of the U.S. government, obligations guaranteed by the U.S. government and money market funds that invest solely in direct
obligations of the U.S. government or in obligations guaranteed by the U.S. government or (ii) any other investment approved in writing by each of the Other Parties. Receipt, investment and
reinvestment of the Funds shall be confirmed by the Escrow Agent as soon as practicable following each such transaction by account statement to the Other Parties. Unless directed otherwise, the Escrow
Agent may invest the undisbursed balance of the Funds in the HSBC Investor Money Market Fund. 

        5.    Disbursement of Funds.    (a) Within one Business Day following the delivery to the Escrow Agent of written
instructions signed by the Chief Executive Officer of the Company, in the form attached hereto as Exhibit A, specifying that all or a portion of the Funds shall be paid to
the Company from the Earn-Out Account designated in the written instructions, the Escrow Agent shall distribute the applicable Funds as specified in such instructions so long as there are sufficient
funds in the Earn-Out Account to make such payment. The Company shall simultaneously deliver a copy of the written instructions delivered to the Escrow Agent to THL and RGHI via the same manner of
notice as used for delivery to the Escrow Agent. Within one Business Day of receipt of the applicable Funds from the Escrow Agent, the Company shall disburse such Funds to the entity named by the
Earn-Out Account. For purposes of this Escrow Agreement, the term "Business Day" shall mean any day of the year, excluding Saturday, Sunday and any
other day on which national banks are required or authorized to close in New York City, New York. 

        (b)   In
the event the amount to be distributed in accordance with the written instructions exceeds the amount in the specified Earn-Out Account, the Escrow Agent shall
promptly notify RGHI of the amount of the deficiency and RGHI shall be liable for such deficiency in accordance with Section 2.4 of the Purchase Agreement. 

        (c)   In
the event the amount of any Earn-Out Account exceeds the amount of all obligations with respect to such Earn-Out Account for which Funds were distributed in
accordance with one or more written instructions in accordance with Section 4(a), upon receipt of joint written instructions signed by the Chief Executive Officer of the
Company, THL and RGHI, the Escrow Agent shall promptly deliver the full amount of such excess to RGHI. 

        (d)   Within
one Business Day following its receipt of a final, non-appealable written judgment of a court of competent jurisdiction providing for the release of Funds, the
Escrow Agent shall distribute such Funds as specified in such written judgment. 

        6.    Amounts Distributed or Earned.    All amounts earned with respect to the Funds (whether investment income or
otherwise) shall not become part of the Funds and shall be distributed to RGHI within five (5) Business Days after the end of any month in which such amounts are earned. 

        7.    Tax Matters.    The Company, THL and RGHI agree that RGHI shall include any amounts earned with respect to the
Funds in its gross income for federal, state and local income tax purposes and that RGHI shall be individually liable for payment of all taxes payable with respect to such earnings and all related tax
reporting duties. RGHI shall provide the Escrow Agent with its taxpayer identification number documented on the signature page hereto upon execution of this Escrow Agreement. Failure so to provide
such forms may prevent or delay disbursements from the Funds and may also result in the assessment of a penalty and the Escrow Agent's being required to withhold tax on any interest or other income
earned on the Funds. Any payments of income shall be subject to applicable withholding regulations then in force in the United States or any other jurisdiction, as applicable. 

2

 

        8.    Scope of Undertaking.    The Escrow Agent's duties and responsibilities in connection with this Escrow Agreement
shall be purely ministerial and shall be limited to those expressly set forth in this Escrow Agreement. The Escrow Agent is not a principal, participant or beneficiary in any transaction underlying
this Escrow Agreement and shall have no duty to inquire beyond the terms and provisions hereof. The Escrow Agent shall have no responsibility or obligation of any kind in connection with this Escrow
Agreement or the Funds and shall not be required to deliver the Funds or any part thereof or take any action with respect to any matters that might arise in connection therewith, other than to
receive, hold, invest, reinvest and deliver the Funds as herein provided. Without limiting the generality of the foregoing, it is hereby expressly agreed and stipulated by the parties hereto that the
Escrow Agent shall not be required to exercise any discretion hereunder and shall have no investment or management responsibility except as set forth in Section 3 and,
accordingly, shall have no duty to, or liability for its failure to, provide investment recommendations or investment advice to the Other Parties or any of them. The Escrow Agent shall not be liable
for any error in judgment, any act or omission, any mistake of law or fact, or for anything it may do or refrain from doing in connection herewith, except for, subject to Section
8 hereof, its own fraud, willful misconduct, gross negligence or breach of this Escrow Agreement. It is the intention of the parties hereto that the Escrow Agent shall never be required
to use, advance or risk its own funds or otherwise incur financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. 

        (a)    Reliance; Liability.    The Escrow Agent may rely on, and shall not be liable for acting or refraining from
acting in accordance with, any written notice, instruction or request or other paper furnished to it hereunder or pursuant hereto and reasonably believed by it in good faith to have been signed or
presented by the proper party or parties. The Escrow Agent shall be responsible for holding, investing, reinvesting and disbursing the Funds pursuant to this Escrow Agreement;  provided, however, that in
no event shall the Escrow Agent be liable for any lost profits, lost savings or other exemplary, consequential or incidental
damages except to the extent that such losses or damages are a result of the Escrow Agent's fraud, willful misconduct, gross negligence or breach of this Escrow Agreement and  provided, further, that the
Escrow Agent shall have no liability for any loss arising from any cause beyond its control, including, but not limited to,
the following: (a) the act, failure or neglect of any Other Party, (b) the act, failure or neglect of any agent or correspondent or any other person or entity selected by the Escrow Agent (unless such
selection involved fraud, gross negligence or willful misconduct); (c) any delay, error, omission or default of any mail, courier, telegraph, cable or wireless agency or operator; or (d) the acts or
edicts of any government or governmental agency or other group or entity exercising governmental powers. The Escrow Agent is not responsible or liable in any manner
whatsoever for the transaction or transactions requiring or underlying the execution of this Escrow Agreement or for the identity or authority of any person (other than the Escrow Agent) executing
this Escrow Agreement or any part hereof or depositing the Funds. The parties hereto shall deliver to the Escrow Agent a list of authorized signatories, as set forth in the attached Schedule A hereto,
with respect to any notice, certificate, instrument, demand, request, direction, instruction, waiver, receipt, consent or other document or communication required or permitted to be furnished to the
Escrow Agent hereunder, and the Escrow Agent shall be entitled to rely on such list with respect to any party until a new list is furnished by such party to the Escrow Agent. The Escrow Agent shall be
fully protected in acting on and relying upon any written notice direction, request, waiver, consent, receipt or other paper or document which the Escrow Agent in good faith believes to have been
signed and presented by the proper party or parties. 

        9.    Right of Interpleader.    Should any controversy arise involving the parties hereto or any of them or any other
person, firm or entity with respect to this Escrow Agreement or the Funds, or should a substitute escrow agent fail to be designated as provided in Section 16 hereof, or
if the Escrow Agent should have reasonable doubt as to what action to take, the Escrow Agent shall have the right, but not the obligation, to institute a petition for interpleader in a court of
competent jurisdiction to determine the rights of the parties hereto and pay into such court all Funds held by the Escrow Agent for holding 

3

 

and
disbursement. Should a petition for interpleader be instituted, or should the Escrow Agent be threatened with litigation or become involved in litigation or binding arbitration in any manner
whatsoever in connection with this Escrow Agreement or the Funds, the Company and RGHI hereby jointly and severally agree to reimburse the Escrow Agent for its reasonable and documented attorneys'
fees and any and all other reasonable and documented out-of-pocket expenses, losses, costs and damages incurred by the Escrow Agent in connection with or resulting from such threatened or actual
litigation prior to any disbursement hereunder (other than any such threatened or actual litigation that results from a breach by the Escrow Agent of this Escrow Agreement or the gross negligence,
willful misconduct or fraud of the Escrow Agent). Without limiting the joint and several nature of their obligations pursuant to the preceding sentence, as between themselves with respect to their
obligations pursuant to the preceding sentence, the Company and RGHI agree that they shall each share one-half of the fees and expenses of the Escrow Agent. 

        10.    Indemnification.    The Company and RGHI (collectively, the "Indemnifying
Parties") hereby jointly and severally agree to indemnify the Escrow Agent, its officers, directors, partners, employees and agents (each hereinafter referred to as an
"Indemnified Party") against, and hold each Indemnified Party harmless from, any and all reasonable and documented out-of-pocket expenses, including,
without limitation, reasonable attorneys' fees and court costs, losses, costs, damages and claims, including, but not limited to, costs of investigation, litigation, tax liability (other than taxes
payable with respect to fees paid or other income hereunder) suffered or incurred by any Indemnified Party in connection with or arising from or out of this Escrow Agreement, except such acts or
omissions as may result from the fraud, willful misconduct or gross negligence of, or breach of this Escrow Agreement by, the Escrow Agent or such Indemnified Party. If any action or proceeding is
brought against any Indemnified Party with respect to which indemnity may be sought from the Indemnifying Parties pursuant to this section, or an Indemnified Party receives notice from any potential
claimant, such Indemnified Party shall, as promptly as practicable after receiving notice thereof, give written notice to the Indemnifying Parties of the commencement of such action or proceeding or
of the existence of any such claim (any such action, proceeding or notice hereinafter referred to as a "Claim") and furnish the Indemnifying Parties
with copies of any summons or other legal process received by such Indemnified Party and other documents and information in the possession of such Indemnified Party as to the nature and basis of the
claim; provided, that no failure to give or delay in giving such notice or such documents and information shall relieve the Indemnifying Parties from
any of their indemnification obligations hereunder except to the extent such obligations could have been reduced or avoided in the absence of such failure or delay. In case any such Claim shall be
brought against any Indemnified Party, the Indemnifying Parties will be entitled to participate in the defense of such Claim, and, after written notice from the Indemnifying Parties to such
Indemnified Party, to jointly assume the defense of such Claim with a single counsel mutually agreed upon and appointed by the Indemnifying Parties and which counsel is reasonably acceptable to such
Indemnified Party at the Indemnifying Parties' joint expense or, alternatively, if only one, but not both, of the Indemnifying Parties elects to assume the defense of such Claim, then such party will,
after written notice to the non-electing Indemnifying Party and such Indemnified Party, be entitled to defend such Claim separately with the cost of such defense to be shared equally by the
Indemnifying Parties (in each case the Indemnifying Parties shall not thereafter be responsible for the fees and disbursements of any separate counsel retained by such Indemnified Party in connection
with such action or proceeding, except as provided below in this section). For the avoidance of doubt, if the Indemnifying Parties shall jointly assume the defense of any Claim against any Indemnified
Party, such defense shall be jointly controlled by the Indemnifying Parties and all decisions relating thereto shall be mutually agreed upon by the Indemnifying Parties. If only one of the
Indemnifying Parties shall elect to assume the defense of any Claim separately, such party shall obtain the prior written consent of (i) the non-electing Indemnifying Party before entering into any
settlement of such Claim if the settlement imposes any cost, expense or obligation on the non-electing Indemnifying Party or does not expressly and unconditionally release the non-electing
Indemnifying Party from all liabilities and obligations with 

4

 

respect
to such Claim (other than sharing equally in the cost thereof as set forth above) and (ii) the Indemnified Party if the settlement imposes any cost, expense or obligation on the Indemnified
Party or does not expressly and unconditionally release the Indemnified Party from all liabilities and obligations with respect to such Claim. Notwithstanding any election by the Indemnifying Parties
to assume the defense of any such Claim, such Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such Claim at the Indemnified Party's expense;  provided, however,
 that such Indemnified Party shall not have the right to settle any such Claim without the prior written consent of the Indemnifying
Parties. Notwithstanding anything to the contrary contained in this Section 10, the Indemnifying Parties agree, as between themselves, to share in the aggregate amount of
any indemnifiable costs or expenses for which any Indemnified Party may be liable in such equitable
proportion as is appropriate to reflect their respective relative fault in connection with the acts or omissions which resulted in such costs or expenses. The relative fault of the Company and RGHI
shall be determined by reference to whether the acts or omissions at issue were those of the Company and RGHI, respectively. If any amount paid by the Company or RGHI pursuant to this
Section 10 is in excess of the amount allocable to it in accordance with the provisions of this section, the party that paid such excess amount shall be entitled to
reimbursement of such excess amount (plus all reasonable attorneys' fees and documented expenses incurred in connection with enforcing this provision) from the other. 

        11.    Compensation and Reimbursement of Expenses.    Upon execution of this Escrow Agreement, the Company shall pay
the Escrow Agent for its services hereunder in accordance with the Escrow Agent's fee schedule as agreed to by the parties separately in writing. In addition, the Company shall pay all reasonable and
documented out-of-pocket expenses incurred by the Escrow Agent in connection with the performance of its duties hereunder and otherwise in connection with the operation and administration of this
Escrow Agreement, including, without limitation, attorneys' fees, brokerage costs and related expenses incurred by the Escrow Agent, in each case to the extent reasonably necessary (collectively,
"Other Expenses"). The Company shall be liable to the Escrow Agent for the payment of all Other Expenses. Notwithstanding the foregoing, the Company
shall not be responsible for any Other Expenses to the extent (i) such expenses arise out of, relate to or result from the Escrow Agent's breach of this Escrow Agreement or the gross negligence,
willful misconduct or fraud of the Escrow Agent or (ii) such expenses arise pursuant to Sections 9 or 10 above (in which case such expenses
will be shared by RGHI and the Company as provided for in such sections). 

        12.    Funds Transfer.    All disbursements of the Funds shall be made by wire transfer of immediately available U.S.
Federal Funds pursuant to the following instructions or as subsequently provided: 

	

 	
 	

If to the Company:
	 	 	 
	Bank:	 	Harris Trust and Savings Bank - Chicago
	ABA#:	 	071 000 288
	AC#:	 	390-4406
	Ref:	 	Refco Capital, LLC, for further credit to Refco Group Ltd., LLC,

for further credit to New Refco Group Ltd., LLC
	 	 	 
	 	 	If to RGHI:
	 	 	 
	Bank:	 	JP Morgan
	ABA#:	 	021000021
	AC#:	 	066636752
	Ref:	 	Refco Group Holdings, Inc.

5

 

        13.    Notices.    Any notice or other communication required or permitted to be given under
this Escrow Agreement by any party hereto to any other party hereto shall be considered as properly given if in writing and (a) delivered against receipt therefor, (b) mailed by registered or
certified mail, return receipt requested and postage prepaid or (c) sent by facsimile machine, in each case to the address or facsimile number, as the case may be, set forth below: 

	

 	
 	

If to the Escrow Agent:	
 	

 
	 	 	 	 	 
	 	 	HSBC Bank USA, National Association

452 Fifth Avenue

New York, NY 10018

Attn: Corporate Trust

Facsimile No.: 212.525.1300	 	 
	 	 	 	 	 
	 	 	If to the Company:	 	 
	 	 	 	 	 
	 	 	New Refco Group Ltd., LLC

One World Financial Center

200 Liberty Street

Attn: Chief Executive Officer

Facsimile No.: 212.693.7686	 	 
	 	 	 	 	 
	 	 	with a copy to:	 	 
	 	 	 	 	 
	 	 	Weil, Gotshal & Manges LLP

101 Federal Street

Boston, MA 02110

Attn: James Westra

Facsimile No.: 617.772.8333	 	 
	 	 	 	 	 
	 	 	and	 	 
	 	 	 	 	 
	 	 	Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, TX 75201

Attn: R. Jay Tabor

Facsimile No.: 214.746.7777	 	 
	 	 	 	 	 
	 	 	If to RGHI:	 	 
	 	 	 	 	 
	 	 	c/o Refco Group Ltd., LLC

One World Financial Center

200 Liberty Street

New York, NY 10281

Attn: Phillip R. Bennett

Facsimile No.: 212.693.7686	 	 
	 	 	 	 	 
	 	 	with a copy to:	 	 
	 	 	 	 	 
	 	 	 	 	 

6

 

	 	 	Mayer, Brown, Rowe & Maw LLP

1675 Broadway

New York, NY 10019

Attn: Joseph P. Collins

Facsimile No.: 212.262.1910	 	 
	 	 	 	 	 
	 	 	If to THL:	 	 
	 	 	 	 	 
	 	 	Thomas H. Lee Partners, L.P.

100 Federal Street

Boston, MA 02110

Attn: Scott Schoen

          Scott Jaeckel

          George Taylor

Facsimile No.: 617.227-3514	 	 
	 	 	 	 	 
	 	 	with a copy to:	 	 
	 	 	 	 	 
	 	 	Weil, Gotshal & Manges LLP

100 Federal Street

Boston, MA 02110

Attn: James Westra

Facsimile No.: 617.772.8333	 	 
	 	 	 	 	 
	 	 	and	 	 
	 	 	 	 	 
	 	 	Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, TX 75201

Attn: R. Jay Tabor

Facsimile No.: 214.746.7777	 	 

Delivery of any communication given in accordance herewith shall be effective only upon actual receipt or when receipt is refused if personally delivered, on the second
business day after it was sent if sent by certified mail, or upon receipt by the sender of a facsimile transmission report or other appropriate evidence that the facsimile has been transmitted to the
addressee during normal business hours if sent by facsimile; provided, however, that notwithstanding the
foregoing, in the case of the Escrow Agent, any notice, request or instruction shall not be deemed to be received by the Escrow Agent unless and until actually received (at the address provided
herein). Any party to this Escrow Agreement may change the address to which communications hereunder are to be directed by giving written notice to the other party or parties hereto in the manner
provided in this section. All signatures of the parties to this Escrow Agreement may be transmitted by facsimile, and such facsimile will, for all purposes, be deemed to be the original signature of
such party whose signature it reproduces, and will be binding upon such party. 

        14.    Consultation with Legal Counsel.    The Escrow Agent may consult with its counsel or other counsel satisfactory
to it concerning any question relating to its duties or responsibilities hereunder or otherwise in connection herewith and shall not be liable for any action taken, suffered or omitted by it in good
faith upon the advice of such counsel. 

        15.    Choice of Laws; Cumulative Rights; Jurisdiction.    All of the Escrow Agent's rights hereunder are cumulative
of any other rights it may have at law, in equity or otherwise. This Escrow Agreement 

7

 

shall
be construed and enforced in accordance with and governed by the laws of the State of New York. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN NEW YORK COUNTY OR THE COMMERCIAL DIVISION CIVIL BRANCH OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND ANY APPELLATE COURT FROM ANY THEREOF, FOR THE RESOLUTION OF ANY SUCH DISPUTE, CONTROVERSY, CONFLICT, LITIGATION OR ACTION. 

        16.    Resignation.    The Escrow Agent may resign hereunder upon thirty (30) days prior notice to the Other Parties.
Upon the effective date of such resignation, the Escrow Agent shall deliver the Funds to any
substitute escrow agent designated by the Other Parties in writing. If the Other Parties fail to designate a substitute escrow agent within thirty (30) days after the giving of such notice, the Escrow
Agent may institute a petition for interpleader. The Escrow Agent's sole responsibility after such 30-day notice period expires shall be to hold the Funds (without any obligation to reinvest the same)
and to deliver the same to a designated substitute escrow agent, if any, or in accordance with the directions of a final order or judgment of a court of competent jurisdiction at which time of
delivery the Escrow Agent's obligations hereunder shall cease and terminate, except that such resignation shall not relieve the Escrow Agent from any liability, losses, costs, damages or claims that
result from a breach by the Escrow Agent of this Escrow Agreement or the gross negligence, willful misconduct or fraud of the Escrow Agent. The Escrow Agent or successor agent shall continue to act as
escrow agent hereunder until a successor is appointed and qualified to act as the escrow agent. 

        17.    Termination by the Company, THL and RGHI.    By mutual agreement, the Company, THL and RGHI shall have the
right at any time upon not less than ten (10) days prior written notice to the Escrow Agent to terminate their appointment of the Escrow Agent as the escrow agent, or any successor escrow agent, as
escrow agent hereunder. The Escrow Agent or successor agent shall continue to act as escrow agent hereunder until a successor is appointed and qualified to act as the escrow agent. 

        18.    Assignment.    None of the Company, RGHI, THL or the Escrow Agent shall have the right to assign this Escrow
Agreement or any of their respective rights or obligations hereunder (by operation of law or otherwise) without the prior written consent of the non-assigning Other Parties and any attempted
assignment without the required consent of such other party shall be void. 

        19.    Severability.    If one or more of the provisions hereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect under applicable law, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and this Escrow Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein, and the remaining provisions hereof shall be given full force and effect. 

        20.    Termination.    This Escrow Agreement shall terminate upon the disbursement, in accordance with
Section 4 hereof, of the Funds in full; provided, however, that in the event all fees, expenses, costs and other amounts
required to be paid to the Escrow Agent hereunder are not fully and finally paid prior to termination, the provisions of Sections 9 and 10
hereof shall survive the termination hereof; provided, further, such termination shall not relieve the Escrow Agent from any liability, losses, costs,
damages or claims that result from a material breach by the Escrow Agent of this Escrow Agreement or the gross negligence, willful misconduct or fraud of the Escrow Agent. 

        21.    Waiver of Offset Rights.    The Escrow Agent hereby waives any and all rights to offset that it may have
against the Funds including, without limitation, claims arising as a result of any claims, amounts, liabilities, costs, expenses, damages, or other losses that Escrow Agent may be otherwise entitled
to collect from any party to this Escrow Agreement. 

8

 

        22.    General.    The section headings contained in this Escrow Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Escrow Agreement. This Escrow Agreement and any affidavit, certificate, instrument, agreement or other document required to be provided
hereunder may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute but one and the same instrument. Unless the context
shall otherwise require, the singular shall include the plural and vice-versa, and each pronoun in any gender shall include all other genders. The terms and provisions of this Escrow Agreement
constitute the entire agreement among the parties hereto in respect of the subject matter hereof, and neither the Other Parties nor the Escrow Agent has relied on any representations or agreements of
the other, except as specifically set forth in this Escrow Agreement. This Escrow Agreement or any provision hereof may be amended, modified, waived or terminated only by written instrument duly
signed by the parties hereto. This Escrow Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, trustees, receivers and permitted assigns.
This Escrow Agreement is for the sole and exclusive benefit of the Other Parties and the Escrow Agent, and nothing in this Escrow Agreement, express or implied, is intended to confer or shall be
construed as conferring upon any other person or entity any rights, remedies or any other type or types of benefits. If performance by any party to this Escrow Agreement is delayed or prevented by any
act of God, terrorism, fire, flood or other casualty, strike, national emergency or other cause beyond the reasonable control of a party, then the period of such party's performance of the applicable
obligation shall be automatically extended for the same amount of time that such party is so delayed or hindered. The affected party shall use its best efforts to remove the cause of delay and shall
notify the other parties to this Escrow Agreement in writing of any such delay or failure promptly after the commencement of the event relied upon for its delay or failure to comply with its
obligations. 

9

   
        IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement to be effective as of the date first above written. 

        Note:
The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding 

10

 

        Tax Certification: Taxpayer ID#: 36-3366699 

NOTE:  The following certification shall be used by and for a U.S. resident only. Non-residents must use and provide Form W8-BEN  

Customer
is a (check one): 

	         Corporation	 	         Municipality	 	         Partnership	 	         Non-profit or Charitable Org
	         Individual	 	         REMIC	 	         Trust	 	         Other
                        

Under
the penalties of perjury, the undersigned certifies that: 

	(1)
	the
entity is organized under the laws of the United States;

	(2)
	the
number shown above is its correct Taxpayer Identification Number (or it is waiting for a number to be issued to it); and

	(3)
	it
is not subject to backup withholding because: (a) it is exempt from backup withholding or (b) it has not been notified by the Internal Revenue Service (IRS) that it is subject to
backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified it that it is no longer subject to backup withholding. 

(If
the entity is subject to backup withholding, cross out the words after the (3) above.) 

Investors
who do not supply a tax identification number will be subject to backup withholding in accordance with IRS regulations. 

	 	 	REFCO GROUP HOLDINGS, INC.
	

 	
 	

By:	

/s/  PHILLIP BENNETT      

	 	 	Name:	Phillip Bennett

	 	 	Title:	President

	 	 	 	"RGHI"

11

 

	 	 	NEW REFCO GROUP LTD., LLC
	

 	
 	
By:	

/s/  SCOTT SCHOEN      

	 	 	Name:	Scott Schoen

	 	 	Title:	President

	 	 	 	"COMPANY"
	

 	
 	
THL REFCO ACQUISITION PARTNERS
	 	 	By: THL Refco GP LLC, a general partner
	

 	
 	
By:	

/s/  SCOTT SCHOEN      

	 	 	Name:	Scott Schoen

	 	 	Title:	President

	 	 	 	"THL"
	 	 	HSBC BANK USA, NATIONAL

ASSOCIATION, as Escrow Agent
	
 	
 	

By:	

/s/  FRANK J. GODINO      

	 	 	Name:	Frank J. Godino

	 	 	Title:	Escrow Agent

	 	 	 	"ESCROW AGENT"

12

  

 
 

Exhibit A    
    

Disbursement
Notice 

        The
undersigned hereby gives notice (this "Notice") pursuant to Section 4 of that certain
Escrow Agreement (the "Agreement"), dated as of August 5, 2004, by and among HSBC Bank USA, National Association, as escrow agent (the
"Escrow Agent"), New Refco Group Ltd., LLC (the "Company"), Refco Group Holdings, Inc.
("RGHI") and THL Refco Acquisition Partners ("THL"), and direct the Escrow Agent to disburse
[amount of funds] from the            Account to the Company. Capitalized terms used but not defined in this Closing Notice shall have the meanings ascribed thereto in the
Agreement. 

        IN
WITNESS WHEREOF, the undersigned has caused this Disbursement Notice to be executed and delivered on this  [            ] day of [            ],
200[            ]. 

	 	 	NEW REFCO GROUP LTD., LLC
	

 	
 	

By:	

 
	 	 	 	

	

 	
 	

Name:	

 
	 	 	 	

	

 	
 	

Title:	

 
	 	 	 	

13

  

 
 

Schedule I    
    

Earn-Out
Accounts 

	Name of Account
 
	 	Amount

	MacFutures Ltd. Account	 	$25,000,000
	Friedberg Mercantile Group Account	 	6,780,361
	Spear, Leads and Kellogg, L.P. Account	 	2,727,917
	LFG Account	 	600,000
	CFG Financial Group Inc. Account	 	906,363
	Carlton Brokerage Ltd. Account	 	356,110

14

  

 
 

Schedule II    
    

        The Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by the following on behalf of the Company. 

	 	 	 
	
	 	

	Phillip R. Bennett	 	True Signature
	 	 	 
	
	 	

	Robert C. Trosten	 	True Signature

        The
Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by the following on behalf of THL. 

	 	 	 
	
	 	

	Scott Schoen	 	True Signature
	 	 	 
	
	 	

	Scott Jaeckel	 	True Signature

        The
Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by the following on behalf of RGHI. 

	 	 	 
	
	 	

	Phillip R. Bennett	 	True Signature

15

QuickLinks

Exhibit 10.26

Exhibit A

Schedule I

Schedule II

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