EXHIBIT 10.1

 

SECOND AMENDMENT TO EXCHANGE AGREEMENT

by and among

INTERACTIVE BROKERS GROUP, INC.,

IBG HOLDINGS LLC,

IBG LLC

and

MEMBERS OF IBG HOLDINGS LLC

Dated as of July 23, 2015

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SECOND AMENDMENT TO EXCHANGE AGREEMENT

 This SECOND AMENDMENT TO EXCHANGE AGREEMENT (the “Second Amendment”), dated as
of July 23, 2015, by and among Interactive Brokers Group, Inc., a Delaware
corporation (“IBGI”), IBG Holdings LLC, a Delaware limited liability company
(“IBG Holdings”), IBG LLC, a Connecticut limited liability company (“IBG LLC”),
and the members of IBG Holdings LLC (the “IBG Holdings Members” (formerly, the
members of IBG LLC) and, together with IBGI, IBG Holdings and IBG LLC, the
“Parties” and each a “Party”).

 

RECITALS

IBGI consummated an initial public offering (the “IPO”) of shares of its Class A
common stock on May 3, 2007.  In connection with the IPO, the Parties executed
that certain exchange agreement, dated May 3, 2007, which was further amended on
June 6, 2012 (the “Exchange Agreement”) pursuant to which IBG Holdings sold 10%
of the membership interests in IBG LLC to IBGI.  The Exchange Agreement
permitted the members of IBG Holdings to redeem their IBG Holdings Shares over
an eight (8) year period ending in 2015.  It was anticipated IBG Holdings would
sell IBG Shares to IBGI to fund such redemptions with payments to be made in
Common Stock or the proceeds from secondary offerings of Common Stock.  Such
sales were to occur on a one-for-one basis (i.e., one IBG Holdings Share was
equivalent to one IBG LLC Share and was equivalent to one share of Common Stock)
subject to adjustment provided in the Exchange Agreement, plus certain payments
pursuant to the Tax Receivable Agreement.

It was anticipated IBGI would increase its interest in IBG LLC over time through
sales under the Exchange Agreement.  The IBG Holdings Members have not elected
to redeem a significant portion of their IBG Holdings Shares.  The Parties
determined it is in their best interests to amend the Exchange Agreement to
extend its term beyond such eight (8) year period to avoid the risk of a
significant number of IBG Holdings Shares being tendered for redemption in 2015
by the IBG Holdings Members (many of whom are key employees of IBG LLC). 

NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth in this Second Amendment, and
intending to be legally bound, the Parties agree to amend the Exchange Agreement
as follows:

Section 1.  Capitalized terms used in this Second Amendment but not otherwise
defined in this Second Amendment shall have the meanings ascribed to them in the
Exchange Agreement.

Section 2.  Article I of the Exchange Agreement is amended by deleting the
definition of “General Redemption Date” and replacing such definition with the
following:

 “General Redemption Date” means on or about June 30 of each year or such other
date established by the managing member of IBG Holdings during the term of the
Agreement.”

Section 3.  Article IV of the Exchange Agreement is deleted in its entirety and
replaced with the following new Article IV:

 

“ARTICLE IV

PURCHASES AND REDEMPTIONS

SECTION 4.1.  Elective Redemptions.

(a) Elective Redemptions.  Each IBG Holdings Member shall be entitled to cause
the redemption of such Member’s IBG Holdings Shares (or any portion thereof) on
each General Redemption Date in accordance with the procedures set forth in this
Article IV (an “Elective Redemption”); provided that, an IBG Holdings Member
must be in compliance with all applicable covenants and obligations under the
IBG Holdings Operating Agreement on such General Redemption Date in order to
remain entitled to cause an Elective Redemption.

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(b) Procedures.

(i)Subject to clause (ii) below, each Elective Redemption shall be effected in
accordance with the IBG Holdings Operating Agreement.

(ii)Except as otherwise provided in this clause (ii), each IBG Holdings Member
who is entitled to cause the redemption of such Member’s IBG Holdings Shares (or
portion thereof) in accordance with Section 4.1(a) (an “Electing Member”) shall
prepare and deliver to IBG Holdings and IBGI, for IBG LLC as its managing member
and for itself, a written request in the form attached to the Agreement as
Exhibit C signed by such Electing Member (A) stating the number of IBG Holdings
Shares that such Electing Member desires to have redeemed and (B) certifying
that such Electing Member is entitled to cause the redemption of the IBG
Holdings Shares specified by such Electing Member and that such Electing Member
is the beneficial owner of such IBG Holdings Shares, together with any other
information reasonably requested by IBG Holdings to confirm such entitlement
(each such request, a “Redemption Request”).  A properly completed Redemption
Request must be delivered to IBG Holdings and IBGI within the time periods
established by the managing member of IBG Holdings; provided that, such period
must give an Electing Member at least 10 calendar days to submit a Redemption
Request.  Once delivered, a Redemption Request is irrevocable.

(iii) IBGI shall use its commercially reasonable efforts to consummate a Public
Offering of a number of shares of Common Stock (adjusted per Section 5.1)
approximately equal to the aggregate number of IBG Holdings Shares specified in
such Redemption Requests.  Upon consummation of such Public Offering, IBGI shall
purchase from IBG Holdings and IBG Holdings shall sell to IBGI that number of
IBG LLC Shares equal to the aggregate number of IBG Holdings Shares specified in
such Redemption Requests at a purchase price per share equal to the offering
price per share of Common Stock in such Public Offering minus any applicable
underwriting discounts or placement agency fees (the “Public Offering Redemption
Price”).  IBG LLC shall bear the costs of the Public Offering other than (i)
underwriting discounts or placement agency fees, which effectively shall be
borne by the IBG Holdings Members making such Redemption Requests and (ii) legal
fees and expenses of the selling IBG Holdings Members. 

(iv)In lieu of the Public Offering described in Section 4.1(b)(iii), IBGI may,
at its election and subject to its compliance with then existing law, including
SEC “seasoned issuer” rules, purchase the IBG Holdings Shares specified in the
Redemption Request by issuing to IBG Holdings that number of shares of
registered and freely tradable Common Stock equal to the aggregate number of IBG
Holdings Shares specified in the Redemption Request.  IBG LLC shall bear the
costs of issuing such shares, including the cost of the preparation of any
required prospectus or prospectus supplement.

SECTION 4.2.  Mandatory Redemptions.

(a)           Mandatory Redemptions. IBG Holdings (with the prior approval of
the IBGI Board) shall be entitled to cause one or more redemptions (each such
redemption, a “Mandatory Redemption”) with respect to all or some IBG Holdings
Shares, in IBG Holdings’ discretion, at any time.  A Mandatory Redemption shall
occur with respect to IBG Holdings Shares without any action required on the
part of the IBG Holdings Member holding such IBG Holdings Shares.

(b)           Procedures.

(i)            Each Mandatory Redemption of IBG Holdings Shares shall be
effected in accordance with the IBG Holdings Operating Agreement.

(ii)           In the event of a Mandatory Redemption pursuant to Section
4.2(a), IBG Holdings shall provide written notice (each such notice, a
“Mandatory Redemption Notice”) to each of IBGI and IBG LLC of such election,
which notice shall state (A) whether the Mandatory Redemption shall apply to all
or some of the IBG Holdings Shares and, if it shall apply only to some thereof,
to which IBG

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Holdings Shares such Mandatory Redemption shall apply, and (B) the anticipated
date on which the Mandatory Redemption shall be consummated.

(iii)          Upon receipt of a Mandatory Redemption Notice, IBGI shall use its
commercially reasonable efforts to consummate a Public Offering of a number of
shares of Common Stock (adjusted per Section 5.1) approximately equal to the
number of IBG Holdings Shares specified in such Mandatory Redemption Notice. 
Upon consummation of such Public Offering, IBGI shall purchase from IBG Holdings
and IBG Holdings shall sell to IBGI that number of IBG LLC Shares equal to the
aggregate number of IBG Holdings Shares specified in such Mandatory Redemption
Notice at a purchase price for share equal to the Public Offering Redemption
Price. In lieu of such Public Offering, IBGI may, at its election and subject to
its compliance with then existing law, including SEC “seasoned issuer” rules,
purchase the IBG Holdings Shares specified in the Mandatory Redemption Notice by
issuing to IBG Holdings that number of shares of registered and freely tradable
Common Stock equal to the aggregate number of IBG Holdings Shares specified in
the Mandatory Redemption Notice.  The cost of such Public Offering or issuance
of Common Stock, as case may be, will be borne by the Parties in the same manner
as provided in Section 4.1(b)(iii) or Section 4.1(b)(iv), as the case may be.

(iv)          In the event of a Mandatory Redemption, IBG Holdings shall use its
reasonable best efforts to deliver notice thereof to the applicable IBG Holdings
Members not less than 20 days prior to the effective date of such Mandatory
Redemption.

Notwithstanding anything to the contrary set forth herein, any failure to
provide such notice for any reason shall not affect the validity or
enforceability of any Mandatory Redemption.

SECTION 4.3.  Purchases and Redemptions Generally.

(a)           Public Offerings of Shares of Common Stock.  Notwithstanding
anything to the contrary set forth herein, (i) IBGI shall not be obligated to
effect any purchase of IBG LLC Shares unless and until, as applicable, (x) IBGI
has consummated a Public Offering of a number of shares of Common Stock
(adjusted per Section 5.1) approximately equal to the aggregate number of IBG
Holdings Shares specified in a Redemption Request or a Mandatory Redemption
Notice, as applicable, or (y) IBGI is authorized to issue shares of Common Stock
approximately equal to the aggregate number of IBG Holdings Shares specified in
a Redemption Request or a Mandatory Redemption Notice, as applicable, which are
registered and freely tradable and IBGI is permitted to issue such shares to IBG
Holdings consistent with existing law, including the SEC “seasoned issuer” rules
and (ii) IBG Holdings shall not be obligated to effect any redemption of IBG
Holdings Shares unless and until IBG Holdings has received from IBGI the cash
consideration for the purchase of the applicable IBG LLC Shares or shares of
freely tradable and registered Common Stock, as the case may be.  IBGI’s
commercially reasonable efforts (as applicable) to consummate a Public Offering
shall include without limitation providing, and causing its subsidiaries to
provide, necessary and appropriate road show support for such Public Offering.

(b)           Restriction on Participation in Public Offerings by IBG Holdings
Members. Unless otherwise permitted by the managing member of IBG Holdings and
the IBGI Board, no IBG Holdings Member may acquire shares of Common Stock in
connection with any Public Offering described in Section 4.3(a).

(c)           [RESERVED]

(d)           Set-Off.  In the event an IBG Holdings Member becomes liable to
IBGI or any of its Affiliates for any reason, IBGI (or its Affiliates, as
applicable) may set-off such liabilities against any purchase consideration
otherwise payable to IBG Holdings under Article IV of this Agreement.

SECTION 4.4.  IBG Holdings Shares.  The IBG Holdings Shares, which were issued
by IBG Holdings on the IPO Effective Date pursuant to Section 3.1 hereof, are
subject to certain restrictions and other terms and conditions as set forth in
the IBG Holdings Operating Agreement.”

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4.  Representation and Warranties of IBG Holdings Members.  Each IBG Holdings
Member severally represents and warrants to each other Party, as of the date
hereof, that this Second Amendment constitutes the binding obligation of such
Member, enforceable against such Member in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

5.  Representations and Warranties of IBG LLC, IBGI and IBG Holdings.  Each of
IBG LLC, IBGI and IBG Holdings represents and warrants to each other Party that
(i) it has the requisite corporate or other power and authority and has taken
all corporate or other action necessary in order to execute, deliver and perform
this Second Amendment and to consummate the transactions contemplated by this
Second Agreement; and (ii) this Agreement has been duly executed and delivered
by it and constitutes a valid and binding agreement of it enforceable in
accordance with the terms thereof (assuming the due execution and delivery
thereof by the other Parties).

6.  Governing Law.  This Second Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws regarding
choice of laws and conflicts of laws that would apply the substantive laws of
any other jurisdiction) as to all matters, including matters of validity,
construction, effect, performance and remedies.

7.  Interpretation.  The headings contained in this Second Amendment are solely
for the purpose of reference, are not part of the agreement of the Parties and
shall not in any way affect the meaning or interpretation of this Second
Amendment.

8.  Severability.  If any term or other provision of this Second Amendment is
invalid, illegal or incapable of being enforced by any applicable rule of law or
public policy, all other conditions and provisions of this Second Amendment
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Second Amendment so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.

9.  Counterparts.  This Second Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.  Delivery of an executed counterpart of a signature
page to this Second Amendment by facsimile or portable document format shall be
effective as delivery of a manually executed counterpart to this Amendment.

10.  Effect of Amendment.  This Second Amendment shall become effective and
binding upon all Parties to the Exchange Agreement upon execution hereof by
IBGI, IBG Holdings, IBG LLC and all IBG Holdings Members.  Except as expressly
set forth herein, the amendments provided herein shall not by implication or
otherwise alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Exchange
Agreement.  Except as expressly amended hereby, the Exchange Agreement shall
continue in full force and effect in accordance with the provisions thereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed as of the date first above written.

 

INTERACTIVE BROKERS GROUP, INC.

By: /s/ Thomas Peterffy

      Thomas Peterffy, Chairman

 

IBG HOLDINGS LLC

By: /s/ Thomas Peterffy

      Thomas Peterffy, Managing Member

 

IBG LLC

By: INTERACTIVE BROKERS GROUP, INC., Its Managing Member

By: /s/ Thomas Peterffy

      Thomas Peterffy, Chairman

 

[Signatures of the Members of IBG Holdings LLC]

 

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