Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of the 10th day
of March, 2017 (the “Effective Date”), by and among IFMI, LLC, a Delaware
limited liability company (the “Company”), DGC Family Fintech Trust, a trust
established by Daniel G. Cohen (“Buyer”), and solely for purposes of Article VI
and Sections 7.3, 7.4, 7.5, and 7.6, Institutional Financial Markets, Inc., a
Maryland corporation (the “Parent”).

 

RECITALS:

 

WHEREAS, Buyer desires to purchase from the Company, and the Company desires to
issue and to sell to Buyer, upon the terms and conditions set forth in this
Agreement, a convertible senior secured promissory note in the aggregate
principal amount of Fifteen Million Dollars ($15,000,000) (the “Note Purchase
Price”), in substantially the form attached hereto as Exhibit A (the “Note”);
and

 

WHEREAS, the parties hereto are executing and delivering this Agreement in
reliance upon an exemption from registration afforded by the Securities Act of
1933, as amended (the “Securities Act”), and the rules and regulations
promulgated thereunder by the U.S. Securities and Exchange Commission (the
“SEC”).

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the
parties hereinafter expressed and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
each intending to be legally bound, agree as follows:

 

ARTICLE I
RECITALS, EXHIBITS, SCHEDULES

 

The foregoing Recitals are true and correct and, such Recitals, together with
the Schedules and Exhibits referred to therein and referred to hereafter, are
hereby incorporated into this Agreement by this reference.

 

ARTICLE II
DEFINITIONS

 

Capitalized terms used in this Agreement but otherwise not defined herein shall
have the following meanings:

 

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

 

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2.2                               “Assets” means all of the properties and
assets of the Company or of the Subsidiaries, whether real, personal or mixed,
tangible or intangible, wherever located, whether now owned or hereafter
acquired.

 

2.3                               “Board of Directors” means the Board of
Directors of Parent.

 

2.4                               “Buyer’s Fundamental Representations” means,
collectively, the representations and warranties of Buyer contained in Sections
4.1 (Organization; Authority), 4.3 (Investment Purpose), 4.4 (Accredited Buyer
Status; Experience of Buyer) and 4.8 (Brokers and Finders).

 

2.5                               “Claims” means any threatened or actual
Proceeding, Judgment, settlement, and/or assessment of any nature or kind.

 

2.6                               “Common Stock” means shares of the common
stock of Parent, $0.001 par value per share.

 

2.7                               “Company Fundamental Representations” means,
collectively, the representations and warranties of the Company contained in
Sections 5.1 (Organization and Qualification), 5.2 (Authorization; Enforcement;
Validity), 5.3 (Capitalization), 5.5 (No Conflicts; Consents and Approvals), 5.6
(Issuance of Securities), 5.7 (Absence of Certain Changes), 5.10 (Compliance
with Laws), 5.12 (Acknowledgement Regarding Buyer’s Purchase of the Securities)
and 5.13 (Brokerage Fees).

 

2.8                               “Consent” means any consent, approval, order
or authorization of, or any declaration, qualification, filing or registration
with, or any application or report to, or any waiver by, or any other action
(whether similar or dissimilar to any of the foregoing) of, by or with, any
Person, which is necessary in order to take a specified action or actions, in a
specified manner and/or to achieve a specific result.

 

2.9                               “Contract” means any written or oral contract,
agreement, order or commitment of any nature whatsoever, including any sales
order, purchase order, lease, sublease, license agreement, services agreement,
loan agreement, mortgage, security agreement, guarantee, management contract,
employment agreement, consulting agreement, partnership agreement, stockholders
agreement, buy-sell agreement, option, warrant, debenture, subscription, call or
put.

 

2.10                        “Conversion Shares” means any shares of Common Stock
issuable, at the option of the Company pursuant to the LLC Agreement, upon
redemption of the LLC Units.

 

2.11                        “DRS” means the Direct Registration System
maintained by the transfer agent for the Common Stock.

 

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

 

2.13                        “European Sale Agreement” means the Share Purchase
Agreement by and between the Company and C&Co Europe Acquisition LLC, dated
August 19, 2014, as amended.

 

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2.14                        “European Sale Agreement Termination Fee” means the
six hundred thousand dollars ($600,000) payable to the Company by Daniel G.
Cohen upon the termination of the European Sale Agreement pursuant to Section 4
of the Second Extension in respect of a portion of the legal and financial
advisory fees and expenses incurred by the Company and the Special Committee (as
defined in the European Sale Agreement) (including fees paid by the Company to
members of the Special Committee) in connection with the transactions
contemplated by the European Sale Agreement since April 1, 2014.

 

2.16                        “Exchange Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

 

2.17                        “GAAP” means generally accepted accounting
principles in the United States of America as in effect from time to time.

 

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

 

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

 

2.20                        “Knowledge of the Company” or words to that effect
means the actual knowledge of any of the following Persons:  Lester Brafman,
Joseph W. Pooler, Jr., Rachael Fink and Douglas Listman; provided, that for
purposes of this definition such Persons shall be deemed to have actual
knowledge of facts that would be reasonably expected to come to the attention of
such Person in performing his or her duties in accordance with the Company’s or
any relevant Subsidiary’s ordinary management practices.

 

2.21                        “Law” means any provision of any law, statute,
ordinance, code, constitution, charter, treaty, rule or regulation of any
Governmental Authority.

 

2.22                        “LLC Agreement” means the Amended and Restated
Limited Liability Company Agreement of the Company, dated as of December 16,
2009 by and among the Company and the Members (as defined therein) that are
signatories thereto, as amended.

 

2.23                        “LLC Units” means units of membership interest in
the Company, which units, other than those held by the Parent, are redeemable
for shares of Common Stock or cash at the option of the Company pursuant to the
LLC Agreement.

 

2.24                        “Material Adverse Effect” means any circumstance,
event, change, development, effect or occurrence that, individually or in the
aggregate, (i) is or would reasonably be expected to be materially adverse to
the Company’s financial position, results of operations, business, condition
(financial or otherwise) or Assets of the Company and its Subsidiaries, taken as
a whole or (ii) would materially impair the ability of the Company to perform
its obligations under this Agreement or otherwise materially threaten or
materially impede the consummations of the transactions contemplated herein;
provided, however, that in the case of clause (i) only, any circumstance, event,
change, development, effect or occurrence

 

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that results from any of the following shall be disregarded in determining
whether there has been or would be a “Material Adverse Effect” on the Company
(except to the extent that such circumstance, event, change, development, effect
or occurrence has a disproportionate adverse effect on the Company and the
Subsidiaries relative to other companies engaged in a similar business as the
Company): (A) changes, after the Effective Date, in GAAP; (B) changes, after the
Effective Date, in Laws or interpretations thereof applicable to the Company or
the Subsidiaries by any Governmental Authority; (C) general changes in the
national or world economy or securities markets generally; (D) changes in the
price or trading volume of the Common Stock on the Trading Market (but not the
underlying causes of such changes); or (E) the outbreak or escalation of war or
hostilities, any occurrence or threats of terrorist acts or any armed
hostilities associated therewith or any national or international calamity,
disaster or emergency or escalation thereof.

 

2.25                        “Northland” means Northland Capital Markets, the
independent financial advisor to the Special Committee.

 

2.26                        “Obligation” means any debt, liability or obligation
of any nature whatsoever, whether secured, unsecured, recourse, nonrecourse,
liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained,
unascertained, known, unknown or obligations under executory Contracts.

 

2.27                        “Permit” means any license, permit, approval,
waiver, order or authorization granted, issued or approved by any Governmental
Authority.

 

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

 

2.29                        “Pledge Agreement” means the Pledge Agreement, dated
as of the date hereof, by and between the Company and Buyer in favor of Buyer.

 

2.30                        “Principal” of any Person means, at the time of
determination, each principal, partner or member of such Person, any spouse or
child of each principal, partner or member, and any trust for the benefit of
each principal, partner or member or each such principal’s, partner’s or
member’s spouse or lineal descendants.

 

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

 

2.32                        “Securities” means, collectively, the Note, the LLC
Units, and the Conversion Shares.

 

2.33                        “Second Extension” means the letter from the Company
to C&Co Europe Acquisition LLC, dated June 30, 2015, amending the European Sale
Agreement.

 

2.34                        “Significant Subsidiary” means each of the
significant subsidiaries (as such term is defined in Rule 1-02(w) of Regulation
S-X) of the Company, as set forth in the Parent’s SEC

 

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Documents.  Notwithstanding the foregoing, Cohen Legacy, LLC shall not be
considered a “Significant Subsidiary” for purposes of this Agreement.

 

2.35                        “Special Committee” means the special committee of
independent directors of the Board of Directors formed in connection with the
transactions contemplated by this Agreement and the Transaction Documents.

 

2.36                        “Subsidiary” means any corporation, association
trust, limited liability company, partnership, joint venture or other business
association or entity (i) at least 50% of the outstanding voting securities of
which are at the time owned or controlled directly or indirectly by the Company
or (ii) with respect to which the Company possesses, directly or indirectly, the
power to direct or cause the direction of the affairs or management of such
Person.  Notwithstanding the foregoing, Cohen Legacy, LLC shall not be
considered a “Subsidiary” for purposes of this Agreement.

 

2.37                        “Trading Market” means any of the following markets
or exchanges on which the Common Stock is listed or quoted for trading on the
date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board (or any successors to any of the foregoing).

 

2.38                        “Transaction Documents” means any documents or
instruments to be executed by the Company and Buyer in connection with this
Agreement, including, without limitation, the Note and the Pledge Agreement, in
each case, with all modifications, amendments, extensions, future advances,
renewals, and substitutions thereof and thereto.

 

In addition, the following terms shall have the respective meanings ascribed to
them in the corresponding Sections:

 

Term

 

Section

2017 Annual Meeting of Stockholders

 

Section 7.5

Agreement

 

Preamble

Buyer

 

Preamble

Buyer Indemnified Parties

 

Section 8.1

Certificate of Formation

 

Section 5.1

Closing

 

Section 3.2

Company

 

Preamble

Company Indemnified Parties

 

Section 8.2

Effective Date

 

Preamble

Investment Company Act

 

Section 5.14

Note

 

Recitals

Note Purchase Price

 

Recitals

Parent

 

Preamble

Parent Proxy Statement

 

Section 7.5

SEC

 

Recitals

SEC Documents

 

Section 6.2

SEC Reports

 

Article V

Securities Act

 

Recitals

 

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Term

 

Section

Share Reserve

 

Section 7.3

Stockholder Proposal

 

Section 7.5

 

ARTICLE III
PURCHASE AND SALE OF SECURITIES

 

3.1                               Purchase and Sale of Securities.  Subject to
the satisfaction (or waiver) of the terms and conditions of this Agreement, on
the Effective Date, (i) the Company agrees to sell and to issue to Buyer the
Note in the initial aggregate principal amount of Fifteen Million Dollars
($15,000,000), and (ii) Buyer agrees to pay to the Company the Note Purchase
Price in exchange for the Note.

 

3.2                               Closing.  The closing (the “Closing”) of the
transactions contemplated hereby will occur at the offices of Duane Morris LLP,
30 South 17th Street, Philadelphia, Pennsylvania, commencing at 9:00 a.m. local
time on the Effective Date or at such other location and on such other date as
the parties mutually determine.

 

3.3                               Closing Deliverables of Buyer.  At the
Closing, Buyer shall deliver to the Company:

 

(a)                                 the Note Purchase Price by wire transfer of
immediately available U.S. funds to such account(s) as shall be designated by
the Company to Buyer; and

 

(b)                                 duly executed copies of this Agreement and
each of the Transaction Documents to which Buyer is a party and any other
certificate, instrument or document contemplated hereby or thereby.

 

3.4                               Closing Deliverables of the Company.  At the
Closing, the Company shall deliver to Buyer duly executed copies of this
Agreement, the Note and each of the other Transaction Documents to which the
Company is a party or any other certificate, instrument or document contemplated
hereby or thereby.

 

3.5                               Transaction Fee.

 

(a)                                 In connection with the issuance of the Note,
the Company hereby agrees to pay to Buyer a transaction fee in the aggregate
amount of six hundred thousand dollars ($600,000) (the “Transaction Fee”).

 

(b)                                 Daniel G. Cohen’s obligation to pay the
European Sale Agreement Termination Fee is hereby deemed to be offset in full by
the Company’s obligation to pay the Transaction Fee and, as a result, the
Company shall have no further obligations whatsoever to Buyer with respect to
the Transaction Fee.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to the Company that:

 

4.1                               Organization; Authority.  Buyer is duly
organized, validly existing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement and by each of the
Transaction Documents to which Buyer is a party and otherwise to carry out its
obligations hereunder and thereunder or is otherwise a natural person.  The
execution, delivery and performance by Buyer of this Agreement and of each of
the Transaction Documents to which Buyer is a party have been duly authorized by
all necessary action on the part of Buyer.  Each of this Agreement and the
Transaction Documents to which Buyer is a party has been (or upon delivery will
have been) duly executed by Buyer, and, when delivered by Buyer in accordance
with the terms hereof and thereof, will constitute the valid and legally binding
obligation of Buyer, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 

4.2                               No Conflicts.  The execution, delivery and
performance by Buyer of this Agreement and the Transaction Documents to which it
is a party and the consummation by it of the transactions contemplated hereby
and thereby will not (i) result in a violation of the organizational documents
of Buyer, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
Contract, indenture or instrument to which Buyer is a party, or (iii) result in
a violation of any Law, rule, regulation, order, judgment or decree (including
federal and state securities Laws) applicable to Buyer, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of Buyer to perform its
obligations hereunder.

 

4.3                               Investment Purpose.  Buyer understands that
the Securities are not, and when issued (as applicable) will not be, registered
under the Securities Act or any applicable state securities Laws, subject to
Section 7.6. Buyer is acquiring, and when issued (as applicable) will acquire,
the Securities as principal for its own account for investment only and not with
a view to or for the purpose of distributing or reselling such Securities or any
part thereof in violation of the Securities Act or any applicable state
securities Laws.  Buyer does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Securities to or through any person or entity;
Buyer is not a registered broker-dealer under Section 15 of the Exchange Act or
an entity engaged in a business that would require it to be so registered as a
broker-dealer.

 

4.4                               Accredited Buyer Status; Experience of Buyer. 
Buyer was at the time Buyer was offered to purchase the Note, and on each date
on which Buyer acquires (as applicable) any Securities it will be, an
“accredited investor” as defined in Rule 501(a) under the Securities Act. 
Buyer, either alone or together with its representatives (if any), has such
knowledge,

 

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sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.  Buyer
acknowledges that it can bear the economic risk and complete loss of its
investment in the Securities.

 

4.5                               Reliance on Exemptions.  Buyer understands
that the Securities are being and will be (as applicable) offered and sold to it
in reliance on specific exemptions from the registration requirements of United
States federal and state securities Laws and that the Company is relying upon
the truth and accuracy of, and Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of Buyer to acquire the Securities.

 

4.6                               Information.  Buyer and its advisors have been
furnished with all materials relating to the business, finances and operations
of the Company and information such Buyer deemed material to making an informed
investment decision regarding its purchase of the Note, which have been
requested by Buyer. Buyer and its advisors have been afforded with the
opportunity to ask questions of the Company and its management.  Buyer has
sought such accounting, legal, tax and other professional advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Note.

 

4.7                               Restrictions on Transferability.  Buyer
understands that because the Securities have not have been registered under the
Securities Act, Buyer cannot dispose of any or all of the Securities unless such
Securities are subsequently registered under the Securities Act or exemptions
from registration are available.  Buyer acknowledges and understands that, other
than as provided for in Section 7.6, it has no registration rights.  By reason
of these restrictions, Buyer understands that it may be required to hold the
Securities for an indefinite period of time.  Buyer understands that each
certificate or other instrument representing the Securities will bear
appropriate legends reflecting the foregoing as well as applicable state “blue
sky” legends.  In addition, appropriate transfer restrictions will be affixed to
any notation in the DRS for any Conversion Shares.

 

4.8                               Brokers and Finders.  Buyer has not employed
any Person, or incurred any liability, for any financial advisory, brokerage or
finder’s fee or commission, and no broker or finder has acted directly or
indirectly for Buyer, in connection with the transactions contemplated by this
Agreement and the Transactions Documents.

 

4.9                               Independent Investment Decision.  Buyer has
evaluated, independently of the Company, the merits of its decision to purchase
the Note pursuant to this Agreement and the Transaction Documents.  Buyer
understands that nothing in this Agreement or any other materials presented by
or on behalf of the Company to Buyer in connection with the purchase of the Note
constitutes legal, tax or investment advice.

 

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth and disclosed in the disclosure schedule attached to this
Agreement and made a part hereof or as disclosed or incorporated by reference in
the Parent’s reports and forms filed with or furnished to the SEC under Sections
13, 14 or 15(d) of the Exchange Act, after December 31, 2015 (other than any
forward-looking disclosures set forth in any risk factor section or
forward-looking statement disclaimer and any other disclosure that is similarly
nonspecific and predictive or forward-looking in nature) (all such reports, the
“SEC Reports”), the Company hereby makes the following representations and
warranties to Buyer:

 

5.1                               Organization and Qualification.  The Company
is an entity duly organized, validly existing and in good standing under the
laws of the State of Delaware, with the requisite power and authority to own or
lease and use its properties and Assets and to carry on its business as
currently conducted and as currently proposed to be conducted.  The Company is
not in violation of any of the provisions of the Certificate of Formation, as
amended and as in effect on the Effective Date (the “Certificate of Formation”)
or the LLC Agreement.  The Company is duly qualified to conduct business and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and no Proceeding
has been instituted, is pending, or, to the Knowledge of the Company, is
threatened in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification.

 

5.2                               Authorization; Enforcement; Validity.  The
Company has the requisite limited liability company power and authority to enter
into and to consummate the transactions contemplated by this Agreement and by
each of the Transaction Documents to which it is a party and otherwise to carry
out its obligations hereunder and thereunder.  The execution, delivery and
performance by the Company of this Agreement and of each of the Transaction
Documents to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby (including, but not limited to, the issuance,
sale and delivery of the Note and the reservation for issuance and the
subsequent issuance of the LLC Units upon exercise of the Note) have been duly
authorized by all necessary limited liability company action on the part of the
Company in connection herewith and therewith.  Each of this Agreement and the
Transaction Documents to which the Company is a party has been (or upon delivery
will have been) duly and validly executed by the Company and is, or when
delivered in accordance with the terms hereof will constitute, the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

 

5.3                               Capitalization.  The Company has 17,504,493
issued and outstanding LLC Units.  All outstanding LLC Units have been duly
authorized, validly issued and are fully paid and nonassessable.  No LLC Units
are subject to preemptive rights or any other similar rights.  Except as
contemplated hereby and as set forth on Schedule 5.3 hereto, as of the Effective
Date:

 

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(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any LLC Units, or Contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional LLC Units, or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any LLC Units; (ii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other Contracts or
instruments evidencing indebtedness of the Company, or by which the Company is
or may become bound; (iii) there are no agreements or arrangements under which
the Company is obligated to register the sale of any of its securities under the
Securities Act; (iv) there are no financing statements securing any obligations
of the Company; (v) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the Company’s consummation of the transactions
described herein or therein; and (vi) there are no outstanding securities or
instruments of the Company which contain any redemption or similar provisions,
and there are no Contracts by which the Company is or may become bound to redeem
a security of the Company.

 

5.4                               Subsidiaries.  Except as set forth on Schedule
5.4 hereto, the Company has no other Subsidiaries and all shares of the
outstanding capital stock or other equity interest of each Subsidiary are owned
directly or indirectly by the Company.  All of such capital stock or other
equity interest of so owned by the Company are duly authorized, validly issued
and are fully paid and nonassessable, and are owned by it free and clear of any
Encumbrance with respect thereto.  Each Significant Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the requisite power and authority to own
or lease and use its properties and Assets and to carry on its business as
currently conducted and as currently proposed to be conducted, in each case
except as would not reasonably be expected to have a Material Adverse Effect on
the Company.

 

5.5                               No Conflicts; Consents and Approvals.  The
execution, delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of any of the Securities, and
compliance by the Company with any provisions of the Transaction Documents will
not: (i) constitute or result in a violation of or conflict with the Certificate
of Formation, the LLC Agreement, or any other organizational or governing
documents of Company or any Subsidiary; (ii) constitute or result in a violation
of, or a default or breach under (either immediately, upon notice, upon lapse of
time, or both), or conflicts with, or gives to any other Person any rights of
termination, amendment, acceleration or cancellation of, any provision of any
Contract, indenture or instrument to which Company or any Subsidiary is a party
or by which it may be bound, or to which the Company or any Subsidiary or any of
their Assets or properties may be bound (other than immaterial contracts
relating to back office operations, systems and facilities or similar matters);
(iii) constitute a violation of, or a default or breach under (either
immediately, upon notice, upon lapse of time, or both), or conflicts with, any
Judgment; (iv) assuming that, in connection with the transactions contemplated
hereby, the parties hereto timely make or cause the appropriate parties to make
all of the filings required by applicable state securities Laws, constitute a
violation of, or conflict with, any Law, rule, regulation, order, judgment or
decree (including federal and state securities Laws); or (v) result in the loss
or adverse modification of, or the imposition of any fine, penalty or other

 

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Encumbrance with respect to, any Permit granted or issued to, or otherwise held
by or for the use of, the Company or any Subsidiary or any of the their Assets
or properties; except, in the case of clause (v), for such violations, defaults,
breaches, conflicts, losses, modifications or impositions that have not had and
would not reasonably be expected to have a Material Adverse Effect.  The Company
is not in default or breach (and no event has occurred which with notice or
lapse of time or both could put the Company in default or breach) under, and the
Company has not taken any action or failed to take any action that would give to
any other Person any rights of termination, amendment, acceleration or
cancellation of, any material Contract to which the Company is a party or by
which any property or Assets of the Company are bound or affected.

 

5.6                               Issuance of Securities.  The Note to be issued
pursuant to this Agreement has been duly authorized by all necessary limited
liability company action of the Company and, upon issuance in accordance with
the terms hereof, the Note, the LLC Units and the Conversion Shares, as
applicable, shall be duly and validly issued, fully paid and non-assessable, and
free from all Encumbrances with respect to the issue thereof, and, assuming the
accuracy of the representations and warranties of Buyer set forth in Article IV
above, will be issued in compliance with all applicable United States federal
and state securities Laws.

 

5.7                               Absence of Certain Changes.  Except as
otherwise disclosed to Buyer in writing on or prior to the date hereof, since
January 1, 2017, there has been no event or circumstance of any nature
whatsoever that has resulted in, or would reasonably be expected to result in, a
Material Adverse Effect.

 

5.8                               Absence of Litigation.  Except as otherwise
disclosed to Buyer in writing on or prior to the date hereof or as would not
reasonably be expected to have a Material Adverse Effect, (i) there is no
Proceeding before or by any Governmental Authority or any other Person, pending,
or to the Knowledge of the Company, threatened or contemplated by, against or
affecting the Company or any Subsidiary or their Assets; and (ii) there are no
outstanding Judgments against or affecting the Company, any Subsidiary or their
Assets.

 

5.9                               Title to Assets.  Except as set forth on
Schedule 5.9 hereto, the Company or a Significant Subsidiary has good and
marketable title to, or a valid leasehold interest in, all of its Assets which
are material to the business and operations of the Company and the Subsidiaries
as presently conducted, free and clear of all Encumbrances or restrictions on
the transfer or use of same.  Except as would not have a Material Adverse
Effect, the Company’s Assets are in good operating condition and repair,
ordinary wear and tear excepted.

 

5.10                        Compliance with Laws.  The Company and the
Subsidiaries (i) are in material compliance with all applicable Laws and
Judgments; (ii) to the Knowledge of the Company, have all material Permits and
such Permits are in full force and effect and no material suspension or
cancellation of any of them is threatened; and (iii) to the Knowledge of the
Company, are not under investigation with respect to, and have not been
threatened to be charged with or given notice of, any material violation of all
applicable Laws and Judgments.

 

5.11                        No Directed Selling Efforts or General
Solicitation.  Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has conducted any “general

 

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solicitation” or “general advertising” (as those terms are used in Regulation D
promulgated under the Securities Act) in connection with the offer or sale of
any of the Securities.

 

5.12                        Acknowledgment Regarding Buyer’s’ Purchase of the
Securities.  The Company acknowledges and agrees that Buyer is acting solely in
the capacity of an “arm’s length” purchaser with respect to this Agreement and
the transactions contemplated hereby.  The Company further acknowledges that
Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by Buyer or any of its representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Buyer’s purchase of the Note.  The Company
further represents to Buyer that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

 

5.13                        Brokerage Fees.  There is no Person acting on behalf
of the Company as placement agent in connection with the transactions
contemplated hereby, and, other than in connection with the Special Committee’s
retention of Northland, there is no Person acting on behalf of the Company who
is entitled to or has any claim for any financial advisory, brokerage or
finder’s fee or commission in connection with the execution of this Agreement or
the transactions contemplated hereby.

 

5.14                        Investment Company.  The Company is not an
“investment company” as defined under the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and the Company does not sponsor any
person that is such an investment company. Buyer acknowledges and agrees that
the Company makes no representations or warranties whatsoever, express or
implied, except for those specifically set forth in this Article V, in any
certificate delivered hereto or in any other Transaction Document.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PARENT

 

Except as set forth and disclosed in the disclosure schedule attached to this
Agreement and made a part hereof or as disclosed or incorporated by reference in
the SEC Reports, the Parent represents and warrants to Buyer that:

 

6.1                               Capitalization.  The authorized capital stock
of the Parent consists of: (a) 100,000,000 shares of Common Stock, of which
12,699,769 shares of Common Stock are issued and outstanding as of the Effective
Date; (b) 10,000,000 shares of Preferred Stock, par value $0.001 per share, all
of which are designated as Series C Junior Participating Preferred Stock, none
of which are issued or outstanding as of the Effective Date; and (c) 50,000,000
shares of Preferred Stock, par value $0.001 per share, of which 4,983,557 shares
are designated as Series E Voting Non-Convertible Preferred Stock, all of which
are issued and outstanding as of the Effective Date.  All outstanding shares of
Common Stock and Series E Voting Non-Convertible Preferred Stock have been duly
authorized, validly issued and are fully paid and nonassessable.  The Common
Stock is currently quoted on the NYSE MKT under the trading symbol “IFMI,” and
the Parent has maintained all requirements on its part for the continuation of
such quotation.  No shares of Common Stock are subject to preemptive rights or
any other similar rights.  Except

 

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as contemplated hereby and as set forth on Schedule 6.1 hereto, as of the
Effective Date: (i) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Parent, or Contracts, commitments, understandings or arrangements by which the
Parent is or may become bound to issue additional shares of capital stock of the
Parent, or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Parent; (ii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other Contracts or instruments evidencing indebtedness of the Parent, or by
which the Parent is or may become bound; (iii) there are no agreements or
arrangements under which the Parent is obligated to register the sale of any of
its securities under the Securities Act, except as provided for in Section 7.6;
(iv) there are no financing statements securing any obligations of the Parent;
(v) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by this Agreement or any related agreement or
the consummation of the transactions described herein or therein; and (vi) there
are no outstanding securities or instruments of the Parent which contain any
redemption or similar provisions, and there are no Contracts by which the Parent
is or may become bound to redeem a security of the Parent.

 

6.2                               Listing and Maintenance Requirements; SEC
Documents.  The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act, and the Parent has taken no action designed to, or that is likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act, nor has the Parent received any notification that the SEC is
contemplating terminating such registration. The Parent has filed all reports,
schedules, forms, statements and other documents, together with any amendments
thereto, required to be filed by it with the SEC under the Exchange Act (all of
the foregoing filed within the two (2) years preceding the Effective Date and
all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as
the “SEC Documents”).  The Parent is current with its filing obligations under
the Exchange Act and there are no outstanding comments from the SEC with respect
to any report, schedule, form, statement and other document required to be filed
by it with the SEC under the Exchange Act.  True and complete copies of the SEC
Documents are available on the SEC’s website (www.sec.gov) at no charge.  As of
their respective dates, the SEC Documents complied in all material respects with
the applicable requirements of the Exchange Act, and none of the SEC Documents,
at the time they were filed with or furnished to the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.

 

6.3                               Absence of Litigation; No Undisclosed
Liabilities.  Except as otherwise disclosed to Buyer in writing on or prior to
the date hereof or as would not reasonably be expected to have a Material
Adverse Effect, (i) there is no Proceeding before or by any Governmental
Authority or any other Person, pending, or to the knowledge of the Parent,
threatened or contemplated by, against or affecting the Parent or its Assets;
and (ii) there are no outstanding Judgments against or affecting the Parent or
its Assets.  There are no obligations that are not appropriately reflected or
reserved against in the consolidated financial statements of the Parent (which
are available on the SEC’s website) to the extent required to be so reflected or
reserved against in accordance with GAAP, except for (i) liabilities that have
arisen since December 31, 2015 in the ordinary

 

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course of business consistent with past practice and (ii) liabilities that have
not had and would not reasonably be expected to have a Material Adverse Effect.

 

6.4                               Compliance with Laws.  The Parent (i) is in
material compliance with all applicable Laws and Judgments; (ii) to the
knowledge of the Parent, have all material Permits and such Permits are in full
force and effect and no material suspension or cancellation of any of them is
threatened; and (iii) to the Knowledge of the Company, is not under
investigation with respect to, and has not been threatened to be charged with or
given notice of, any material violation of all applicable Laws and Judgments.

 

6.5                               No Conflicts; Consents and Approvals.  The
execution, delivery and performance of this Agreement and the Transaction
Documents, and the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of any of the Securities, and
compliance by the Parent with any provisions of the Transaction Documents will
not: (i) constitute or result in a violation of or conflict with the Second
Articles of Amendment and Restatement of the Parent, as amended, the By-laws of
the Parent, as amended, or any other organizational or governing documents of
the Parent; (ii) constitute or result in a violation of, or a default or breach
under (either immediately, upon notice, upon lapse of time, or both), or
conflicts with, or gives to any other Person any rights of termination,
amendment, acceleration or cancellation of, any provision of any Contract,
indenture or instrument to which Parent is a party or by which it may be bound,
or any of its Assets or properties may be bound (other than immaterial contracts
relating to back office operations, systems and facilities or similar matters);
(iii) constitute a violation of, or a default or breach under (either
immediately, upon notice, upon lapse of time, or both), or conflicts with, any
Judgment; (iv) assuming that, in connection with the transactions contemplated
hereby, the parties hereto timely make or cause the appropriate parties to make
all of the filings required by applicable state securities Laws, constitute a
violation of, or conflict with, any Law, rule, regulation, order, judgment or
decree (including federal and state securities Laws); or (v) result in the loss
or adverse modification of, or the imposition of any fine, penalty or other
Encumbrance with respect to, any Permit granted or issued to, or otherwise held
by or for the use of, the Parent or any of the its Assets or properties; except,
in the case of clause (v), for such violations, defaults, breaches, conflicts,
losses, modifications or impositions that have not had and would not reasonably
be expected to have a Material Adverse Effect.  The Parent is not in default or
breach (and no event has occurred which with notice or lapse of time or both
could put the Parent in default or breach) under, and the Parent has not taken
any action or failed to take any action that would give to any other Person any
rights of termination, amendment, acceleration or cancellation of, any material
Contract to which the Parent is a party or by which any property or Assets of
the Parent are bound or affected.

 

6.6                               Authorization; Enforcement; Validity.  The
Parent has the requisite corporate power and authority to enter into and to
consummate the transactions binding upon it contemplated by this Agreement and
by each of the Transaction Documents to which it is a party and otherwise to
carry out its obligations hereunder and thereunder.  The execution, delivery and
performance by the Parent of this Agreement and of each of the Transaction
Documents to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby (including, but not limited to, the covenants
binding upon it in Article VII hereof) have been duly authorized by all
corporate action on the part of the Parent in connection herewith and therewith.

 

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Each of this Agreement and the Transaction Documents to which the Parent is a
party has been (or upon delivery will have been) duly and validly executed by
the Parent and is, or when delivered in accordance with the terms hereof will
constitute, the legal, valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

 

ARTICLE VII
COVENANTS

 

7.1                               Use of Proceeds.  The proceeds from the
purchase and sale of the Securities shall be used by the Company and its
Subsidiaries for general corporate purposes.

 

7.2                               Intentionally omitted.

 

7.3                               Reservation of Shares.  The Parent shall, at
all times, have authorized and reserved for the purpose of issuance, such number
of shares of Common Stock for the issuance of all of the Conversion Shares
(collectively, the “Share Reserve”).  If at any time the Share Reserve is
insufficient, then the Parent shall, as soon as reasonably practicable, take all
required measures to implement an increase of the Share Reserve accordingly.

 

7.4                               NYSE MKT Listing Application.  Prior to the
issuance of any Conversion Shares, the Parent shall prepare and file with the
NYSE MKT an Additional Listing Application relating to all of the Conversion
Shares.

 

7.5                               Stockholder Meeting and Parent Proxy
Statement. At the 2017 annual meeting of the Parent’s stockholders (the “2017
Annual Meeting of Stockholders”), Parent shall cause its stockholders to vote
on, among other things, proposals (collectively, the “Stockholder Proposal”)
regarding the issuance of the Conversion Shares for purposes of Section 713 of
the NYSE MKT’s Company Guide, as applicable.  The Board of Directors shall
recommend to the Parent’s stockholders that such stockholders approve the
Stockholder Proposal, and shall not modify or withdraw such resolution.  In
connection with the 2017 Annual Meeting of Stockholders, Parent shall promptly
prepare and file with the SEC a Definitive Proxy Statement on Schedule 14A
pursuant to Section 14(a) of the Exchange Act (the “Parent Proxy Statement”),
use its reasonable best efforts to solicit proxies for such stockholder approval
and to respond to any comments of the SEC or its staff and mail a definitive
proxy statement related the 2017 Annual Meeting of Stockholders to the Parent’s
stockholders promptly after clearance by the SEC.  The Parent shall notify Buyer
promptly of the receipt by Parent of any comments from the SEC or its staff with
respect to the Parent Proxy Statement and of any request by the SEC or its staff
for amendments or supplements to such proxy statement or for additional
information and shall supply Buyer with copies of all correspondence between the
Parent or any of its representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to such proxy statement.  If at any time prior
to the 2017 Annual Meeting of Stockholders there shall occur any event that is
required to be set forth in an amendment or supplement to the Parent Proxy
Statement, the Parent shall promptly prepare and mail to its stockholders such
an

 

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amendment or supplement.  The Parent shall promptly correct any information
provided by it or on its behalf for use in the Parent Proxy Statement if and to
the extent that such information shall have become false or misleading in any
material respect, and the Parent shall promptly prepare and mail to its
stockholders an amendment or supplement to correct such information to the
extent required by applicable Laws.  The Parent shall consult with Buyer prior
to Parent mailing the Parent Proxy Statement, or any amendment or supplement
thereto, and provide Buyer with reasonable opportunity to comment thereon.  The
Board of Directors’ recommendation described in this Section 7.5 shall be
included in the Parent Proxy Statement.

 

7.6                               Registration Rights.  Upon issuance of any
Conversion Shares by the Parent to Buyer, the Parent and Buyer shall execute a
Registration Rights Agreement in a form reasonably satisfactory to Buyer and the
Parent pursuant to which the Parent shall grant to such Buyer the rights to
cause the Parent to register such Conversion Shares for resale under the
Securities Act and under applicable state securities Laws.

 

7.7                               Efforts.  Each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary to consummate and make
effective as promptly as practicable the transactions contemplated hereby and
under the other Transaction Documents and to cooperate with the other parties in
connection with the foregoing. Without limiting the generality of the foregoing,
the Company shall use its reasonable best efforts to (i) obtain any required
approvals or consents as promptly as practicable, (ii) to lift or rescind as
promptly as practicable any injunction or restraining order or other order
adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby, and (iii) to effect all necessary
registrations and filings, if any.

 

7.8                               Amendment to LLC Agreement.  Parent hereby
agrees to execute an amendment to the LLC Agreement, substantially in the form
attached hereto as Exhibit B, at such time in the future as all of the other
members of the Company execute such amendment.

 

ARTICLE VIII
INDEMNIFICATION

 

8.1                               Company’s Obligation to Indemnify.  The
Company hereby agrees to defend, indemnify and hold harmless Buyer and Buyer’s
Affiliates and subsidiaries, and its respective directors, officers, partners,
employees, agents and representatives, and any Person who controls Buyer, and
the successors and assigns of each of the foregoing (collectively, the “Buyer
Indemnified Parties”), to the fullest extent lawful, from and against any and
all Claims made, brought or asserted against the Buyer Indemnified Parties, or
any one of them, and the Company hereby agrees to pay or reimburse the Buyer
Indemnified Parties for any and all amounts arising out of Claims payable by any
of the Buyer Indemnified Parties to any Person, as well as reasonable attorneys’
and paralegals’ fees and expenses, court costs, settlement amounts, costs of
investigation and other similar costs, as a result of, or arising out of, or
relating to: (i) any misrepresentation or breach of any representation or
warranty made by the Company or the Parent in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby; or (ii) any breach of any covenant, agreement or Obligation of the
Company or the Parent contained in this Agreement, the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby. 
To

 

16

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the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Claims covered hereby, which is permissible
under applicable Law.  The Company will not be liable to Buyer under this
indemnity: (x) for any settlement by Buyer in connection with any Claim effected
without the Company’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed; or (y) to the extent that a Claim
is attributable to Buyer’s breach of any of the representations, warranties,
covenants or agreements made by Buyer in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby.  Notwithstanding anything to the contrary contained in this
Section 8.1 or anywhere else in this Agreement or in the Transaction Documents,
the aggregate amount of indemnification which may be sought, claimed and/or
recovered by the Buyer Indemnified Parties (collectively) from the Company
pursuant to this Section 8.1 relating to a breach of a representation or
warranty by the Company (other than a breach of the Company Fundamental
Representations), excluding the representation and warranty of the Company set
forth in clause (ii) of Section 5.5) shall not, under any circumstances, exceed
Fifteen Million Dollars ($15,000,000).

 

8.2                               Buyer’s Obligation to Indemnify.  Buyer agrees
to defend, indemnify and hold harmless the Company, the Parent and each of their
respective Affiliates and Subsidiaries, and their respective directors,
officers, partners, employees, agents and representatives, and the successors
and assigns of each of the foregoing (collectively, the “Company Indemnified
Parties”), to the fullest extent lawful, from and against any and all Claims
made, brought or asserted against the Company Indemnified Parties, or any one of
them, and Buyer hereby agrees to pay or reimburse the Company Indemnified
Parties for any and all amounts arising out of Claims payable by any of the
Company Indemnified Parties to any Person, as well as reasonable attorneys’ and
paralegals’ fees and expenses, court costs, settlement amounts, costs of
investigation and other similar costs, as a result of, or arising out of, or
relating to: (i) any misrepresentation or breach of any representation or
warranty made by Buyer in this Agreement, the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby; or (ii) any
breach of any covenant, agreement or Obligation of Buyer contained in this
Agreement, the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby.  To the extent that the foregoing
undertaking by Buyer may be unenforceable for any reason, Buyer shall make the
maximum contribution to the payment and satisfaction of each of the Claims
covered hereby, which is permissible under applicable Law. Buyer will not be
liable to the Company under this indemnity: (x) for any settlement by the
Company in connection with any Claim effected without Buyer’s prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed; or (y) to the extent that a Claim is attributable to the Company’s
breach of any of the representations, warranties, covenants or agreements made
by the Company in this Agreement, the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby. 
Notwithstanding anything to the contrary contained in this Section 8.2 or
anywhere else in this Agreement or in the Transaction Documents, the aggregate
amount of indemnification which may be sought, claimed and/or recovered by the
Company Indemnified Parties (collectively) from Buyer pursuant to this
Section 8.2 relating to a breach of representation or warranty made by Buyer
(other than a breach of Buyer’s Fundamental Representations) shall not, under
any circumstances, exceed Five Hundred Thousand Dollars ($500,000).

 

17

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8.3                               Exclusive Remedy.  This Article VIII will be
the exclusive remedy of the parties following the Closing for any losses arising
out of any misrepresentation or breach of the representations, warranties,
covenants, agreements or Obligations of the parties contained in this Agreement,
except for claims of, or causes of action arising from, fraud or intentional
misrepresentation.

 

8.4                               Other Matters Regarding Indemnification.

 

(a)                                 Notwithstanding anything in this Agreement
to the contrary, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of any
party, after the consummation of the transactions contemplated hereby, to
rescind this Agreement or any of such transactions.

 

(b)                                 The Company and Buyer shall take
commercially reasonable efforts, consistent with good commercial practice, to
mitigate the losses for which any indemnification claim may be made by it
against the other pursuant to this Agreement after becoming aware that such
claim could reasonably be expected to give rise to any such losses.

 

ARTICLE IX
MISCELLANEOUS

 

9.1                               Anti-Sandbag Provision.  Notwithstanding
anything to the contrary contained in this Agreement, Buyer agrees that no
representation or warranty of the Company in this Agreement shall be deemed to
be untrue or incorrect, and the Company shall be deemed not to be in breach
thereof, if Buyer or Daniel G. Cohen had knowledge on the Effective Date that
any such representation or warranty was untrue or incorrect.

 

9.2                               Interpretation.  In this Agreement, unless the
express context otherwise requires: (i) the words “herein,” “hereof” and
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement; (ii) references to the words
“Article” or “Section” refer to the respective Articles and Sections of this
Agreement, and references to “Exhibit” or “Schedule” refer to the respective
Exhibits and Schedules annexed hereto; (iii) references to a “party” mean a
party to this Agreement and include references to such party’s permitted
successors and permitted assigns; (iv) references to a “third party” mean a
Person not a party to this Agreement; (v) the terms “dollars” and “$” mean U.S.
dollars; (vi) wherever the word “include,” “includes” or “including” is used in
this Agreement, it will be deemed to be followed by the words “without
limitation.”

 

9.3                               Notices.  All notices of request, demand and
other communications hereunder shall be addressed to the parties as follows:

 

If to the Company:

 

IFMI, LLC

 

 

Cira Centre

 

 

2929 Arch Street, 17th Floor

 

 

Philadelphia, Pennsylvania 19104

 

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With a copy to:

 

Duane Morris LLP

 

 

430 South 17th Street

 

 

Philadelphia, Pennsylvania 19103

 

 

Attn: Darrick M. Mix

 

 

Facsimile: (215) 239-4958

 

 

Email: dmix@duanemorris.com

 

 

 

If to Parent:

 

Institutional Financial Markets, Inc.

 

 

Cira Centre

 

 

2929 Arch Street, 17th Floor

 

 

Philadelphia, Pennsylvania 19104

 

 

Attn: Joseph W. Pooler, Jr.

 

 

Facsimile: (215) 701-8280

 

 

E-mail: jpooler@ifmi.com

 

 

 

 

 

and to:

 

 

 

 

 

Institutional Financial Markets, Inc.

 

 

1633 Broadway, 28th Floor

 

 

New York, New York 10019

 

 

Attn: Rachael Fink

 

 

Facsimile: (866) 543-2907

 

 

E-mail: rfink@ifmi.com

 

 

 

With a copy to:

 

Duane Morris LLP

 

 

430 South 17th Street

 

 

Philadelphia, Pennsylvania 19103

 

 

Attn: Darrick M. Mix

 

 

Facsimile: (215) 239-4958

 

 

Email: dmix@duanemorris.com

 

 

 

If to Buyer:

 

At the address on the books and records of the Company.

 

 

 

With a copy to:

 

Fellheimer & Eichen LLP

 

 

50 S. 16th Street

 

 

Philadelphia, PA 19102

 

 

Attn: Raphael Licht

 

 

Email: rlicht@fellheimer.net

 

unless the address is changed by the party by like notice given to the other
parties.  Notice shall be in writing and shall be deemed delivered: (i) if
mailed by certified mail, return receipt requested, postage prepaid and properly
addressed to the address above, then three (3) business days after deposit of
same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by
Federal Express (FedEx), the United Parcel Service (UPS), or another nationally
recognized overnight courier service, next business morning delivery, then one
(1) business day after deposit

 

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of same in a regularly maintained receptacle of such overnight courier; or
(iii) if hand delivered, then upon hand delivery thereof to the address
indicated on or prior to 5:00 p.m., New York City time, on a business day.  Any
notice hand delivered after 5:00 p.m. New York City time, shall be deemed
delivered on the following business day.  Notwithstanding the foregoing,
notices, consents, waivers or other communications referred to in this Agreement
may be sent by facsimile, e-mail, or other method of delivery, but shall be
deemed to have been delivered only when the sending party has confirmed (by
reply e-mail or some other form of written confirmation from the receiving
party) that the notice has been received by the other party.

 

9.4                               Entire Agreement.  This Agreement and (i) the
Exhibits and Schedules attached hereto, and (ii) the documents delivered
pursuant hereto, including the Transaction Documents, collectively, set forth
all the promises, covenants, agreements, conditions and understandings between
the parties hereto with respect to the subject matter hereof and thereof, and
supersede all prior and contemporaneous agreements, understandings, inducements
or conditions, expressed or implied, oral or written.

 

9.5                               Assignment.  No party hereto may sell or
assign this Agreement or any of the Transaction Documents, or any portion
thereof or any rights thereunder, either voluntarily or by operation of law, nor
delegate any of their respective duties or obligations hereunder or thereunder,
without the prior written consent of all of the other parties to this Agreement.

 

9.6                               Binding Effect.  This Agreement shall be
binding upon the parties hereto, their respective successors and permitted
assigns.

 

9.7                               Amendment.  The parties hereby irrevocably
agree that no attempted amendment, modification, or change of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such amendment, modification or change.

 

9.8                               No Waiver.  No failure or delay by any party
in exercising any right, power or privilege 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, power or
privilege.  No waiver of any provision of this Agreement shall be effective,
unless it is in writing and signed by the party against whom it is asserted, and
any such written waiver shall only be applicable to the specific instance to
which it relates and shall not be deemed to be a continuing or future waiver.

 

9.9                               Gender and Use of Singular and Plural.  All
pronouns shall be deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the party or parties or their personal
representatives, successors and assigns may require.

 

9.10                        Execution.  This Agreement may be executed in one or
more counterparts, all of which taken together shall be deemed and considered
one and the same Agreement, and the same shall become effective when
counterparts have been signed by each party and each party has delivered its
signed counterpart to the other party.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding

 

20

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obligation of the party executing same with the same force and effect as if such
facsimile or “.pdf” signature page was an original thereof.

 

9.11                        Headings.  The article and section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement.

 

9.12                        Governing Law.  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 City, New York, and expressly consent to the
jurisdiction and venue of the state and federal courts sitting in New York City,
New York, for the adjudication of any civil action asserted pursuant to this
Agreement.

 

9.13                        Further Assurances.  The parties hereto will execute
and deliver such further instruments and do such further acts and things as may
be reasonably required to carry out the intent and purposes of this Agreement
and the other Transaction Documents.

 

9.14                        Survival.  The covenants and agreements made by the
Company and Buyer herein shall survive for the duration of any statutes of
limitations applicable thereto or until, by their respective terms, they are no
longer operative.  The representations and warranties made by the Company and
Buyer herein shall survive for a period of eighteen (18) months following the
Effective Date, provided, however, that the Company Fundamental Representations
and Buyer’s Fundamental Representations shall survive for a period of three
(3) years following the Effective Date.

 

9.15                        Time is of the Essence.  The parties hereby agree
that time is of the essence with respect to performance of each of the parties’
obligations under this Agreement.  The parties agree that in the event that any
date on which performance is to occur falls on a Saturday, Sunday or state or
national holiday, then the time for such performance shall be extended until the
next business day thereafter occurring.

 

9.16                        Joint Preparation.  The preparation of this
Agreement has been a joint effort of the parties and the resulting documents
shall not, solely as a matter of judicial construction, be construed more
severely against one of the parties than the other.

 

9.17                        Severability.  If any provision of this Agreement is
held to be invalid or unenforceable in any respect, then the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this
Agreement.

 

9.18                        No Third Party Beneficiaries.  This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except that the provisions of
Article VIII are intended for the benefit of the Persons referred to in that
Article.

 

21

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9.19                        WAIVER OF JURY TRIAL.  EACH PARTY HERETO, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER
AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS
AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH BUYER AND THE
COMPANY ARE ADVERSE PARTIES.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR BUYER
TO PURCHASE THE NOTE.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be executed as of the date and year first set forth above.

 

 

COMPANY:

 

 

 

IFMI LLC

 

 

 

 

 

By:

/s/ Joseph W. Pooler, Jr.

 

Name:

Joseph W. Pooler, Jr.

 

Title:

Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

PARENT:

 

 

 

INSTITUTIONAL FINANCIAL MARKETS, INC., solely for purposes of Article VI and
Sections 7.3, 7.4, 7.5, and 7.6

 

 

 

 

 

By:

/s/ Joseph W. Pooler, Jr.

 

Name:

Joseph W. Pooler, Jr.

 

Title:

Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

BUYER:

 

 

 

DGC FAMILY FINTECH TRUST

 

 

 

 

 

By:

/s/ Jeffrey D. Blomstrom

 

Name:

Jeffrey D. Blomstrom

 

Title:

Trustee

 

 

 

 

 

 

 

By:

/s/ Raphael Licht

 

Name:

Raphael Licht

 

Title:

Trustee

 

[Signature page to Securities Purchase Agreement]

 

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Exhibit A

 

NEITHER THIS NOTE NOR THE LLC UNITS ISSUABLE UPON THE CONVERSION HEREOF HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY JURISDICTION.  THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.  BY ACQUIRING THIS NOTE, THE
HOLDER REPRESENTS THAT THE HOLDER WILL NOT SELL OR OTHERWISE DISPOSE OF THIS
NOTE OR THE LLC UNITS ISSUABLE UPON CONVERSION HEREOF WITHOUT REGISTRATION OR
EXEMPTION THEREFROM.

 

CONVERTIBLE SENIOR SECURED PROMISSORY NOTE

 

$15,000,000

 

March 10, 2017

 

For value received, IFMI, LLC, a Delaware limited liability company (together
with its successors and assigns, the “Company”), promises to pay to DGC Family
Fintech Trust (the “Holder”), the principal amount of $15,000,000, together with
all accrued and unpaid interest thereon (the “Outstanding Amount”).  This
convertible senior secured promissory note (this “Note”) has been issued
pursuant to that certain Securities Purchase Agreement (the “Purchase
Agreement”) dated as of the date hereof by and between the Company and the
Holder, and, for purposes of Article VI and Sections 7.3, 7.4, 7.5 and 7.6
thereof, Institutional Financial Markets, Inc. (the “Parent”).  This Note is
subject to the following terms and conditions:

 

1.                                      Note.

 

(a)                                 Maturity.  The Outstanding Amount shall be
due and payable in full on March 10, 2022, provided that, upon 30 days’ prior
written notice, the Company shall have the right, in its sole discretion, to
extend the maturity date for an additional one-year period (as may be extended,
the “Maturity Date”), unless this Note shall have been earlier converted in
accordance with Section 2.

 

(b)                                 Interest.  Interest shall accrue from the
date of this Note on the unpaid principal amount at a rate equal to eight
percent (8%) per annum, computed on the basis of the actual number of days
elapsed and a year of 365 days from the date of this Note until the principal
amount and all interest accrued thereon are paid (or converted, as provided in
Section 2).  Interest shall be payable in cash quarterly on each January 1,
April 1, July 1, and October 1 (each, an “Interest Payment Date”) until the
Maturity Date, commencing on the first Interest Payment Date to occur after the
Closing under the Purchase Agreement; provided, however, that if no Event of
Default has occurred, in the event that dividends of less than Two Cents ($0.02)
per share are paid on the Common Stock in the fiscal quarter prior to any
Interest Payment Date, then the Company shall have the option, in its sole
discretion, to pay one-half of the interest payable on such Interest Payment
Date in cash, in which event the remaining one-half of the interest otherwise
payable on such Interest Payment Date shall accrue and be added to the
Outstanding Amount as of such Interest Payment Date; provided, further, that if
the Company elects to only pay in cash one-half of interest payable on an
Interest Payment Date, the Company will provide written notice to the Holder of
such election at least ten (10) days prior to the

 

A-1

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relevant Interest Payment Date.  Such notice shall set forth the amount of
interest in cash not paid, as well as the revised Outstanding Amount.  Upon the
occurrence of any Event of Default and after any applicable cure period as
described in Section 9 and for so long as such Event of Default continues, all
principal, interest and other amounts payable under this Note shall bear
interest at a rate equal to nine percent (9%) per annum (the “Default Rate”).

 

(c)                                  No Prepayment Without Consent.  This Note
shall not be prepaid in whole or in part prior to the Maturity Date without the
prior written consent of the Holder (which may be granted or withheld in its
sole discretion).

 

(d)                                 Collateral.  The obligations under this Note
prior to the Conversion in full of this Note shall be secured pursuant to that
certain Pledge Agreement, dated the date hereof, by and between the Company and
Holder.

 

2.                                      Conversion.  At any time following the
date hereof (including, for the avoidance of doubt, at any time prior to 5:00
p.m. (ET) on the business day prior to the Maturity Date), the Holder shall have
the right, in the Holder’s sole discretion, to convert all or any part of the
Outstanding Amount of this Note (the “Conversion”), without the payment of any
additional consideration therefor, into the number of fully paid and
nonassessable LLC Units that is determined by dividing (i) the portion of the
Outstanding Amount being converted by (ii) $1.45 (the “Conversion Price”).  The
Conversion Price is subject to adjustment if the Company, at any time while this
Note is outstanding:  (i) pays a dividend of LLC Units or otherwise makes a
distribution or distributions on LLC Units or any other equity or equity
equivalent securities payable in LLC Units (which, for avoidance of doubt, shall
not include any LLC Units issued by the Company upon conversion of this Note),
(ii) subdivides outstanding LLC Units into a larger number of units,
(iii) combines (including by way of reverse split) outstanding LLC Units into a
smaller number of units, (iv) issues by reclassification of LLC Units any LLC
Units of the Company or (v) takes any similar action or any action designed to
have a similar effect, then in each case the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of LLC Units
(excluding LLC Units held in treasury, if any) outstanding immediately before
such event and of which the denominator shall be the number of LLC Units
outstanding immediately after such event, and the number of LLC Units issuable
upon Conversion shall be proportionately adjusted such that the aggregate
Conversion Price of this Note shall remain unchanged.  Any adjustment made
pursuant to this Section 2 shall become effective immediately after the record
date for the determination of members entitled to participate in such event
described in clauses (i) through (v) and shall become effective immediately
after the effective date in the case of a subdivision, combination,
reclassification or similar action.  Whenever the Conversion Price is adjusted
pursuant to this Section 2, the Company shall promptly notify the Holder, in
accordance with the Purchase Agreement, of the Conversion Price after such
adjustment, any resulting adjustment to the number of LLC Units issuable upon
Conversion and a brief statement of the facts requiring such adjustment.

 

3.                                      Mechanics and Effect of Conversion.

 

(a)                                 If the Holder wishes to exercise its right
to effect a Conversion, the Holder shall provide the Company with a written
notice of its election, and shall agree in writing to be bound by the Amended
and Restated Limited Liability Company Agreement of the Company, dated

 

A-2

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December 16, 2009, as amended, in accordance with Section 10.2 thereof to the
extent the Holder is not so bound upon effecting such Conversion.

 

(b)                                 No fractional LLC Units will be issued upon
conversion of this Note.  In lieu of any fractional LLC Unit to which the Holder
would otherwise be entitled, the Company shall pay to the Holder in cash the
unconverted amount that would otherwise be converted into such fractional LLC
Unit.

 

(c)                                  In the event that all or any portion of
this Note is converted pursuant to Section 2, promptly after such Conversion,
the Holder shall surrender this Note, duly endorsed, to the Company and this
Note shall thereupon be canceled.  At its expense, the Company shall as promptly
as practicable (but in no event more than five (5) days after the Holder’s
surrender of this Note) issue and deliver to the Holder (i) the number of LLC
Units to which the Holder is entitled upon such Conversion, (ii) any accrued
interest from the Interest Payment Date immediately prior to Conversion through
the date of Conversion, (iii) if applicable, a check payable to the Holder for
any cash amounts payable as described in Section 3(b), and (iv) in the case of a
partial Conversion of this Note, a new promissory note (a “Replacement Note”),
duly endorsed by the Parent and the Company, representing the unconverted
portion of the Outstanding Amount, the terms and conditions of which Replacement
Note shall be identical to this Note (except for the Outstanding Amount
thereunder).

 

(d)                                 Upon issuance of LLC Units in respect of a
Conversion of the entire Outstanding Amount or, in the case of a partial
Conversion of this Note, upon issuance of LLC Units and a Replacement Note in
respect of such partial Conversion, all rights with respect to this Note shall
terminate, whether or not this Note has been surrendered for cancellation.  The
Holder shall be treated for all purposes as the record holder of LLC Units
issued upon Conversion.

 

(e)                                  Upon a Conversion of all or any portion of
the Outstanding Amount and the issuance of LLC Units to the Holder, the Holder
shall have the same rights of redemption, if any, held by the holders of LLC
Units as set forth in the LLC Agreement; provided, however, that Holder shall
have no such redemption rights with respect to any LLC Units issued in
connection with this Note if the Board of Directors of Parent, after
consultation with legal counsel, determines in good faith and in its sole
discretion that satisfaction of such redemption by Parent with shares of its
Common Stock would (i) jeopardize or endanger the availability to Parent of its
net operating loss and net capital loss carryforwards and certain other tax
benefits under Section 382 of the Code or (ii) constitute a “Change of Control”
under that certain Junior Subordinated Indenture, dated as of June 25, 2007, by
and between Parent (formerly Alesco Financial Inc.) and Wells Fargo Bank, N.A.,
as trustee.

 

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

 

(a)                                 take such limited liability company action
as may be necessary from time to time to cause the LLC Units to be issued upon
Conversion of this Note pursuant to Section 2 to be duly authorized, validly
issued, fully paid and non-assessable;

 

A-3

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.                                      Redemption of LLC Units.  Until the
Parent’s stockholders approve the Stockholder Proposal, the Holder shall not be
permitted to redeem any LLC Units received upon a Conversion of this Note if
satisfaction of such redemption by Parent with shares of its Common Stock would
result in the Parent issuing a number of shares of Common Stock that, when
aggregated with any shares of Common Stock previously issued to the Holder in
connection with a redemption of LLC Units received by the Holder upon any
Conversion of this Note, equals or exceeds twenty percent (20%) of the
outstanding Common Stock as of the date of this Note.  Notwithstanding the
foregoing, upon written request by the Holder to redeem any LLC Units received
upon a Conversion of this Note, Parent may elect, in its sole discretion, to
redeem such LLC Units in cash.

 

6.                                      Voting Proxy.

 

(a)                                 If following any Conversion of this Note the
Parent owns a number of LLC Units representing less than a majority of the votes
entitled to be cast at any Meeting (as defined below), then for so long as the
Parent owns a number of LLC Units representing less than a majority of the votes
entitled to be cast at any Meeting, the Holder hereby grants to and appoints the
Parent as the Holder’s proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of the Holder, to vote at
any Meeting the number of LLC Units owned by the Holder as of the record date of
such Meeting equal to the Additional Units (as defined below).  Such
attorney-in-fact may evidence the taking of any action, giving of any consent or
the voting of such Additional Units by the execution of any document or
instrument for such

 

A-4

--------------------------------------------------------------------------------

 

purpose in the name of the Holder.  The Holder hereby affirms that the proxy set
forth in this Section 6 is given in connection with, and in consideration of,
this Note. The Holder hereby further affirms that this proxy is coupled with an
interest and may not be revoked unless otherwise terminated by the mutual
consent of the Holder and the Parent. The Holder hereby ratifies and confirms
all that the proxy and attorney-in-fact appointed pursuant to this Section 6 may
lawfully do or cause to be done by virtue hereof.  Notwithstanding anything to
the contrary herein, upon the earlier to occur of a Notice Default and an
Automatic Default, the proxy shall, without further action by any party, be
automatically revoked.

 

(b)                                 For purposes of this Section 6, the
following terms have the meanings set forth below:

 

(i)                                     “Additional Units” means the number of
LLC Units representing fifty percent (50%) of the votes entitled to be cast at
any Meeting, plus one LLC Unit, minus the number of LLC Units owned by Parent as
of the record date of such Meeting; and

 

(ii)                                  “Meeting” shall mean any meeting of the
holders of LLC Units, or any adjournment thereof or any other circumstances upon
which a vote, agreement, consent (including unanimous written consents) or other
approval is sought from the holders of LLC Units.

 

7.                                      Transfer Restrictions.  Upon a
Conversion of all or any portion of the Outstanding Amount and the issuance of
LLC Units, no such LLC Units may be sold, assigned or otherwise transferred by
the holder thereof to any other party unless the transferee of such LLC Units
agrees in writing in a form acceptable to the Company in its reasonable
discretion to be bound by the provisions of this Section 7 and the provisions of
Sections 3(e), 5 and 6 of this Note.

 

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

 

9.                                      Priorities.             The indebtedness
evidenced by this Note and the payment of all principal, interest and any other
amounts payable hereunder is a senior obligation of the Company and shall be
Senior (as hereinafter defined) to, and have priority in right of payment over,
all Indebtedness (as hereinafter defined) of the Company incurred following the
date hereof and any subordinated or junior subordinated Indebtedness outstanding
as of the date hereof.  “Senior” means that, in the event of any default in the
payment of the obligations represented by this Note or of any liquidation,
insolvency, bankruptcy, reorganization or similar proceedings relating to the
Company, all amounts payable under this Note shall first be paid in full before
any payment is made upon any other Indebtedness hereinafter incurred (including
any Indebtedness guaranteed by the Company) or any subordinated or junior
subordinated Indebtedness outstanding as of the date hereof, and, in any such
event, any payment or distribution of any character which shall be made in
respect of any other Indebtedness of Company shall be paid to the Holder for
application to the payment hereof, unless and until the obligations under this
Note shall have been paid and satisfied in full.  “Indebtedness” means, with
respect to a specified

 

A-5

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

 

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

 

(a)                                 subject to Section 1(b), the Company shall
fail to pay as and when due (i) any payment of principal and such nonpayment
shall continue uncured for a period of thirty (30) days or (ii) two
(2) consecutive payments of interest required to be paid to Noteholder in cash
under the Note;

 

(b)                                 the Company fails to perform any material
covenant or agreement under the Note, and such failure continues or is not cured
within thirty (30) days after written notice by the Noteholder to the Company;

 

(c)                                  Parent or the Company applies for or
consents to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) makes a general
assignment for the benefit of itself or any of its creditors, or (iii) commences
a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect;

 

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

 

(e)                                  there is entered against the Company a
final judgment for the payment of money in an aggregate amount exceeding
$500,000 and such judgment shall remain unsatisfied or without a stay in respect
thereof for a period of sixty (60) days;

 

(f)                                   the Company shall fail to pay when due any
obligation, whether direct or contingent, for indebtedness exceeding $500,000,
or shall breach or default with respect to any term of any loan agreement,
mortgage, indenture or other agreement pursuant to which such obligation for
indebtedness was created or securing such obligation if the effect of such
breach or

 

A-6

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default is to cause, or to permit the holder or holders of that indebtedness (or
a trustee on behalf of such holder or holders), to cause that indebtedness to
become or be declared due and payable (or redeemable) prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may
be; or

 

(g)                                  a Change in Control shall have occurred. 
For purposes of the Note, the term “Change in Control” shall mean any one of the
following events:  (i) any person or group (other than the Noteholder, Daniel
Cohen, members of Daniel Cohen’s Family Group (as defined below) and each of its
and their controlled affiliates and principals) is or becomes a beneficial
owner, directly or indirectly, of more than fifty percent (50%) of the aggregate
voting power represented by all issued and outstanding capital stock of Parent,
(ii) the stockholders of Parent or the members of the Company approve a plan of
liquidation or dissolution of Parent or the Company or a sale of all or
substantially all of Parent’s or the Company’s assets, as applicable; or
(iii) Parent or the Company, as applicable, has entered into a definitive
agreement, the consummation of which would result in the occurrence of any of
the events described in clauses (i) or (ii) above.  For purposes of the Note,
the term “Family Group” means, with respect to any Person, such Person and such
Person’s spouse, parent, sibling and descendants (whether natural or adopted)
and any estate, trust, family limited partnership, limited liability company or
other entity wholly owned, directly or indirectly, by such Person or such
Person’s spouse, parent, sibling and/or descendant that is and remains for the
benefit of such Person and/or such Person’s spouse, parent, sibling and/or
descendants and any self-directed retirement plan for such individual.

 

Notwithstanding the foregoing, the occurrence of any of the foregoing events
described in clauses (a) through (g) above shall not constitute an “Event of
Default” under the Note to the extent that such event is primarily caused by the
Noteholder, Daniel Cohen, its or their controlled affiliates and principals
and/or members of Daniel Cohen’s Family Group.

 

Upon the occurrence or existence of any Event of Default described in clause
(a), clause (b), clause (e), clause (f) or clause (g) above and at any time
thereafter during the continuance of such Event of Default, the Noteholder may,
by written notice to the Company, declare a default under the Note (a “Notice
Default”), whereupon the entire unpaid principal amount outstanding and all
interest accrued and unpaid on the Note to be immediately due and payable.

 

Upon the occurrence or existence of any Event of Default described in clause
(c) or clause (d) above, immediately and without notice, the entire unpaid
principal amount outstanding and all interest accrued and unpaid on the Note
shall automatically become immediately due and payable (an “Automatic Default”).

 

10.                               Survival.  The provisions of Sections 3(e), 5,
6 and 7 shall survive the Maturity Date, any full payment of the outstanding
principal amount of this Note, the full Conversion of this Note and any
cancellation or termination of this Note.

 

11.                               Miscellaneous.

 

(a)                                 This Note and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with

 

A-7

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the laws of the State of New York without regard to its conflicts of law
principles or the conflicts of law principles of any other state in either case
that would result in the application of the laws of any other state.

 

(b)                                 Any notice or other communication required
or permitted to be given hereunder shall be in writing and given as provided in
the Purchase Agreement.

 

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

 

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

 

(e)                                  This Note may not be assigned by any holder
without the prior written approval of the Company.

 

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

 

(g)                                  The Company agrees to pay up to $15,000 of 
Holder’s legal fees and expenses in connection with the negotiation of this Note
and the Purchase Agreement, and to pay all reasonable costs and expenses
actually incurred by the Holder in connection with an Event of Default,
including without limitation the fees and disbursements of counsel, advisors,
consultants, examiners and appraisers for the Holder, in connection with (i) any
enforcement (whether through negotiations, legal process or otherwise) of this
Note in connection with such Event of Default, (ii) any workout or restructuring
of this Note during the pendency of such Event of Default and (iii) any
bankruptcy case or proceeding of the Company or any appeal thereof.

 

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

 

(i)                                     Capitalized terms used herein and not
otherwise defined, shall have the meanings ascribed to them in the Purchase
Agreement.

 

A-8

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(j)                                    This Note may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same instrument.

 

Signature page follows

 

A-9

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

 

 

 

IFMI, LLC

 

 

 

 

 

By:

 

 

Name:

Joseph W. Pooler, Jr.

 

Title:

Executive Vice President, Chief Financial Officer and Treasurer

 

 

AGREED AND ACKNOWLEDGED:

 

DGC FAMILY FINTECH TRUST

 

 

By:

 

 

Name:

Jeffrey D. Blomstrom

Title:

Trustee

 

 

 

 

By:

 

 

Name:

Raphael Licht

Title:

Trustee

 

A-10

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Exhibit B

 

IFMI, LLC

 

AMENDMENT NO. 3 TO

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
of IFMI, LLC, dated as of [   ] (“Amendment No. 3”), is entered into by and
among each of the Members set forth on the signature pages hereto.

 

Background

 

On December 16, 2009, the Members entered into the Amended and Restated Limited
Liability Company Agreement (the “Amended and Restated Agreement”) of IFMI, LLC
(formerly, Cohen Brothers, LLC, the “Company”). On June 20, 2011, the Members
entered into Amendment No. 1 to Amended and Restated Limited Liability Company
Agreement of IFMI, LLC (“Amendment No. 1”).  On May 9, 2013, the Members entered
into Amendment No. 2 to Amended and Restated Limited Liability Company Agreement
of IFMI, LLC (“Amendment No. 2” and collectively with the Amended and Restated
Agreement and Amendment No. 1, the “Agreement”).

 

Pursuant to Section 13.10 of the Agreement, the Members desire to amend certain
provisions of the Agreement.

 

NOW, THEREFORE, intending to be bound hereby, the Members agree as follows:

 

1.             Defined Terms. Terms that are used but not defined herein shall
have the meaning ascribed to such terms in the Agreement.

 

1.1  The definition set forth below is hereby added to Section 1.2 of the
Agreement to be placed in proper alphabetical sequence.

 

“Additional Units”: the number of Units representing fifty percent (50%) of the
votes entitled to be cast at any Meeting, plus one Unit, minus the number of
Units owned by Parent as of the record date of such Meeting.

 

“Convertible Secured Note”: the Convertible Senior Secured Promissory Note,
dated as of March 10, 2017, issued by the Company to DGC Family Fintech Trust in
the aggregate principal amount of Fifteen Million Dollars ($15,000,000), with an
interest rate of eight percent (8%) per annum.

 

“Meeting”: any meeting of the holders of Units, or any adjournment thereof or
any other circumstances upon which a vote, agreement, consent (including
unanimous written consents) or other approval is sought from the holders of
Units.

 

2.             Management and Control of Business; Authority of Board Members.
Section 7.1 of the Agreement is hereby deleted and replaced in its entirety as
follows:

 

B-1

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Section 7.1 Management and Control of Business; Authority of Board Members.
Management of the business and affairs of the Company and the Subsidiaries shall
be vested in the Board of Managers, who may exercise all powers of the Company
and perform or authorize the performance of all lawful acts which are not by the
Act or this Agreement directed or required to be exercised or performed by the
Members.  The Board of Managers shall consist of three Managers.  The Managers
shall initially be Daniel G. Cohen (who shall be the Chairman of the Board of
Managers), Lester R. Brafman and Joseph W. Pooler, Jr.  A Manager may resign at
any time for any reason or for no reason. Upon resignation of a Manager or other
vacancy on the Board of Managers, a new Manager shall be elected by the Members
by a Majority Vote. A Manager may be removed by the Company upon a Majority
Vote, except as set forth in the following sentence. Notwithstanding any other
provision of this Agreement, the Company shall not, without receiving advance
written approval by Parent and a Majority Vote of the Designated Non-Parent
Members, if any, remove Daniel G. Cohen as a Manager or as Chairman of the Board
of Managers other than for cause.

 

3.             Special Proxy Regarding Convertible Secured Note.  Section 6.13
of the Agreement is inserted as follows:

 

Section 6.13 Special Proxy Regarding Convertible Secured Note.  If following any
conversion of all or any part of the Convertible Secured Note as provided
therein, the Parent owns a number of Units representing less than a majority of
the votes entitled to be cast at any Meeting, then for so long as the Parent
owns a number of Units representing less than a majority of the votes entitled
to be cast at any Meeting, each holder of any Units issued as a result of the
conversion of the Convertible Secured Note (regardless of how such Units were
acquired by such holder) hereby grants to and appoints the Parent as such
holder’s proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of each such holder, to vote at any Meeting the
number of Units (the “Proxy Units”) owned by each such holder as of the record
date of such Meeting equal to (i) the Additional Units or (ii) if such holder
holds less than a number of Units equal to the Additional Units, all such
holder’s Units.  Such attorney-in-fact may evidence the taking of any action,
giving of any consent or the voting of such Proxy Units by the execution of any
document or instrument for such purpose in the name of such holder.  Each such
holder hereby affirms that the proxy set forth in this Section 6.13 is given in
connection with, and in consideration of, the Convertible Secured Note and/or in
connection with the acquisition of any Units issued as a result of the
conversion of such Convertible Secured Note. Each such holder hereby further
affirms that this proxy is coupled with an interest and may not be revoked
unless otherwise terminated by the mutual consent of each such holder and the
Parent. Each such holder hereby ratifies and confirms all that the proxy and
attorney-in-fact appointed pursuant to this Section 6.13 may lawfully do or
cause to be done by virtue hereof.  Notwithstanding anything to the contrary
herein, upon the earlier to occur of a Notice Default and an Automatic Default
(each as defined in the Convertible Secured Note), the proxy shall, without
further action by any party, be automatically revoked.

 

B-2

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4.             Approval of Dissolution of the Company.  Section 12.1 of the
Agreement is hereby deleted and replaced in its entirety as follows:

 

Section 12.1 Approval of Dissolution of the Company. If there is any Designated
Non-Parent Member, Parent agrees that Parent shall not, without receiving
advance approval by a Majority Vote of the Designated Non-Parent Members, adopt
any plan of liquidation or dissolution or file a certificate of dissolution with
respect to the Company.

 

5.             Special Redemption Regarding Convertible Secured Note. 
Section 12.2(j) of the Agreement is inserted as follows:

 

(j)                Upon a conversion of all or any portion of the Convertible
Secured Note and the issuance of Units to the holder of the Convertible Secured
Note, such holder shall have the same rights of Redemption, if any, held by any
Member; provided, however, that such holder shall have no such Redemption rights
with respect to any Units issued in connection with the Convertible Secured Note
if the Board of Directors of Parent, after consultation with legal counsel,
determines in good faith and in its sole discretion that satisfaction of such
Redemption by Parent with Common Shares would (i) jeopardize or endanger the
availability to Parent of its net operating loss and net capital loss
carryforwards and certain other tax benefits under Section 382 of the Code or
(ii) constitute a “Change of Control” under that certain Junior Subordinated
Indenture, dated as of June 25, 2007, by and between Parent (formerly Alesco
Financial Inc.) and Wells Fargo Bank, N.A., as trustee.

 

6.             Integration. The Agreement, as amended by this Amendment No. 3
sets forth all (and is intended by all parties hereto to be an integration of
all) of the promises, agreements, conditions, understandings, warranties and
representations among the parties hereto with respect to the Company, the
Company business and the property of the Company, and there are no promises,
agreements, conditions, understanding, warranties, or representations, oral or
written, express or implied, among them other than as set forth herein or in the
agreements noted above.  Notwithstanding the foregoing, certain Members are or
will be a party to a senior management agreement between the Company and such
Member (e.g., the Cohen Executive Agreement). To the extent that any provisions
of this Amendment No. 3 conflict with such Member’s senior management agreement
(including, without limitation, terms relating to the transfer of Units and the
allocations provided for therein), the terms of such Member’s senior management
agreement shall control.

 

7.             No Other Amendments.  Except as expressly amended, modified and
supplemented hereby, the provisions of the Agreement are and shall remain in
full force and effect.

 

8.             Governing Law. It is the intention of the parties that all
questions with respect to the construction of this Amendment No. 3 and the
rights and liabilities of the parties hereto shall be determined in accordance
with the laws of the State of Delaware.

 

9.             Binding Effect. This Amendment No. 3 shall be binding upon, and
inure to the benefit of, the parties hereto and their respective personal and
legal representatives, successors and assigns.

 

B-3

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10.          Counterparts. This Amendment No. 3 may be executed in any number of
counterparts and it shall not be necessary that each party to this Amendment
No. 3 execute each counterpart. Each counterpart so executed (or, if all parties
do not sign on the same counterpart, each group of counterparts signed by all
parties) shall be deemed to be an original, but all such counterparts together
shall constitute one and the same instrument. In making proof of this Amendment
No. 3, it shall not be necessary to account for more than one counterpart or
group of counterparts signed by all parties.

 

[Signatures on Following Page]

 

B-4

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IN WITNESS WHEREOF, the undersigned parties have caused this Amendment No. 3 to
be executed as of the date and year first set forth above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B-5

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DISCLOSURE SCHEDULES

 

to the

 

SECURITIES PURCHASE AGREEMENT

 

by and among

 

IFMI, LLC

 

and DGC Family Fintech Trust,

 

and solely for purposes of Article VI and Sections 7.3, 7.4, 7.5 and 7.6
thereof,

 

Institutional Financial Markets, Inc.

 

Dated as of March 10, 2017

 

These Disclosure Schedules (these “Disclosure Schedules”) are being delivered
pursuant to the Securities Purchase Agreement (the “Purchase Agreement”), dated
as of March 10, 2017, by and among IFMI, LLC, a Delaware limited liability
company (the “Company”), DGC Family Fintech Trust, a trust established by Daniel
G. Cohen, and solely for purposes of Article VI and Sections 7.3, 7.4, 7.5 and
7.6 thereof, Institutional Financial Markets, Inc., a Maryland corporation (the
“Parent”).  Capitalized terms used herein but not otherwise defined shall have
the meanings ascribed to such terms in the Purchase Agreement.

 

These Disclosure Schedules contain numbered sections corresponding to sections
in the Purchase Agreement.  The mere inclusion of an item in these Disclosure
Schedules as an exception to a representation or warranty shall not be deemed an
admission by any party that such item represents a material exception, fact,
event or circumstance.  Any disclosures made in these Disclosure Schedules with
respect to a section or subsection of the Purchase Agreement shall be deemed to
qualify such sections or subsections specifically referenced or cross-referenced
and any other section or subsection in these Disclosure Schedules to the extent
that it is reasonably apparent that such disclosure also pertains to such other
section or subsection.  No disclosure in these Disclosure Schedules constitutes
an admission of any liability or obligation of any party to any third party nor
an admission against any party’s interests to any third party.

 

The descriptive headings in these Disclosure Schedules are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning, construction or interpretation of these Disclosure Schedules or the
Purchase Agreement.

 

1

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Schedule 5.3

 

Capitalization

 

(i)

 

·                  Parent Outstanding Restricted Stock:

·                  519,366 restricted shares issued, scheduled to vest on
1/31/18 (321,412 shares) and 1/31/19 (197,954 shares)

·                  Parent Outstanding Restricted Units:

·                  500,000 restricted units, subject to performance and
time-based vesting as noted in the related unit issuance agreement

·                  Parent Outstanding Stock Options:

·                  3,000,000 options issued, with a five-year term expiring on
11/30/18 (1,000,000 have a $3.00 strike price; 1,000,000 have a $4.00 strike
price; and 1,000,000 have a $5.00 strike price)

·                  192,857 options issued, with a five-year term expiring on
2/13/19 (all have a $4.00 strike price)

·                  Convertible Senior Promissory Notes

·                  2,749,167 shares of Parent common stock are issuable upon
conversion of the $8,247,501 in Convertible Senior Promissory Notes originally
issued to Mead Park Capital Partners LLC and EBC 2013 Family Trust (as assignee
of Cohen Bros. Financial, LLC) at a conversion price of $3.00 per share, subject
to customary anti-dilution adjustments

 

Note that Parent common stock equivalents are listed above because they would
result in a simultaneous issuance of LLC Units to the Parent company upon
vesting.

 

2

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Schedule 5.4

Subsidiaries

 

·                  Alesco Holdings, Ltd. (Cayman Islands) — 40% of the capital
stock is owned by the Company.

·                  C&Co Loan Trading LLC (DE)

·                  C&Co/PrinceRidge Partners LLC (DE)

·                  Cira ECM, LLC (DE)

·                  Cira SCM, LLC (DE)

·                  Cohen & Compagnie (France)

·                  Cohen & Company Financial Limited (UK)

·                  Cohen & Company Financial Management, LLC

·                  Cohen & Company Management, LLC (DE)

·                  Cohen & Company Securities, LLC (DE)

·                  Cohen Asia Investments Ltd (Cayman Island)

·                  Cohen Legacy, LLC (DE)

·                  Cohen Principal Investing, LLC (DE)

·                  Cohen Securities Funding LLC (DE)

·                  COOF Asset Acquisition, LLC (DE)

·                  Dekania Capital Management, LLC (DE)

·                  Dekania Investors, LLC (DE)

·                  Foundation View Capital Management, LLC (DE)

·                  Foundation View CLO Opportunities GP LLC (DE)

·                  IFMI Real Estate Holdings, LLC (DE)

·                  J.V.B. Financial Group Holdings, LP (DE)

·                  J.V.B. Financial Group, LLC (DE)

·                  Unicum Capital, S.L. (Spain)

 

3

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Schedule 5.9

Title to Assets

 

IFMI, LLC

Select Assets from Balance Sheet

As of January 31, 2017

 

J.V.B. Financial Group - Accrued Interest on Trading Securities

 

$

1,097,569

 

Due from broker

 

84,108,097

 

Investments-trading

 

118,155,775

 

Other investments, at fair value

 

6,495,732

 

Securities purchased under agreements to resell-reverse repo (1)

 

283,529,375

 

 

 

$

493,386,549

 

 

--------------------------------------------------------------------------------

(1)         Substantially all of these assets serve as collateral for our
securities financing transactions and margin loan payable at J.V.B. Financial
Group, LLC, the Company’s broker-dealer subsidiary registered with the
Securities and Exchange Commission (SEC) and a member of the Financial Industry
Regulatory Authority (FINRA).  Like assets in the future will continue to serve
as collateral.

 

In addition:

 

·                  Substantially all of the asset management contracts held by
the Company and Subsidiaries are subject to transfer restrictions; and

·                  Substantially all assets and net capital held in J.V.B
Financial Group, LLC may be subject to distribution restrictions depending on
its ongoing measurements of regulatory capital and the related rules governing
distributions.

 

4

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Schedule 6.1

Capitalization

 

(i)

 

·                  Parent Restricted Stock

·                  519,366 restricted shares issued, scheduled to vest on
1/31/18 (321,412 shares) and 1/31/19 (197,954 shares)

·                  Parent Restricted Units

·                  500,000 restricted units, subject to performance and
time-based vesting as noted in the related unit issuance agreement

·                  Parent Stock Options

·                  3,000,000 options issued, with a five-year term expiring on
11/30/18 (1,000,000 have a $3.00 strike price; 1,000,000 have a $4.00 strike
price; and 1,000,000 have a $5.00 strike price)

·                  192,857 options issued, with a five-year term expiring on
2/13/19 (all have a $4.00 strike price)

·                  Convertible Senior Promissory Notes

·                  2,749,167 shares of Parent common stock to be issued upon
conversion of the $8,247,501 in Convertible Senior Promissory Notes (originally
issued to Mead Park Capital Partners LLC and EBC 2013 Family Trust (as assignee
of Cohen Bros. Financial, LLC)) at a conversion price of $3.00 per share,
subject to customary anti-dilution adjustments, which option expires upon
maturity of the Convertible Senior Promissory Notes on 9/25/18

 

(ii)

 

·                  Alesco Capital Trust I (par value $28,995,000)

·                  Sunset Financial Statutory Trust I (par value $20,619,000)

·                  Convertible Senior Promissory Note payable to The Edward E.
Cohen IRA (aggregate principal amount of $4,385,628)

·                  Convertible Senior Promissory Note payable to EBC Family
Trust (aggregate principal amount of $2,400,000)

·                  Convertible Senior Promissory Note payable to Christopher
Ricciardi (aggregate principal amount of $1,461,873)

 

5

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