Exhibit 10.1

 

INVESTMENT AGREEMENT

 

THIS INVESTMENT AGREEMENT (this “Agreement”), dated as of October 3, 2016 (the
“Effective Date”), is entered into by and between JKD Capital Partners I LTD, a
New York corporation (“Investor”), and IFMI, LLC, a Delaware limited liability
company (the “Company”).  Each of the Company and Investor may be referred to
herein as a “Party” and, together, as the “Parties.”

 

BACKGROUND:

 

WHEREAS, Investor desires to invest up to $12,000,000 into the Company in
exchange for the Investment Return Quarterly Payments (as defined below) to be
made by the Company to Investor pursuant to the terms and conditions of this
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

 

1.                                      Definitions.  For purposes of this
Agreement:

 

(a)                                 “Agreement” shall have the meaning set forth
in the Preamble;

 

(b)                                 “Company” shall have the meaning set forth
in the Preamble;

 

(c)                                  “Company Redemption” shall have the meaning
set forth in Section 6(b);

 

(d)                                 “Confidential Information” shall have the
meaning set forth in Section 11;

 

(e)                                  “Effective Date” shall have the meaning set
forth in the Preamble;

 

(f)                                   “Initial Investment Amount” shall have the
meaning set forth in Section 4;

 

(g)                                  “Investment Balance” shall mean an amount
equal to (i) the Initial Investment Amount, plus (ii) any additional investments
made by Investor into the Company following the Effective Date, plus (iii) the
Investment Return for each calendar quarter where the Investment Return was
positive for such calendar quarter, less (iv) the Investment Return for each
calendar quarter where the Investment Return was negative for such calendar
quarter, less (v) the aggregate amount of all Investment Return Quarterly
Payments made by the Company to Investor during the Term in accordance with
Section 5;

 

(h)                                 “Investment Return” shall mean, with respect
to the calendar quarter being measured, an amount equal to 50% of the difference
between (i) Revenue in Accordance with GAAP, less (ii) Team Expenses;

 

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(i)                                     “Investment Return Quarterly Payment”
shall have the meaning set forth in Section 5;

 

(j)                                    “Investor” shall have the meaning set
forth in the Preamble;

 

(k)                                 “Investor Payments” shall mean, in
connection with a Sale, the amount of any sign on bonus, up-front loan, equity
or other compensation or consideration provided to any members of senior
management of Investor by a third party purchaser in the Sale, and the full
amount of any applicable employer portion of withholding taxes that the Company
will be obligated to pay in connection with such payments.

 

(l)                                     “Investor Redemption” shall have the
meaning set forth in Section 6(a);

 

(m)                             “Jets Charges” shall mean, with respect to the
calendar quarter being measured, an amount equal to the sum of: (i) one-fourth
(1/4) of 75% of the annual license fee as set forth in the Jets License, plus
(ii) 75% of all catering charges incurred during such calendar quarter in
connection with the use of the Jets License, plus (iii) 75% of the cost of
tickets incurred during such calendar quarter in connection with the Jets
License;

 

(n)                                 “Jets License” shall mean the Shared
Suite License Agreement dated July 8, 2016 between Jets Stadium Development, LLC
and JVB;

 

(o)                                 “JVB” shall mean the Company’s wholly-owned
subsidiary, J.V.B. Financial Group, LLC;

 

(p)                                 “Net Consideration” shall have the meaning
set forth in Section 7

 

(q)                                 “Notice” shall have the meaning set forth in
Section 17;

 

(r)                                    “Party(ies)” shall have the meaning set
forth in the Preamble;

 

(s)                                   “Redemption” shall mean either a Company
Redemption or an Investor Redemption;

 

(t)                                    “Representatives” shall have the meaning
set forth in Section 11;

 

(u)                                 “Revenue in Accordance with GAAP” shall mean
an amount equal to the aggregate revenues generated directly by the activities
of the Team from any and all sources (less errors and any losses incurred in
connection with these activities) that are received by JVB during the calendar
quarter being measured, all as calculated in accordance with U.S. generally
accepted accounting principles as applied by the Company.  Only revenues
generated in accordance with the Company’s and its subsidiaries’ policies and
regulatory requirements shall be taken into account for purposes of this
definition.  For the avoidance of doubt, the Parties acknowledge that charges
for the cost of equity capital used by the Team that are deducted from revenue
for the purposes of calculating the Team’s commissions, shall not be deducted
when determining Revenue in Accordance with GAAP for this Agreement;

 

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(v)                                 “Team” shall mean Josh Zucker, Pat Moore,
Justin Dillon, Doug Gillespie and Robert Ferrari and any new employees that are
hired by the Company to join JVB’s Institutional Corporate Trading business;

 

(w)                               “Team Expenses” shall mean the amount equal to
(i) $175,000 per calendar quarter (or $700,000 annually), with such amount to be
increased by 5% on each anniversary of the Effective Date during the Term, plus
(ii) any direct expenses (including, but not limited to, salaries, bonuses,
draws, commissions, overrides, benefits, any other form of compensation,
employer portion of payroll and other taxes, marketing expenses, travel and
entertainment, professional fees, recruiting fees, legal fees, subscriptions
costs, trade ticket charges, portal and connectivity charges, clearing fees and
finance and borrow charges (including, but not limited to, Pershing), exchange
fees, Committee on Uniform Security Identification Procedures (CUSIP) fees,
Bloomberg fees and expenses, Electronic Communication Network (ECN) fees, loan
fees, tri-party fees of any kind, syndicate fees, third party broker-dealer
costs, floor brokerage costs, rent and other occupancy costs for the Long Island
office used by the Team (including, but not limited to the telephone, internet,
television services and moving expenses), Jets Charges and costs mandated by the
Financial Industry Regulatory Authority (FINRA) and/or the U.S. Securities and
Exchange Commission) that are incurred, during the calendar quarter being
measured, by or on behalf of the Company or its affiliates with respect to the
Team’s operations;

 

(x)                                 “Sale” shall have the meaning set forth in
Section 7; and

 

(y)                                 “Term” shall have the meaning set forth in
Section 2.

 

2.                                      Term.  This Agreement shall become
effective on the Effective Date and shall survive until the closing of any
Redemption (the “Term”) unless this Agreement is earlier terminated in
accordance with Section 3.  All rights and obligations whatsoever of the Parties
hereunder shall terminate upon any Redemption.

 

3.                                      Termination.

 

(a)                                 Termination.

 

(i)                                     Investor may terminate this Agreement
upon ninety (90) days’ prior written notice to the Company if each of the
following occurs: (A) the Company or its affiliates modify any of their policies
or procedures governing the operation of their businesses or change the way they
operate their business and (B) such modification or change has a material
adverse effect on the amounts payable to Investor under the terms of this
Agreement.

 

(ii)                                  Investor may terminate this Agreement upon
ninety (60) days’ prior written notice to the Company if Lester Brafman’s
employment with the Company is terminated.

 

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(iii)                               The Company may terminate this Agreement
upon ninety (60) days’ prior written notice to Investor if Jack DiMaio ceases to
control the day-to-day operations of Investor.

 

(b)                                 Effect of Termination.  Upon the
effectiveness of a termination of this Agreement in accordance with
Section 3(a), the Company shall, within thirty (30) days following such
termination, pay to Investor an amount equal to the Investment Balance, plus (or
less, if the following Investment Return amount is negative) an amount equal to
the Investment Return from the start of the then current calendar quarter
through the day prior to such termination.

 

4.                                      Initial Investment.  On the Effective
Date, Investor shall pay to the Company an amount equal to $6,000,000 (the
“Initial Investment Amount”).

 

5.                                      Payment of Investment Return.  On the
thirtieth (30th) day following each calendar quarter-end during the Term, the
Company shall pay to Investor an amount equal to the Investment Return for such
calendar quarter-end provided that such amount is positive (each an “Investment
Return Quarterly Payment”).  Each of the Company and Investor agree and
acknowledge that the Company shall have the right to fund any Investment Return
Quarterly Payment to Investor from any available sources of cash.  At the time
of each Investment Return Quarterly Payment, the Company will provide to
Investor (i) an Investment Return Statement showing the calculation of such
Investment Return and (ii) support documentation reasonably requested by
Investor in connection with its review of such Investment Return Statement.

 

6.                                      Redemption Rights.

 

(a)                                 Investor Redemption.  Any time following the
third (3rd) anniversary of the Effective Date, Investor may cause the Company to
pay to Investor (an “Investor Redemption”) an amount equal to the Investment
Balance, plus (or less, if the following Investment Return amount is negative)
an amount equal to the Investment Return from the start of the then current
calendar quarter through the day prior to the closing of the Investor
Redemption.  Notice of the Investor Redemption shall be provided by Investor to
the Company at least two (2) months prior to the closing of the Investor
Redemption and may be provided any time only after the thirty-four (34) month
anniversary of the Effective Date.  The Company shall have the right to
accelerate the closing date of the Investor Redemption to any business day of
its choice that is on or after the third (3rd) anniversary of the Effective
Date.  Following the closing of the Investor Redemption, Investor shall have no
further rights, title or interest in the Company and/or its subsidiaries or
affiliates arising out or as a result of this Agreement.

 

(b)                                 Company Redemption.  Any time following the
third (3rd) anniversary of the Effective Date, the Company may pay to Investor
(a “Company Redemption”) an amount equal to the Investment Balance, plus (or
less, if the following Investment Return amount is negative) an amount equal to
the Investment Return from the start of the then current calendar quarter
through the day prior to the closing of the Company Redemption.  Notice of the
Company Redemption shall be provided by the Company to Investor at

 

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least two (2) months prior to the closing of the Company Redemption and may be
provided any time only after the thirty-four (34) month anniversary of the
Effective Date. Following the closing of the Company Redemption, Investor shall
have no further rights, title or interest in the Company and/or its subsidiaries
or affiliates arising out or as a result of this Agreement.

 

7.                                      Team Sale Payment.  In the event that
the Company (or JVB) sells JVB’s Institutional Corporate Trading business to any
unaffiliated third party, and such sale is not part of a larger sale or
transaction or series of transactions involving the sale of all or substantially
all of the assets or equity securities of the Company or JVB (the “Sale”), the
Company shall pay Investor an amount equal to (i) 25% of the net consideration
paid to the Company in connection with the Sale (the “Net Consideration”), less
(ii) Investor Payments.  The Company shall, in its sole discretion, determine in
good faith the amount of the Net Consideration after providing for reductions in
the gross consideration paid to the Company in connection with the Sale, which
reductions shall include, without limitation, reductions for (i) any applicable
legal fees or fees of any other advisors, (ii) any direct or incremental costs
of the Sale, and (iii) the fair value of any inventory included in any the Sale
and the related employer portion of payroll taxes received by the Company (or
JVB) in connection with the Sale.  The payment of 25% of the Net Consideration
by the Company to Investor pursuant to this Section 7 shall occur within thirty
(30) days after the Company receives payment of the gross proceeds from the
third party in the Sale.

 

8.                                      Representations and Warranties of
Investor.  Investor hereby represents and warrants to the Company as follows:

 

(a)                                 Investor is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York;

 

(b)                                 Investor has all requisite power and
authority to execute and deliver this Agreement, to carry out its obligations
hereunder, and to consummate the transactions contemplated hereby.  Investor has
obtained all necessary corporate approvals for the execution and delivery of
this Agreement, the performance of its obligations hereunder, and the
consummation of the transactions contemplated hereby.  This Agreement has been
duly executed and delivered by Investor and, assuming due execution and delivery
by the Company, constitutes Investor’s legal, valid and binding obligations,
enforceable against Investor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidity or similar laws relating to or affecting
generally the enforcement of creditors’ rights and remedies or by other
equitable principles of general application;

 

(c)                                  The execution, delivery and performance by
Investor of this Agreement do not conflict with, violate or result in the breach
of any agreement, instrument, order, judgment, decree, law or governmental
regulation to which Investor is a party or is subject;

 

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(d)                                 There are no actions, suits, claims,
investigations or other legal proceedings pending or, to the knowledge of
Investor, threatened against or by Investor that challenge or seek to prevent,
enjoin or otherwise delay the transactions contemplated by this Agreement; and

 

(e)                                  Investor, either alone or together with its
representatives (if any), has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the transactions contemplated by this Agreement, and has so evaluated
the merits and risks of such transactions.

 

9.                                      Representation and Warranties of the
Company.  The Company hereby represents and warrants to Investor as follows:

 

(a)                                 The Company is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware;

 

(b)                                 The Company has all requisite power and
authority to execute and deliver this Agreement, to carry out its obligations
hereunder, and to consummate the transactions contemplated hereby.  The Company
has obtained all necessary limited liability company approvals for the execution
and delivery of this Agreement, the performance of its obligations hereunder,
and the consummation of the transactions contemplated hereby.  This Agreement
has been duly executed and delivered by the Company and, assuming due execution
and delivery by Investor, constitutes the Company’s legal, valid and binding
obligations, enforceable against the Company in accordance with its terms except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidity or similar laws relating to or affecting
generally the enforcement of creditors’ rights and remedies or by other
equitable principles of general application;

 

(c)                                  The execution, delivery and performance by
Company of this Agreement do not conflict with, violate or result in the breach
of any agreement, instrument, order, judgment, decree, law or governmental
regulation to which Company is a party or is subject;

 

(d)                                 There are no actions, suits, claims,
investigations or other legal proceedings pending or, to the knowledge of the
Company, threatened against or by the Company that challenge or seek to prevent,
enjoin or otherwise delay the transactions contemplated by this Agreement; and

 

(e)                                  The Company, either alone or together with
its representatives (if any), has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the transactions contemplated by this Agreement, and has so
evaluated the merits and risks of such transactions.

 

10.                               Acknowledgements.  Each of Investor and the
Company acknowledge and agree that Investor shall have no role in the management
or the day-to-day operations of the Company or JVB and shall not be responsible
for (a) any liabilities of the Company or JVB (other than liabilities incurred
in connection with the Team’s operations that are

 

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determined by the Company to be part of Team Expenses), and (b) any legal,
regulatory, compliance or other matters of the Company or JVB.

 

11.                               Confidentiality.  In connection with this
Agreement, Investor acknowledges that it may have access to Confidential
Information (as hereinafter defined) of the Company and its affiliates and
subsidiaries.  Without limiting the applicability of any other obligation of
confidentiality to which individuals associated with Investor may be
bound, Investor agrees to keep (and cause its affiliates and its and their
respective officers, directors, partners, managers, employees and advisors (such
Persons hereinafter collectively being referred to as “Representatives”) to
keep) any Confidential Information strictly in confidence (and agrees not to
trade on such information), not to disclose it to any third party without the
prior written approval of the Company and to use it only for the purposes set
forth in this Agreement, except (a) as required by applicable law or regulation,
or in response to a subpoena, deposition or other judicial process, in which
case Investor shall (other than during a routine regulatory examination), to the
extent permitted by law, notify the Company prior to disclosing such
Confidential Information and shall use its commercially reasonable efforts to
obtain a protective order or otherwise prevent or minimize disclosure of such
Confidential Information, or (b) with the express prior written approval of the
Company.  For purposes of this Agreement, “Confidential Information” means any
non-public confidential information with respect to the Company, its affiliates
and subsidiaries and their respective businesses, including, without limitation,
their operations, systems, services, personnel, marketing, financial affairs,
investment and trading performance, philosophies, strategies and techniques,
structure, products, product development, technology, inventions, trade secrets,
know-how, software models, risk management tools, clients and investors and
client and investor lists (including without limitation, the identity of clients
or investors, names, addresses, contact persons and the client or investors’
business or investment status, strategies or needs).  The term “Confidential
Information” shall also include any information, programs, software or
technology or any documents based thereon, developed by you during the Term of
this Agreement.  The obligation of confidentiality set forth in this Section 11
shall not extend to: (i) information that at the time of disclosure was in the
public domain or thereafter comes into the public domain without breach of this
Agreement by Investor or its Representatives, or; and (ii) information that is
or becomes known to Investor or its Representatives from a source other than the
Company without breach of this Agreement by the Investor or its
Representatives.  Investor acknowledges that any breach by it or its
Representatives of the terms of this Section shall constitute a breach of this
Agreement.

 

12.                               Payments.  Each payment contemplated by this
Agreement shall be paid by wire transfer of immediately available funds to an
account designated in writing by the receiving Party of such payment to the
paying Party of such payment.

 

13.                               Independent Analysis.  Each Party hereto
acknowledges that such Party understands the transactions contemplated by this
Agreement and that such Party has had the opportunity to review this Agreement
and the transactions contemplated hereby with such Party’s own legal counsel,
tax advisors and other advisors.  Each Party is relying solely on such Party’s
own counsel and advisors and not on any statements or

 

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representations of the other Party or of their respective representatives or
agents for legal or other advice with respect to the transactions contemplated
by this Agreement.

 

14.                               Survival.  All representations and warranties
contained herein shall survive the execution and delivery of this Agreement and
the Effective Date.

 

15.                               Further Assurances.  Following the Effective
Date, the Company and Investor shall execute and deliver, or shall cause to be
executed and delivered, such additional documents, instruments, conveyances and
assurances, and take or cause to be taken, such further actions as may be
reasonably required to carry out the provisions hereof and give effect to the
transactions contemplated by this Agreement.

 

16.                               Expenses.  All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Party incurring such costs and expenses.

 

17.                               Notices.  All notices, requests, consents,
claims, demands, waivers and other communications hereunder (each, a “Notice”)
shall be in writing and addressed to the Parties at the addresses set forth on
the books and records of the Company (or to such other address that may be
designated by the receiving Party from time to time in accordance with this
section).  All Notices shall be delivered by personal delivery, nationally
recognized overnight courier (with all fees pre-paid), facsimile or e-mail of a
.PDF document (with confirmation of transmission) or certified or registered
mail (in each case, return receipt requested, postage prepaid).  Except as
otherwise provided in this Agreement, a Notice is effective only (i) upon
receipt by the receiving Party, and (ii) if the Party giving the Notice has
complied with the requirements of this Section 17.

 

18.                               Entire Agreement.  This Agreement constitutes
the sole and entire agreement of the Parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous understandings, agreements,
representations and warranties, both written and oral, with respect to such
subject matter.

 

19.                               Successor and Assigns.  This Agreement shall
be binding upon and shall inure to the benefit of the Parties and their
respective successors and assigns.

 

20.                               Amendment and Modification; Waiver.  This
Agreement may only be amended, modified or supplemented by an agreement in
writing signed by each Party hereto.  No waiver by any Party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and
signed by the Party so waiving.  No failure to exercise, or delay in exercising,
any rights, remedy, power or privilege arising from this Agreement shall operate
or be construed as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.

 

21.                               Severability.  If any term or provision of
this Agreement is invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or
provision of this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction.  If any court determines that any term or

 

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other provision in this Agreement is invalid, illegal or unenforceable, it is
the Parties’ intention that such court shall have the power to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible to the maximum extent permitted by applicable law.

 

22.                               Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
THE PARTIES FURTHER AGREE THAT ANY ACTION BETWEEN THEM SHALL BE HEARD IN NEW
YORK, NEW YORK, AND EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF THE STATE
AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK, FOR THE ADJUDICATION OF ANY
CIVIL ACTION ASSERTED PURSUANT TO THIS AGREEMENT.  EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

23.                               Interpretation.  The words “this Agreement,”
“herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer
to this Agreement as a whole and not to any particular section, subsection or
other subdivision unless expressly limited.  All references to “$” shall be
deemed references to United States Dollars.  Titles appearing at the beginning
of any section, subsection or other subdivision contained in this Agreement are
for convenience only, do not constitute any part of this Agreement, and shall be
disregarded in construing the language hereof.  If an ambiguity, question of
intent or question of interpretation arises, this Agreement must be construed as
if drafted jointly by the Parties, and there must not be any presumption,
inference or conclusion drawn against either Party by virtue of the fact that
its representatives have authored this Agreement or any of its terms.

 

24.                               Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement.  A signed copy of
this Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have executed this Investment Agreement on the
date first written above.

 

 

INVESTOR:

 

 

 

JKD Capital Partners I LTD

 

 

 

 

 

 

 

By:

/s/ Jack DiMaio

 

Name:

Jack DiMaio

 

Title:

Owner

 

 

 

 

 

 

 

THE COMPANY:

 

 

 

IFMI, LLC

 

 

 

 

 

 

 

By:

/s/ Joseph W. Pooler, Jr.

 

Name:

Joseph W. Pooler, Jr.

 

Title:

Executive Vice President and Chief
Financial officer

 

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