Document:

Exhibit
10.6

 

 

EXCHANGE AGREEMENT

 

by and among

 

INTERACTIVE BROKERS GROUP, INC.,

 

IBG HOLDINGS LLC,

 

IBG LLC

 

and

 

MEMBERS OF IBG LLC

 

Dated as of [                  ],
2007

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  SECTION 1.2.

  	
   

  	
  General

  	
   

  	
  4

  
	
  SECTION 1.3.

  	
   

  	
  References to Time

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  REPRESENTATION AND WARRANTIES

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  Representations and Warranties of IBG LLC Members

  	
   

  	
  5

  
	
  SECTION 2.2.

  	
   

  	
  Representations and Warranties of IBG LLC, IBGI and
  IBG Holdings

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONTRIBUTION AND INITIAL
  PURCHASE

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  Contribution

  	
   

  	
  6

  
	
  SECTION 3.2.

  	
   

  	
  Initial Purchase

  	
   

  	
  6

  
	
  SECTION 3.3.

  	
   

  	
  Effect of Contribution and Initial Purchase

  	
   

  	
  6

  
	
  SECTION 3.4.

  	
   

  	
  Class B Common Stock

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  PURCHASES AND REDEMPTIONS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  Elective Redemptions

  	
   

  	
  7

  
	
  SECTION 4.2.

  	
   

  	
  Mandatory Redemptions

  	
   

  	
  8

  
	
  SECTION 4.3.

  	
   

  	
  Purchases and Redemptions Generally

  	
   

  	
  9

  
	
  SECTION 4.4.

  	
   

  	
  IBG Holdings Shares

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  RELATIONSHIP AMONG THE PARTIES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
   

  	
  Parity of IBG Holdings Shares and Shares of Common
  Stock

  	
   

  	
  10

  
	
  SECTION 5.2.

  	
   

  	
  IBG LLC Further Assurances

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  MISCELLANEOUS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  Entire Agreement

  	
   

  	
  10

  
	
  SECTION 6.2.

  	
   

  	
  Expenses

  	
   

  	
  11

  
	
  SECTION 6.3.

  	
   

  	
  Notices

  	
   

  	
  11

  
	
  SECTION 6.4.

  	
   

  	
  Amendment, Modification or Waiver

  	
   

  	
  12

  
	
  SECTION 6.5.

  	
   

  	
  Successors and Assigns; No Third Party Beneficiaries

  	
   

  	
  12

  
	
  SECTION 6.6.

  	
   

  	
  Counterparts

  	
   

  	
  12

  
	
  SECTION 6.7.

  	
   

  	
  Negotiation

  	
   

  	
  12

  
	
  SECTION 6.8.

  	
   

  	
  Specific Performance

  	
   

  	
  12

  
	
  SECTION 6.9.

  	
   

  	
  Governing Law

  	
   

  	
  12

  
	
  SECTION 6.10.

  	
   

  	
  Jurisdiction

  	
   

  	
  13

  
	
  SECTION 6.11.

  	
   

  	
  Interpretation

  	
   

  	
  13

  
	
  SECTION 6.12.

  	
   

  	
  Severability

  	
   

  	
  13

  
						

 

i

 

	
  Exhibits to the
  Exchange Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Tax Receivable
  Agreement

  	
   

  	
   

  
	
  Exhibit B

  	
  Form of Contribution
  Notice

  	
   

  	
   

  
	
  Exhibit C

  	
  Form of Redemption
  Request

  	
   

  	
   

  

 

ii

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT
(this “Agreement”), dated as of                 ,
2007, 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 (formerly known as Interactive
Brokers Group LLC, “IBG LLC”), and the members of IBG LLC party hereto (the
“IBG LLC Members,” and together with IBGI, IBG Holdings and IBG LLC, the
“Parties” and each a “Party”).

 

RECITALS

 

WHEREAS, IBGI
intends to consummate an initial public offering (the “IPO”) of shares
of its Class A common stock, par value $0.01 per share (the “Common Stock”);

 

WHEREAS, in
connection with the IPO, the IBG LLC Members desire to contribute their
membership interests in IBG LLC to IBG Holdings in exchange for IBG Holdings
membership interests pursuant to the terms of this Agreement;

 

WHEREAS, in
connection with the IPO, IBG Holdings desires to sell certain of its membership
interests in IBG LLC to IBGI upon consummation of the IPO for an aggregate
consideration consisting of: (a) the net proceeds from the IPO, and (b) an
amount equal to certain tax benefits to be realized by IBGI over time, in
accordance with the Tax Receivable Agreement (as defined below);

 

WHEREAS, IBGI
agrees to purchase from IBG Holdings over time membership interests in IBG LLC
using the proceeds of periodic offerings of shares of Common Stock, commencing
one year after consummation of the IPO; and

 

WHEREAS, IBG
LLC agrees to effect such transfers of its membership interests and to take
such actions as are otherwise necessary to facilitate the foregoing.

 

NOW,
THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, and intending to be
legally bound hereby, the Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1. Definitions.
As used in this Agreement, the following terms shall have the meanings set
forth below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

 

“Agreement”
has the meaning assigned to such term in the preamble to this Agreement, and
includes any amendments or modifications to this Agreement after the date
hereof.

 

 

 

“Closing
Date” means the date hereof.

 

“Common
Stock” has the meaning set forth in the recitals.

 

“Contribution”
has the meaning set forth in Section 3.1.

 

“Electing
Member” has the meaning set forth in Section 4.1(b)(ii).

 

“Elective
Redemption” has the meaning set forth in Section 4.1(a).

 

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

 

“General Redemption
Date” has the meaning assigned to such term in Section 4.1(a).

 

“Governmental
Authority” means any national, local or foreign (including U.S. federal,
state or local) or supranational (including European Union) governmental,
judicial, administrative or regulatory (including self-regulatory) agency,
commission, department, board, bureau, entity or authority of competent
jurisdiction.

 

“IBG
Holdings Members” has the meaning assigned to the term “Members” in the IBG
Holdings Operating Agreement.

 

“IBG
Holdings Operating Agreement” means the Limited Liability Company Agreement
of IBG Holdings LLC, dated as of [                            ],
2007, entered into by and among the signatories thereto, as same may be amended
from time to time.

 

“IBG
Holdings Series A Shares” has the meaning assigned to the term “Series A
Shares” in the IBG Holdings Operating Agreement.

 

“IBG
Holdings Series B Shares” has the meaning assigned to the term “Series B
Shares” in the IBG Holdings Operating Agreement.

 

2

 

“IBG
Holdings Series C Shares” has the meaning assigned to the term “Series C
Shares” in the IBG Holdings Operating Agreement.

 

“IBG
Holdings Shares” has the meaning assigned to the term “Common Shares” in
the IBG Holdings Operating Agreement.

 

“IBGI Board”
means the board of directors of IBGI.

 

“IBG LLC
Members” has the meaning set forth in the recitals.

 

“IBG LLC
Operating Agreement” means the Amended and Restated Operating Agreement of IBG
LLC, dated as of [              ],
2007, entered into by and between IBG Holdings LLC and Interactive Brokers
Group, Inc., as same may be amended from time to time.

 

“IBG LLC
Shares” has the meaning assigned to the term “Shares” in the IBG LLC
Operating Agreement.

 

“Incumbent IBGI
Board” means the members of the IBGI Board who were members of the IBGI Board
immediately after the consummation of the IPO; provided, however,
that any individual becoming a director subsequent to the consummation of the
IPO whose election, or nomination for election by IBGI’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent IBGI Board shall be considered as though such individual were a
member of the Incumbent IBGI Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the IBGI Board.

 

“Initial
Purchase” has the meaning assigned to such term in Section 3.2.

 

“IPO”
has the meaning assigned to such term in the recitals.

 

“IPO Date”
means the date of the closing of the IPO.

 

“IPO
Effective Date” means the date of effectiveness of the Registration
Statement.

 

“Mandatory Redemption”
has the meaning assigned to such term in Section 4.2(a).

 

“Mandatory
Redemption Notice” has the meaning assigned to such term in Section
4.2(b)(ii).

 

“Party”
or “Parties” has the meaning assigned to such term in the preamble to
this Agreement.

 

“Public
Offering” means an underwritten or best efforts public offering pursuant to
an effective registration statement under the Securities Act, other than
pursuant to a registration statement on Forms S-4 or S-8 or any similar or
successor form.

 

3

 

“Public
Offering Redemption Price” has the meaning ascribed to such term in Section
4.1(b)(iii).

 

“Redemption
Request” has the meaning set forth in Section 4.1(b)(ii)(B).

 

“Registration
Statement” means, as applicable, the registration statement on Form S-1 of IBGI
under the Securities Act relating to the Common Stock to be issued in the IPO,
as amended or supplemented from time to time.

 

“SEC”
means the Securities and Exchange Commission.

 

“Securities
Act” means the Securities Act of 1933, as amended, together with the rules
and regulations promulgated thereunder.

 

“Stock
Price” means, as of any particular date, the volume weighted average closing
price of a share of Common Stock for the thirty (30) most recent trading days on
the primary national securities exchange on which the Common Stock is traded,
as reported by Bloomberg L.P. or, if Bloomberg L.P. is not available, as
determined by another reputable third-party information source selected by
IBGI.

 

“Tax
Receivable Agreement” means the Tax Receivable Agreement to be entered into
by and between IBGI and IBG Holdings, substantially in the form of Exhibit A
hereto, with such changes as may be determined by the parties thereto.

 

SECTION 1.2. General.
Wherever required by the context of this Agreement, the singular shall include
the plural and vice versa, and the masculine gender shall include the feminine
and neuter genders and vice versa, and references to any agreement, document or
instrument shall be deemed to refer to such agreement, document or instrument
as amended, supplemented or modified from time to time. When used herein:

 

(a)                                  the
word “or” is not exclusive;

 

(b)                                 the
words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without limitation”;

 

(c)                                  the
terms “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision;

 

(d)                                 the
word “person” means any individual, corporation, limited liability company,
trust, joint venture, association, company, partnership or other legal entity
or a Governmental Authority; and

 

(e)                                  all
section, paragraph or clause references not attributed to a particular document
shall be references to such parts of this Agreement, and all exhibit, annex and
schedule references not attributed to a particular document shall be references
to such exhibits, annexes and schedules to this Agreement.

 

4

 

SECTION 1.3. References
to Time. All references in this Agreement to times of day shall be to Greenwich,
Connecticut time.

 

ARTICLE II

REPRESENTATION AND WARRANTIES

 

SECTION 2.1. Representations
and Warranties of IBG LLC Members.

 

(a)                                  Each
IBG LLC Member severally represents and warrants to each of IBG LLC, IBG
Holdings and IBGI, as of the date hereof, that (i) this Agreement constitutes
the legal, valid and binding obligation of such IBG LLC Member, enforceable
against such IBG LLC 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); (ii) neither the execution and
delivery of this Agreement by such IBG LLC Member nor the consummation of the
transactions contemplated herein conflicts with or results in a breach of any
of the terms, conditions or provisions of any agreement or instrument to which
such IBG LLC Member is a party or by which the material assets of such IBG LLC Member
are bound, or constitutes a default under any of the foregoing, or violates any
law or regulation; (iii) there are no actions, suits or proceedings
pending, or, to the knowledge of such IBG LLC Member, threatened against or
affecting such IBG LLC Member or such IBG LLC Member’s assets in any court or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which, if adversely
determined, would impair the ability of such IBG LLC Member to perform this
Agreement; (iv) the performance of this Agreement will not violate any
order, writ, injunction, decree or demand of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality to which such IBG LLC Member is subject; and (v) no
statement, representation or warranty made by such IBG LLC Member in this
Agreement, nor any information provided by such IBG LLC Member for inclusion in
a registration statement filed by IBGI, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements, representations or warranties
contained herein or information provided therein not misleading; and

 

(b)                                 Each
IBG LLC Member severally represents and warrants to each of IBG LLC, IBG
Holdings and IBGI, as of the date hereof, that such IBG LLC Member has good,
valid and marketable title to the IBG LLC membership interests to be
contributed to IBG Holdings pursuant to Section 3.1 hereof, free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance of
any kind, other than pursuant to this Agreement, the IBG LLC Operating
Agreement or the IBG Holdings Operating Agreement.

 

5

 

Each IBG LLC Member
shall promptly notify IBG LLC, IBG Holdings and IBGI of any breaches of such
representations or covenants.

 

SECTION 2.2. Representations
and Warranties of IBG LLC, IBGI and IBG Holdings.

 

(a)                                  Each
of IBG LLC, IBGI and IBG Holdings represents that 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 Agreement and to
consummate the transactions contemplated by this Agreement; and

 

(b)                                 Each
of IBG LLC, IBGI and IBG Holdings represents that 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).

 

ARTICLE III

CONTRIBUTION AND INITIAL PURCHASE

 

SECTION 3.1. Contribution.
On the IPO Effective Date, the IBG LLC Members shall contribute their IBG LLC membership
interests to IBG Holdings in exchange for IBG Holdings Shares (the “Contribution”);
provided that the Contribution with respect to the IBG LLC membership interests
held by Thomas Peterffy individually shall not occur until immediately after
giving effect to the Initial Purchase described in Section 3.2 below. Upon
completion of the Contribution, IBG Holdings shall issue to each IBG LLC Member
IBG Holdings Shares in the series and in the numbers set forth in such IBG LLC
Member’s Contribution Notice and admit such IBG LLC Member as an IBG Holdings
Member pursuant to the IBG Holdings Operating Agreement. Upon the completion of
the Contribution, IBG LLC shall admit IBG Holdings as a member pursuant to the
IBG LLC Operating Agreement, and the books and records of IBG LLC shall be
updated to reflect the Contribution.

 

SECTION 3.2. Initial
Purchase. On the IPO Effective Date, after giving effect to the
Contribution, IBG Holdings shall sell [                   ]
IBG LLC Shares to IBGI (the “Initial Purchase”) for an aggregate
consideration consisting of: (a) the sum of $[            ],
such amount to be paid out of the net proceeds of the IPO, and (b) an amount
equal to the tax benefits to be realized by IBGI over time, in accordance with
the Tax Receivable Agreement, in connection with the Initial Purchase. IBGI
shall pay the cash consideration set forth in clause (a) above on the IPO Date
by wire transfer of immediately available funds to an account designated in
writing by IBG Holdings. Upon completion of the Initial Purchase, the
Contribution with respect to the IBG LLC membership interests held by Thomas
Peterffy individually shall be consummated, IBG LLC shall admit IBGI as its
sole managing member pursuant to the IBG LLC Operating Agreement, and the books
and records of IBG LLC shall be updated to reflect the Initial Purchase.

 

SECTION 3.3. Effect
of Contribution and Initial Purchase. On the IPO Effective Date, in
connection with the Contribution and the Initial Purchase, (a) IBGI and IBG
Holdings shall enter into the IBG LLC Operating Agreement, (b) IBG LLC shall
admit IBGI as its sole

 

6

 

managing member pursuant
to the IBG LLC Operating Agreement, (c) IBG LLC shall admit IBG Holdings as a
member pursuant to the IBG LLC Operating Agreement, (d) IBG LLC shall have only
two members (IBGI, which will be its sole managing member, and IBG Holdings),
and (e) the books and records of IBG LLC shall be updated to reflect the Contribution
and the Initial Purchase.

 

SECTION 3.4. Class
B Common Stock. On the IPO Effective Date, IBG LLC shall transfer to IBG
Holdings the 100 shares of Class B Common Stock, par value $0.01 per share, of
IBGI then held by IBG LLC, which shares represent all of the authorized, issued
and outstanding shares of such Class B Common Stock.

 

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 IBG Holdings Member’s IBG Holdings Shares (or portion
thereof) so redeemable in accordance with the following schedule and the
procedures set forth in this Article IV the following schedule and the
procedures set forth in this Article IV: (i) 5% of such IBG Holdings
Member's IBG Holdings Shares on the IPO Date, (ii) an additional 12.5% of
such IBG Holdings Member's IBG Holdings Shares on each of the first seven
anniversaries of the IPO Date, and (iii) the remaining 7.5% of such IBG
Holdings Member's IBG Holdings Shares on the eight anniversary of the IPO Date;
provided that, a holder of IBG Holdings Series C Shares may cause the
redemption of its IBG Holdings Series C Shares (x) only subsequent to
the redemption of all of such holder's IBG Holdings Series B Shares and
(y) only if such holder remains in compliance with the covenants set forth
in Sections 8.7 and 8.8 of the IBG Holdings Operating Agreement. Each
redemption subsequent to the IPO Date (an “Elective Redemption”) shall occur:
(i) on or about the date that is the first anniversary of the IPO Date and
on or about each subsequent anniversary date thereof (each such anniversary
date, a “General Redemption Date”), or (ii) if not on or about a General
Redemption Date, with the prior written consent of the managing member of IBG
Holdings; provided that, an IBG Holdings Member must be in compliance
with all applicable covenants and obligations under the IBG Holdings Operating
Agreement in order to remain entitled to cause an Elective Redemption.

 

(b)                                 Procedures.

 

(i)                                     Subject
to clause (ii) below, each Elective Redemption of IBG Holdings Shares 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 shall
be entitled to cause the redemption of such IBG Holdings Member’s IBG Holdings Shares
(or portion thereof) so redeemable in accordance with Section 4.1(a)
hereto (an “Electing Member”) shall prepare and deliver to IBG Holdings and
IBGI a written request in the form attached hereto 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 (each such request, a “Redemption Request”).
A properly completed Redemption Request must be delivered to IBG Holdings and IBGI
not less than 60 days or more than 90 days prior to the General Redemption Date
on which such Electing Member desires to effect the Elective Redemptions in
accordance with this Section 4.1. Once delivered, a Redemption Request shall be
irrevocable.

 

7

 

(iii)                               Upon
receipt of all Redemption Requests relating to a given General Redemption Date,
subject to Section 4.3(c), 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 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.

 

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 following the first anniversary of the IPO Date. 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)(ii), 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 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, subject to Section 4.3(c), 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 that number of IBG LLC Shares equal to the aggregate number of

 

8

 

IBG Holdings Shares
specified in such Mandatory Redemption Notice at a purchase price for share
equal to the Public Offering Redemption Price.

 

(iv)                              In
the event of any 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 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 Redemption Requests or a
Mandatory Redemption Notice, as applicable, 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. IBGI’s commercially reasonable efforts 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)                                  Alternative Financing of Redemptions.

 

(i)                                     At the option of, and upon mutual agreement of, IBGI,
IBG Holdings and IBG LLC, in lieu of, or in addition to, consummating one or
more Public Offerings as set forth in this Article IV, redemptions of IBG
Holdings Shares may be effected using cash on hand at IBG LLC and corresponding
redemptions by IBG LLC of its interests held by IBG Holdings. In such cases,
the redemption price per IBG Holdings Share and IBG LLC Share shall be the Stock
Price of the Common Stock as of the date of redemption.

 

(ii)                                  In the event a redemption of IBG
Holdings Shares is financed using a combination of a Public Offering and cash
on hand at IBG LLC, (A) IBG Holdings shall apply the proceeds from sales of IBG
LLC Shares to IBGI in conjunction with a Public Offering as follows: (x) first,
to redeem any IBG Holdings Series A Shares scheduled for redemption, (y)
second, to the extent there are remaining proceeds, to redeem any IBG Holdings
Series B Shares scheduled for redemption, and (z) third, to the extent there
are remaining proceeds, to redeem any IBG Holdings Series C Shares scheduled
for redemption, and (B) IBG Holdings shall apply the proceeds from redemptions
of IBG LLC Shares by IBG LLC from cash on hand at IBG LLC as follows: (x)
first, to redeem any IBG Holdings Series C Shares scheduled for redemption, (y)
second, to the extent there are remaining proceeds, to redeem any IBG Holdings
Series B Shares scheduled for

 

9

 

redemption, and (z) third, to the extent there are remaining proceeds,
to redeem any IBG Holdings Series A Shares scheduled for redemption.

 

(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 shall be 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.

 

ARTICLE V

RELATIONSHIP AMONG THE PARTIES

 

SECTION 5.1. Parity
of IBG Holdings Shares and Shares of Common Stock. It is the intention of
each of IBGI, IBG Holdings and IBG LLC that, unless otherwise determined by the
IBGI Board, the number of IBG LLC Shares outstanding shall at all times equal
the number of outstanding shares of Common Stock plus the number of IBG
Holdings Shares outstanding (such that the number of IBG LLC Shares and IBG
Holdings Shares would be proportionately adjusted as necessary in the event of
any issuance or repurchase by IBGI of shares of Common Stock), and each of IBGI,
IBG Holdings and IBG LLC agrees to cooperate to effect the intent of this
sentence. In the event that IBGI shall: (i) subdivide the outstanding shares of
Common Stock into a greater number of shares; (ii) combine the outstanding
shares of Common Stock into a smaller number of shares; (iii) pay a dividend or
make a distribution on shares of Common Stock in the form of shares of Common
Stock; (iv) make a distribution on shares of Common Stock in shares of its
share capital other than Common Stock; or (v) issue by reclassification of the
outstanding shares of Common Stock any shares of its share capital, then the
number of IBG LLC Shares and IBG Holdings Shares would be proportionately
adjusted to the extent necessary to preserve the economic rights of IBGI and IBG
Holdings in IBG LLC, with such adjustment to be determined in good faith by the
IBGI Board in consultation with IBG Holdings.

 

SECTION 5.2. IBG
LLC Further Assurances. IBG LLC agrees to effect transfers of its IBG LLC
Shares and to take such actions as are otherwise necessary to facilitate the
Exchanges and the other transactions contemplated by this Agreement.

 

ARTICLE VI

MISCELLANEOUS

 

SECTION 6.1. Entire
Agreement. This Agreement and the Schedules hereto shall constitute the
entire agreement among the Parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.

 

10

 

SECTION 6.2. Expenses.

 

(a)                                  Except
as expressly set forth in this Agreement, all third party fees, costs and
expenses paid or incurred in connection with the transactions contemplated by
this Agreement will be paid by the Party incurring such fees, costs or
expenses.

 

(b)                                 With
respect to the IPO, IBG LLC shall pay all third party costs, fees and expenses
relating to the IPO, all of the reimbursable expenses of the placement agent pursuant
to the placement agency agreement, and all of the costs of producing and filing
the applicable Registration Statement and printing, mailing and otherwise
distributing the prospectus contained in such Registration Statement.

 

(c)                                  Subsequent
to the IPO, IBG LLC shall reimburse IBGI for all reasonable third party costs,
fees and expenses incurred by IBGI in the ordinary course of business,
including all costs associated with all reports and other filings with the SEC.

 

SECTION 6.3. Notices.
All notices, consents, waivers and other communications required or permitted
by this Agreement shall be in writing and shall be deemed given to a Party when
(a) delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses and facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number or person as a Party may designate by notice to the
other Parties):

 

If to IBG LLC:

 

IBG LLC

One Pickwick Plaza

Greenwich,
Connecticut  06830

Attention: Thomas
Peterffy, Managing Member

Fax: (203) 618-5934

 

If to IBGI:

 

Interactive Brokers
Group, Inc.

One Pickwick Plaza

Greenwich,
Connecticut  06830

Attention: Thomas
Peterffy, Chairman, Chief Executive Officer and President

Fax: (203) 618-5934

 

If to IBG Holdings:

 

IBG Holdings LLC

One Pickwick Plaza

Greenwich,
Connecticut  06830

Attention: Thomas
Peterffy, Managing Member

Fax: (203) 618-5934

 

If to Members of IBG LLC:

 

11

 

To the addresses set
forth on the books and records of IBG LLC.

 

SECTION 6.4. Amendment,
Modification or Waiver. This Agreement may be amended, modified, waived or
supplemented, in whole or in part, only by a written agreement signed by IBGI, IBG
LLC and IBG Holdings. No failure or delay on the part of any Party in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. The waiver by
such Parties of any breach of this Agreement shall not be construed as a waiver
of any subsequent breach.

 

SECTION 6.5. Successors
and Assigns; No Third Party Beneficiaries.

 

(a)                                  This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the Parties and their successors and permitted assigns, but
neither this Agreement nor any of the rights, interests and obligations
hereunder shall be assigned or otherwise transferred, in whole or in part, by
any Party without the prior written consent of each of the Parties.

 

(b)                                 This
Agreement is solely for the benefit of the Parties and is not intended to
confer upon any other persons any rights or remedies hereunder.

 

SECTION 6.6. Counterparts.
This Agreement 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.

 

SECTION 6.7. Negotiation.
In the event of any dispute or disagreement between any of the Parties arising
out of or in connection with this Agreement (including with respect to the
interpretation or performance of any provision hereof), the dispute or
disagreement, upon written request of a Party, as applicable, shall be referred
to representatives of the Parties involved in such dispute for decision. Such
applicable representatives of the Parties shall promptly meet in a good faith
effort to resolve the dispute or disagreement or determine a means to resolve
the dispute or disagreement. If such representatives do not agree upon a
decision within 30 days after reference of the matter to them, the Parties shall
be free to exercise all rights and remedies available to them under this
Agreement.

 

SECTION 6.8. Specific
Performance. The Parties acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they may be entitled by law or equity.

 

SECTION 6.9. Governing
Law. This Agreement 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.

 

12

 

SECTION 6.10. Jurisdiction.
Each of the Parties agrees that all actions or proceedings arising out of or in
connection with this Agreement, or for recognition and enforcement of any
judgment arising out of or in connection with this Agreement, shall be tried
and determined exclusively in the state or federal courts in the State of Connecticut
and each of the Parties hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of
the Parties hereby expressly waives any right it may have to assert, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in
any such action or proceeding: (a) any claim that it is not subject to personal
jurisdiction in the aforesaid courts for any reason; (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts; and (c) that (i) any of the aforesaid
courts is an inconvenient or inappropriate forum for such action or proceeding,
(ii) venue is not proper in any of the aforesaid courts and (iii) this
Agreement or the subject matter hereof may not be enforced in or by any of the
aforesaid courts.

 

SECTION 6.11. Interpretation.
The Article and Section headings contained in this Agreement 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 Agreement.

 

SECTION 6.12. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any applicable rule of law or public policy, all
other conditions and provisions of this Agreement 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 hereto shall
negotiate in good faith to modify this Agreement 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.

 

13

 

IN WITNESS
WHEREOF, the Parties have caused this Agreement to be duly executed as of the
date first above written.

 

	
   

  	
  INTERACTIVE
  BROKERS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  Thomas Peterffy

  
	
   

  	
   

  	
   Title:

  	
  Chairman, Chief
  Executive Officer and

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IBG HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  Thomas Peterffy

  
	
   

  	
   

  	
   Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IBG LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  Thomas Peterffy

  
	
   

  	
   

  	
   Title:

  	
  Managing Member

  
					

 

 

Signature Page to Exchange Agreement

 

 

	
   

  	
   

  	
   

  
	
  [Signatures of
  the Members of IBG LLC]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

Signature
Page to Exchange AgreementExhibit
10.7

 

TAX RECEIVABLE AGREEMENT

 

This
TAX RECEIVABLE AGREEMENT (this “Agreement”) is dated as of                         ,
2007, by and between Interactive Brokers Group, Inc., a Delaware company (“IBGI”),
and IBG Holdings LLC, a Delaware limited liability company (“IBG Holdings”).

 

RECITALS:

 

WHEREAS,
IBGI, IBG Holdings, IBG LLC, a Connecticut limited liability company with
status as a partnership for U.S. federal income tax purposes (“IBG LLC”),
and the members of IBG LLC entered into a certain Exchange Agreement as of                    ,
2007 (the “Exchange Agreement”); and

 

WHEREAS,
in connection with transactions contemplated by the Exchange Agreement, the
members of IBG LLCcontributed
their interests in IBG LLC to IBG Holdings in exchange for membership interests
in IBG Holdings and becamemembers of IBG
Holdings after giving effect to the transactions contemplated by the Exchange
Agreement (such contributors, the “Members”);

 

WHEREAS,
pursuant to the Exchange Agreement, certain interests in IBG LLC will be sold
by IBG Holdings to IBGI (the “Original Sale”) in exchange for cash and
the right to certain payments equal to a portion of any tax benefits realized
by IBGI as the result of the sale; and 

 

WHEREAS,
certain series of membership interests in IBG Holdings may be tendered over
time by the Members for redemption by IBG Holdings pursuant to the Exchange
Agreement, and, as necessary to obtain the consideration necessary to give
effect to such rights of redemption, IBG Holdings has the right to sell to IBGI
a corresponding number of IBG LLC interests in exchange for cash and a portion
of any tax benefits realized by IBGI as the result of such sale and exchange (an
“Exchange”); and

 

WHEREAS,
any tax benefits from the Original Sale or from an Exchange will result from
IBG LLC’s having in effect an election under Section 754 of the Code (as
defined herein) for the Taxable Year (as defined herein) in which the Original
Sale or the Exchange, as applicable, occurs, which election will result in an
adjustment to IBGI’s share of the tax basis of the assets owned by IBG LLC as
of the date of the Original Sale or the Exchange, with a consequent result on
the taxable income subsequently derived therefrom; and

 

WHEREAS,
immediately following the Original Sale, IBGI will become the managing member
of IBG LLC and exercise control of IBG LLC, including of its business and
affairs; and

 

 

WHEREAS,
the parties to this Agreement desire to provide for certain payments and make
certain arrangements with respect to any tax benefits to be derived by IBGI as
the result of the Original Sale and Exchanges as contemplated by the Exchange
Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE
I

Definitions

 

As
used in this Agreement, the terms set forth in this Article I shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined).

 

“Advisory
Firm” means an accounting or law firm that is nationally recognized as
being expert in Covered Tax matters, as determined by the Audit Committee.  The Audit Committee shall select the Advisory
Firm.

 

“Advisory
Firm Letter” shall mean a letter from the Advisory Firm stating that the
relevant schedule, notice or other information to be provided by IBGI to IBG
Holdings and all supporting schedules and work papers were prepared in a manner
consistent with the terms of this Agreement and, to the extent not expressly
provided in this Agreement, on a reasonable basis in light of the facts and law
in existence on the date such schedule, notice or other information is
delivered to IBG Holdings.

 

“Agreed
Rate” means LIBOR plus [200] basis points.

 

“Agreement”
is defined in the preamble.

 

“Amended
Tax Benefit Schedule” is defined in Section 2.05(b) of this Agreement.

 

“Assumed
Tax Liability means the actual liability for Covered Taxes of IBGI; provided
that in computing the Assumed Tax Liability of IBGI for any Covered Taxable
Year, the deductions for interest expense shall not exceed the amount of such
deductions to which IBGI would be entitled if the amount and terms of
indebtedness of IBGI during such Covered Taxable Year were the same as the
indebtedness of IBGI in place on the Original Sale Date.

 

“Audit
Committee” means the audit committee of the board of directors of IBGI.

 

“Basis
Adjustment” means the increase or decrease to the tax basis of, or IBGI’s
share of the tax basis of, IBG LLC’s assets (i) under Sections 734(b), 743(b)
and 754 of the Code and the comparable sections of U.S. state and local income
and franchise tax law as a result of

 

2

 

the Original Sale, (ii) under Section 743(b) and 754
of the Code and the comparable sections of U.S. state and local income and
franchise tax law as a result of any Exchange and (iii) under Sections 743(b)
and 754 as a result of any payments under this Agreement.

 

“Business
Day” means any calendar day that is not a Saturday, Sunday or other
calendar day on which banks are required or authorized to be closed in the City
of New York.

 

“Change
Notice” means a 30-day letter, a final audit report, a statutory notice of
deficiency or similar written notice with respect to Covered Taxes from any
Taxing Authority with respect to the treatment of the Original Sale or any
Exchange.  

 

“Code”
means the Internal Revenue Code of 1986, as amended (or any successor U.S.
federal income tax statute and the corresponding provisions thereof).

 

“Covered
Taxable Year” means any Taxable Year of IBGI ending after the Original Sale
Date and on or before the Scheduled Termination Date or Early Termination Date,
as applicable.

 

“Covered
Taxes” means any tax imposed under Subtitle A of the Code or any other
provision of U.S. federal income tax law (including, without limitation, the
taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code) and U.S. state
and local income and franchise taxes.

 

“Determination”
shall have the meaning ascribed to such term in Section 1313(a) of the Code or
similar provision of state or local income or franchise tax law, as applicable.

 

“Early
Termination Date” is the last day of the Taxable Year in which an Early
Termination Notice is given.

 

“Early
Termination Notice” is defined in Section 4.02 of this Agreement.

 

“Early
Termination Payment” shall mean, as of the date of an Early Termination
Notice, a payment equal to the present value, discounted at the Termination
Rate, of all Tax Benefit Payments that would be required to be paid by IBGI to
IBG Holdings during the period from the date of the Early Termination Notice
through the Scheduled Termination Date assuming the Valuation Assumptions are
applied.

 

“Exchange”
is defined in the recitals.

 

“Exchange
Agreement” is defined in the recitals.

 

“Exchange
Assets” means the assets owned by IBG LLC as of an applicable Exchange Date
(and any asset whose tax basis is determined, in whole or in part, by reference
to the adjusted basis of any such asset).

 

“Exchange
Basis Schedule” is defined in Section 2.04(a) of this Agreement.

 

3

 

“Exchange
Date” means the date on which an Exchange is effected.

 

“Final
Adjustment” is defined in Section 3.03(b).

 

“Governmental
Entity” means any U.S. federal, state or local government or any court of
competent jurisdiction, administrative agency or commission or other domestic
governmental authority or instrumentality.

 

“Hypothetical
Tax Basis” means, with respect to any asset at any time, the tax basis that
such asset would have at such time if no Basis Adjustment had been made as a
result of the Original Sale or an applicable Exchange, as the case may be.

 

“Hypothetical
Tax Liability” means, with respect to any Covered Taxable Year, the
liability for Covered Taxes of IBGI using the same methods, elections,
conventions and similar practices used on the actual Tax Returns of IBGI, but
using the Hypothetical Tax Basis instead of the actual tax basis of each relevant
asset and excluding any deduction attributable to the Imputed Interest.

 

“IBG
Holdings” is defined in the preamble.

 

“IBG
Holdings Operating Agreement” means the Operating Agreement of IBG Holdings
dated as of                ,
2007.

 

“IBGI”
is defined in the preamble.

 

“Imputed
Interest” and “Imputed Principal” shall mean the portion of a
payment treated as interest or principal, as applicable, under Section 1272,
1274 or 483 or other provision of the Code and the similar section of the
applicable U.S. state or local income or franchise tax law with respect to IBGI’s
payment obligations to IBG Holdings under this Agreement.

 

“IRS”
means the U.S. Internal Revenue Service.

 

“LIBOR”
means, for each month (or portion thereof) during any period, an interest rate
per annum equal to the rate per annum reported, on the date two days prior to
the first day of such month, on the Telerate Page 3750 (or if such screen shall
cease to be publicly available, as reported on Reuters Screen page “LIBO” or by
any other publicly available source of such market rate) for London interbank
offered rates for U.S. dollar deposits for such month (or portion thereof).

 

“Members”
is defined in the recitals.

 

“Original
Assets” means the assets owned by IBG LLC as of the date of the Original
Sale and any asset whose tax basis is determined, in whole or in part, by
reference to the adjusted basis of any such asset.

 

“Original
Sale” is defined in the recitals.

 

4

 

“Original
Sale Basis Schedule” is defined in Section 2.02 of this Agreement.

 

“Original
Sale Date” means the date on which the Original Sale is effected.

 

“Person”
means and includes any individual, firm, corporation, partnership (including,
without limitation, any limited, general or limited liability partnership),
company, limited liability company, trust, joint venture, association, joint
stock company, unincorporated organization or similar entity or Governmental
Entity.

 

“Potential
Reduction” is defined in Section 3.03(a) of this Agreement. 

 

“Preliminary
Termination Notice” is defined in Section 4.02(b).

 

“Proceeding”
a suit, action or proceeding relating to this Agreement.

 

“Realized
Tax Benefit” means, for a Covered Taxable Year, the excess, if any, of the
Hypothetical Tax Liability over the Assumed Tax Liability for such Covered
Taxable Year, less the fees, charges and expenses of the Advisory Firm and the
expert described in Section 7.09 related to this Agreement paid by IBGI in the
relevant Covered Taxable Year.  If all or
a portion of the Assumed Tax Liability for Covered Taxes for the Covered
Taxable Year arises as a result of an audit by a Taxing Authority of any
Covered Taxable Year, such adjustment to the liability shall not be included in
determining the Realized Tax Benefit or the Realized Tax Detriment unless and
until there has been a Determination.

 

“Realized
Tax Detriment” means, for a Covered Taxable Year, the excess, if any, of
the Assumed Tax Liability of IBGI over the Hypothetical Tax Liability for such
Covered Taxable Year, plus the fees, charges and expenses of the Advisory Firm and
the expert described in Section 7.09 related to this Agreement paid by IBGI in
the relevant Covered Taxable Year.  If
all or a portion of the Assumed Tax Liability arises as a result of an audit by
a Taxing Authority of any Covered Taxable Year, such adjustment to the liability
shall not be included in determining the Realized Tax Benefit or Realized Tax
Detriment unless and until there has been a Determination.

 

“Reconciliation
Procedures” shall mean those procedures set forth in Section 7.02 of this
Agreement.  

 

“Scheduled
Termination Date” shall mean the date on which this Agreement would
terminate in the absence of an Early Termination Notice as provided in Section
4.01.

 

“Senior
Obligations” means principal, interest or other amounts due and payable in
respect of any debt of IBGI for borrowed funds.

 

“Tax
Benefit Payment” is defined in Section 3.01(b) of this Agreement.

 

“Tax
Benefit Schedule” is defined in Section 2.05(a) of this Agreement.  

 

5

 

“Taxable
Year” means a taxable year as defined in Section 441(b) of the Code or
comparable section of U.S. state or local income or franchise tax law, as
applicable (and, therefore, for the avoidance of doubt, may include a period of
less than 12 months for which a Tax Return is made).

 

“Tax
Return” means any return or filing required to be made with respect to
Covered Taxes, including amended returns, for any Taxable Year with any Taxing
Authority.

 

“Taxing
Authority” means the IRS and any state or local Governmental Entity
responsible for the administration of Covered Taxes.

 

“Termination
Rate” means the Applicable Treasury Rate plus [300] basis points, where the
“Applicable Treasury Rate” means a rate equal to the yield to maturity
as of the date an Early Termination Notice is delivered of U.S. Treasury
securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H. 15 (519)) of ten years.

 

“Treasury
Regulations” means the final, temporary and proposed regulations under the
Code promulgated from time to time (including corresponding provisions of
succeeding provisions) as in effect for the relevant taxable period.

 

“Valuation
Assumptions” shall mean, as of any Valuation Date, the assumptions
described in Schedule A to this Agreement.

 

“Valuation
Date” means the date of an Early Termination Notice for purposes of
determining an Early Termination Payment.

 

ARTICLE
II

Determination of Realized Tax Benefit or Realized Tax Detriment

 

SECTION 2.01.  Original Sale
Basis Adjustment.  IBGI and IBG
Holdings hereby acknowledge and agree that (i) IBG Holdings will recognize gain
on the Original Sale under Section 741 of the Code, and (ii) IBGI’s share of
the basis in the Original Assets shall be increased by the excess of its
adjusted basis in the interests in IBG LLC acquired by IBGI in the Original
Sale, adjusted to take into account the Imputed Principal of Tax Benefit
Payments as made, over the acquired interests’ proportionate share of the basis
of the Original Assets on the Original Sale Date.

 

SECTION 2.02.  Original Sale
Basis Schedule.  

 

(a)           Generally.  Within 120
calendar days after the Original Sale Date, IBGI shall deliver (or cause IBG
LLC to deliver) to IBG Holdings a schedule (the “Original Sale Basis
Schedule”) that shows, in reasonable detail, for U.S. federal income tax
purposes, (i) the actual tax basis as of the Original Sale Date of the Original
Assets, (ii) the Basis Adjustment with

 

6

 

respect to the
Original Assets as a result of the Original Sale and (iii) the period or
periods, if any, over which the Original Assets are amortizable or depreciable
for U.S. federal income tax purposes.  At
the time IBG LLC delivers the Original Sale Basis Schedule to IBG Holdings,
IBGI shall (x) deliver (or cause IBG LLC to deliver) to IBG Holdings schedules
and work papers providing reasonable detail regarding the preparation of the
Original Sale Basis Schedule and an Advisory Firm Letter supporting such
Original Sale Basis Schedule and (y) allow IBG Holdings reasonable access to
the appropriate representatives at IBGI, IBG LLC and the Advisory Firm in
connection with its review of such schedule. 
The Original Sale Basis Schedule shall become final and binding on the
parties unless IBG Holdings, within 30 calendar days after receiving such
Original Sale Basis Schedule, provides IBGI with notice of a material objection
to such Original Sale Basis Schedule made in good faith and in reasonable
detail.  If the parties, negotiating in
good faith, are unable to successfully resolve the issues raised in such notice
within 30 calendar days after such notice was delivered to IBGI, IBGI and IBG
Holdings shall employ the Reconciliation Procedures.

 

(b)           Amendments to Original Sale Basis Schedule.  The Original Sale Basis Schedule may be
amended from time to time by IBGI with the consent of the Audit Committee (i)
in connection with a Determination, (ii) to correct inaccuracies to the
original Original Sale Basis Schedule identified after the Original Sale Date
as a result of the receipt of additional information relating to facts or
circumstances on or prior to the Original Sale Date or (iii) to comply with the
expert’s determination under the Reconciliation Procedures.  At the time IBGI delivers such amended
Original Sale Basis Schedule to IBG Holdings, it shall (x) deliver to IBG
Holdings schedules and work papers providing reasonable detail regarding the
preparation of the amended Original Sale Basis Schedule and an Advisory Firm
Letter supporting such amended Original Sale Basis Schedule and (y) allow IBG
Holdings reasonable access to the appropriate representatives at IBG, IBG LLC
and the Advisory Firm in connection with its review of such schedule.  The amended Original Sale Basis Schedule
shall become final and binding on the parties unless IBG Holdings, within 30
calendar days after receiving such amended Original Sale Basis Schedule,
provides IBGI with notice of a material objection to such amended Original Sale
Basis Schedule made in good faith and in reasonable detail.  If the parties, negotiating in good faith,
are unable to successfully resolve the issues raised in such notice within 30
calendar days after such notice was delivered to IBGI, IBGI and IBG Holdings
shall employ the Reconciliation Procedures.

 

SECTION 2.03.  Basis
Adjustment Attributable to an Exchange. 
Pursuant to an Exchange, IBG Holdings shall sell and exchange a number
of interests in IBG LLC to IBGI as necessary to provide IBG Holdings with
consideration to give effect to any redemption of interests of the Members in
IBG Holdings.  The parties hereto
acknowledge that (i) IBG Holdings will recognize taxable gain or loss on the
Exchange for U.S. federal income tax purposes under Section 741 of the Code,
and (ii) IBGI’s share of the basis in the Exchange Assets shall be increased by
the excess, if any, of (A) adjusted basis in the interests in IBG LLC acquired
by IBGI, adjusted to take into account the Imputed Principal of any Tax Benefit
Payments as made by IBGI with respect thereto, over (B) IBGI’s proportionate
share of the basis of the Exchange Assets immediately after the Exchange
attributable to the IBG LLC interests

 

7

 

exchanged.  IBGI and IBG Holdings will treat such gain
and basis adjustment as occurring entirely on the Exchange Date unless there is
a Determination to the contrary.

 

SECTION 2.04.  Exchange Basis
Schedule.  

 

(a)           Generally.  Within 120
calendar days after the end of a Covered Taxable Year in which any Exchange has
been effected, IBGI shall deliver (or cause IBG LLC to deliver) to IBG Holdings
a schedule (the “Exchange Basis Schedule”) approved by the Audit
Committee that shows, in reasonable detail, for U.S. federal income tax
purposes, (i) the actual tax basis as of the first applicable Exchange Date in
such Covered Taxable Year of the Exchange Assets, (ii) the Basis Adjustment
with respect to the Exchange Assets as a result of the Exchanges effected in
such Covered Taxable Year, calculated in the aggregate, and (iii) the period or
periods, if any, over which the Exchange Assets are amortizable or
depreciable.  At the time IBGI delivers
(or causes IBG LLC to deliver) the Exchange Basis Schedule to IBG Holdings, it
shall (x) deliver (or cause IBG LLC to deliver) to IBG Holdings schedules and
work papers providing reasonable detail regarding the preparation of the
Exchange Basis Schedule and an Advisory Firm Letter supporting such Exchange
Basis Schedule and (y) allow IBG Holdings reasonable access to the appropriate
representatives at IBGI, IBG LLC and the Advisory Firm in connection with its
review of such schedule.  The Exchange
Basis Schedule shall become final and binding on the parties unless IBG
Holdings, within 30 calendar days after receiving such Exchange Basis Schedule,
provides IBGI with notice of a material objection to such Exchange Basis
Schedule made in good faith and in reasonable detail.  If the parties, negotiating in good faith,
are unable to successfully resolve the issues raised in such notice within 30
calendar days after such notice was delivered to IBGI, IBGI and IBG Holdings
shall employ the Reconciliation Procedures.

 

(b)           Amendments to Exchange Basis Schedule.  The Exchange Basis Schedule may be amended
from time to time by IBGI with the consent of the Audit Committee (i) in
connection with a Determination, (ii) to correct inaccuracies to the original
Exchange Basis Schedule identified after the date of the Exchange as a result
of the receipt of additional information or (iii) to comply with the expert’s
determination under the Reconciliation Procedures.  At the time IBGI delivers such amended
Exchange Basis Schedule to IBG Holdings, it shall (x) deliver to IBG Holdings
schedules and work papers providing reasonable detail regarding the preparation
of the amended Exchange Basis Schedule and an Advisory Firm Letter supporting
such amended Exchange Basis Schedule and (y) allow IBG Holdings reasonable access
to the appropriate representatives at IBGI, IBG LLC and the Advisory Firm in
connection with its review of such schedule. 
The amended Exchange Basis Schedule shall become final and binding on
the parties unless IBG Holdings, within 30 calendar days after receiving such
amended Exchange Basis Schedule, provides IBGI with notice of a material
objection to such amended Exchange Basis Schedule made in good faith and in
reasonable detail.  If the parties,
negotiating in good faith, are unable to successfully resolve the issues raised
in such notice within 30 calendar days after such notice was delivered to IBGI,
IBGI and IBG Holdings shall employ the Reconciliation Procedures.

 

8

 

SECTION 2.05.  Tax Benefit
Schedule.  

 

(a)           Generally.  Within 10
calendar days after filing its U.S. federal income Tax Return for the relevant
Covered Taxable Year, IBGI shall provide to IBG Holdings a schedule approved by
the Audit Committee showing, in reasonable detail, the calculation of IBGI’s
Realized Tax Benefit or Realized Tax Detriment for such Covered Taxable Year
(the “Tax Benefit Schedule”).  At
the time IBGI delivers the Tax Benefit Schedule to IBG Holdings it shall (i)
deliver to IBG Holdings schedules and work papers providing reasonable detail
regarding the preparation of the Tax Benefit Schedule and an Advisory Firm
Letter supporting such Tax Benefit Schedule and (ii) allow IBG Holdings
reasonable access to the appropriate representatives at IBGI, IBG LLC and the
Advisory Firm in connection with its review of such schedules.  The Tax Benefit Schedule shall become final
and binding on the parties unless IBG Holdings, within 30 calendar days after
receiving such Tax Benefit Schedule, provides IBGI with notice of a material
objection to such Tax Benefit Schedule made in good faith and in reasonable
detail.  If the parties, negotiating in
good faith, are unable to successfully resolve the issues raised in such notice
within 30 calendar days after receipt thereof by IBGI, IBGI and IBG Holdings
shall employ the Reconciliation Procedures.

 

(b)           Amendments to Tax Benefit Schedule.  A Tax Benefit Schedule for any Covered
Taxable Year may be amended from time to time by IBGI with the consent of the
Audit Committee (i) in connection with a Determination affecting such Tax
Benefit Schedule, (ii) to correct inaccuracies in the original Tax Benefit
Schedule identified as a result of the receipt of additional factual
information relating to a Covered Taxable Year after the date the Tax Benefit
Schedule was provided to IBG Holdings, (iii) to reflect a change in the
Realized Tax Benefit or Realized Tax Detriment for such Covered Taxable Year
attributable to a carryback or carryforward of a loss or other tax item to such
Covered Taxable Year, (iv) to reflect a change in the Realized Tax Benefit or
Realized Tax Detriment for such Covered Taxable Year attributable to an amended
tax return filed for such Covered Taxable Year (provided, however,
that such a change attributable to an audit of a Tax Return by an applicable
Taxing Authority shall not be taken into account on an Amended Tax Benefit
Schedule unless and until there has been a Determination with respect to such
change) or (v) to comply with the expert’s determination under the Reconciliation
Procedures.  At the time IBGI delivers
such an amended Tax Benefit Schedule pursuant to this Section 2.05(b) (an “Amended
Tax Benefit Schedule”) to IBG Holdings it shall (x) deliver to IBG Holdings
schedules and work papers providing reasonable detail regarding the preparation
of the Amended Tax Benefit Schedule and an Advisory Firm Letter supporting such
Amended Tax Benefit Schedule and (y) allow IBG Holdings reasonable access to
the appropriate representatives at IBGI, IBG LLC and the Advisory Firm in connection
with its review of such schedule.  Such
Amended Tax Benefit Schedule shall become final and binding on the parties
unless IBG Holdings, within 30 calendar days after receiving such Amended Tax
Benefit Schedule, provides IBGI with notice of a material objection to such
Amended Tax Benefit Schedule made in good faith and in reasonable detail.  If the parties, negotiating in good faith,
are unable to successfully resolve the issues raised in such notice within 30
calendar days after such notice was delivered to IBGI, IBGI and IBG Holdings
shall employ the Reconciliation Procedures.

 

9

 

(c)           Applicable Principles. 
The Realized Tax Benefit or Realized Tax Detriment for each Covered
Taxable Year is intended to measure the decrease or increase in the actual
Covered Tax liability of IBGI for such Covered Taxable Year attributable to the
Basis Adjustment and Imputed Interest, determined using a “with and without”
methodology.  For avoidance of doubt, the
actual Covered Tax liability will take into account the deduction of the
portion of the Tax Benefit Payment that must be accounted for as Imputed
Interest under the Code based upon the characterization of the Tax Benefit
Payment as additional consideration payable by IBGI for the IBG LLC interests
acquired in the Original Sale or an Exchange, as applicable.  Carryovers or carrybacks of any Covered Tax
item attributable to the Basis Adjustment and Imputed Interest (determined
using such “with and without” methodology) shall be considered to be subject to
the rules of the Code and the Treasury Regulations or the appropriate
provisions of U.S. state and local income and franchise tax law, as applicable,
governing the use, limitation and expiration of carryovers or carrybacks of the
relevant type.  If a carryover or
carryback of any Covered Tax item includes a portion that is attributable to
the Basis Adjustment or Imputed Interest and another portion that is not, such
portions shall be considered to be used in the order determined using such “with
and without” methodology.

 

SECTION 2.06.  No Certainty of
Tax Benefit.  Tax Benefit Payments
will only be made based upon Realized Tax Benefits.  The parties acknowledge that circumstances
may exist where either no Basis Adjustment results from an Exchange, no
positive Basis Adjustment results from an Exchange or no Tax Benefit is
realized as the result of a positive Basis Adjustment resulting from an
Exchange.  For example, if as the result
of overlapping ownership of IBGI and IBG Holdings IBGI and IBG Holdings are “related
persons” within the meaning of the anti-churning rules of Code Section
197(f)(9), the portion of the Basis Adjustment allocable to good will for the
account of IBGI will not be subject to amortization.  In any such circumstance, Tax Benefit
Payments that would otherwise have become due will not become due or will
become due in greatly reduced amounts.

 

ARTICLE
III

Tax Benefit Payments

 

SECTION 3.01.  Payments.  

 

(a)           Except
as provided in Section 3.03, within three calendar days of the delivery of the
Tax Benefit Schedule to IBG Holdings for any Covered Taxable Year, IBGI shall
pay to IBG Holdings an amount equal to the Tax Benefit Payment (as defined
below) for such Covered Taxable Year. 
Each Tax Benefit Payment shall be made by wire transfer of immediately
available funds to the bank account of IBG Holdings previously designated by
IBG Holdings to IBGI.  For the avoidance
of doubt, no Tax Benefit Payment shall be made in respect of estimated tax
payments, including, without limitation, estimated federal income tax payments.

 

(b)           A
“Tax Benefit Payment” shall equal 85% of IBGI’s Realized Tax Benefit, if
any, for a Covered Taxable Year,

 

10

 

increased by:

 

(1)           interest calculated at
the Agreed Rate from the due date (without extensions) for filing the Tax
Return for such Covered Taxable Year); and

 

(2)           85% of the amount of
the excess Realized Tax Benefit reflected on an Amended Tax Benefit Schedule
for a previous Covered Taxable Year over the Realized Tax Benefit (or Realized
Tax Detriment) reflected on the Tax Benefit Schedule for such previous Covered
Taxable Year, and 

 

decreased by:

 

(3)           an amount equal to 85%
of IBGI’s Realized Tax Detriment (if any) for any previous Covered Taxable
Year; and

 

(4)           85% of the amount of
the excess Realized Tax Benefit reflected on the Tax Benefit Schedule for a
previous Covered Taxable Year over the Realized Tax Benefit (or Realized Tax
Detriment) reflected on the Amended Tax Benefit Schedule for such previous
Covered Taxable Year;

 

provided, however, that the amounts
described in clauses 3.01(b)(2), (3) and (4) shall not be taken into account in
determining a Tax Benefit Payment attributable to any Covered Taxable Year to
the extent of such amounts taken into account in determining any Tax Benefit
Payment in a preceding Covered Taxable Year.

 

SECTION 3.02.  No Duplicative
Payment.  No duplicative payment of
any amount (including interest) will be required under this Agreement.

 

SECTION 3.03.  Suspension of
Tax Benefit Payments Following Change Notice.  If IBGI or IBG LLC receives a Change Notice,
which, if sustained, would result in (i) a reduction in the amount of Realized
Tax Benefit (or the increase in the amount of Realized Tax Detriment) with
respect to a Covered Taxable Year preceding the taxable year in which the
Change Notice is received or (ii) a reduction in the amount of Tax Benefit
Payments IBGI will be required to pay to IBG Holdings with respect to Covered
Taxable Years after and including the taxable year in which the Change Notice
is received (either, a “Potential Reduction”), prompt written notice
shall be given to IBG Holdings, and Tax Benefit Payments shall be suspended as
necessary to maintain the status quo until a Determination is reached with
respect to the Change Notice.  

 

SECTION 3.04.  Repayment or
Additional Payment of Tax Benefit upon Final Adjustment.  If a Determination with respect to the Change
Notice results in a reduction (or increase) in the amount that should have been
paid as any Tax Benefit Payment (the “Final Adjustment”), then not later
than 30 days after IBGI provides IBG Holdings with a copy of the Determination,
IBG Holdings shall pay or cause to be paid to IBGI 85% of the Final Adjustment in
the

 

11

 

case of a
reduction, or IBGI shall pay to IBG Holdings 85% of the Final Adjustment in the
case of an increase.  All suspended Tax
Benefit Payments, adjusted as necessary to reflect the Determination, shall
promptly be made.

 

ARTICLE
IV

Termination

 

SECTION 4.01.  Scheduled
Termination Date.  This Agreement
shall terminate effective upon the earlier of (i) the end of the Taxable Year
that includes the 50th anniversary of the Original Sale Date, or (ii)
the end of the Taxable Year that includes the 16th anniversary of
the date upon which all rights of sale and exchange granted under the Exchange
Agreement have terminated.  Upon the
Scheduled Termination Date, IBGI shall have no further payment obligations
under this Agreement, other than for (i) any Tax Benefit Payment agreed to by
IBGI and IBG Holdings as due and payable but unpaid as of the Scheduled
Termination Date and (ii) any Tax Benefit Payment with respect to the Covered
Taxable Year ending with the Scheduled Termination Date.

 

SECTION 4.02.  Early
Termination.  

 

(a)           At
any time after the 25th anniversary of the date of this Agreement, IBGI may
terminate this Agreement with the consent of the Audit Committee effective as
of the Early Termination Date by paying to IBG Holdings the Early Termination
Payment as provided in paragraph (c) below. 
Upon payment of the Early Termination Payment by IBGI, IBGI shall have
no further payment obligations under this Agreement, other than for any (i) Tax
Benefit Payment agreed to by IBGI and IBG Holdings as due and payable but
unpaid as of the Early Termination Date and (ii) any Tax Benefit Payment due
for the Covered Taxable Year ending with or including the Early Termination
Date (except to the extent that the amount described in clause (i) or (ii) is
included in the Early Termination Payment).

 

(b)           If
IBGI intends to exercise its right of early termination, it shall first provide
at least 60 days’ (but not more than 90 days’) prior written notice of its intention
to exercise its termination rights with respect to this Agreement to IBG
Holdings (the “Preliminary Termination Notice”); and, for the next
succeeding 30 days, IBG Holdings shall have the right to sell and exchange its
interests in IBG LLC in accordance with the Exchange Agreement.  To exercise its right of early termination
under Section 4.02(a) above, within 60 days following the requisite Preliminary
Termination Notice to IBG Holdings, IBGI shall deliver to IBG Holdings a notice
(the “Early Termination Notice”) specifying IBGI’s intention to exercise
its right of termination and showing in reasonable detail the calculation of
the Early Termination Payment.  At the
time IBGI delivers the Early Termination Notice to IBG Holdings, IBGI shall (i)
deliver to IBG Holdings schedules and work papers providing reasonable detail
regarding the calculation of the Early Termination Payment, in a manner
consistent with the definition of such term and an Advisory Firm Letter
supporting such calculation and (ii) allow IBG Holdings reasonable access to
the appropriate representatives at IBGI, IBG LLC and the Advisory Firm in
connection with its review of such calculation. 
The calculation contained in such Early Termination Notice shall become
final and binding on the parties unless IBG Holdings, within 30 calendar days
after

 

12

 

receiving such
calculation, provides IBGI with notice of a material objection to such
calculation made in good faith and in reasonable detail.  If the parties, negotiating in good faith, are
unable to successfully resolve the issues raised in such calculation within 30
calendar days after such notice of material objection, IBGI, and IBG Holdings
shall employ the Reconciliation Procedures.

 

(c)           Within
forty-five (45) calendar days after the delivery to IBG Holdings of the Early
Termination Notice or ten (10) days after any amendment to the Early
Termination Notice, IBGI shall pay to IBG Holdings an amount equal to the Early
Termination Payment.  Such payment shall
be made by wire transfer of immediately available funds to a bank account
designated by IBG Holdings.

 

(d)           For
the avoidance of doubt, IBG Holdings shall not be entitled to cause an early
termination of this Agreement.

 

ARTICLE
V

Subordination and Late Payments

 

SECTION 5.01.  Subordination.  Notwithstanding any other provision of this
Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment
required to be made by IBGI to IBG Holdings under this Agreement shall rank subordinate
and junior in right of payment to any Senior Obligations and shall rank pari
passu with all current or future unsecured obligations of IBGI that are not
Senior Obligations.

 

SECTION 5.02.  Late Payments
by IBGI.  The amount of all or any
portion of a payment not made to IBG Holdings when due under the terms of this
Agreement shall be payable together with any interest thereon, computed at the
Agreed Rate and commencing from the date on which such payment was due and
payable.

 

ARTICLE
VI

Election; No Disputes; Consistency; Cooperation

 

SECTION 6.01.  Election to be
Filed.  As managing member of IBG
LLC, IBGI shall cause IBG LLC to file an election under Section 754 of the Code
commencing with its Taxable Year in which the Original Sale occurs.

 

SECTION 6.02.  IBG Holdings
Participation In IBGI Tax Matters. 
Except as otherwise provided herein, IBGI shall have full responsibility
for, and sole discretion over, all matters concerning Covered Taxes of IBGI and
IBG LLC, including without limitation the preparation, filing or amending of
any Tax Return and defending, contesting or settling any issue pertaining to
Covered Taxes.  Notwithstanding the
foregoing, IBGI shall notify IBG Holdings of, and keep IBG Holdings reasonably
informed with respect to, and IBG Holdings shall have the right to participate
in and monitor (but, for the avoidance of doubt, not to control) the portion of
any

 

13

 

audit of IBGI
by a Taxing Authority the outcome of which is reasonably expected to affect IBG
Holdings’s rights under this Agreement. 
IBGI shall provide to IBG Holdings reasonable opportunity to provide
information and other input to IBGI and its advisors concerning the conduct of
any such portion of such audits.  IBGI shall
not settle or otherwise resolve any audit or other challenge by a Taxing
Authority relating to the Basis Adjustment or the deduction of Imputed Interest
without the consent of the Audit Committee and IBG Holdings, which consent IBG
Holdings shall not unreasonably withhold, condition or delay.

 

SECTION 6.03.  Consistency.  Unless there is a Determination to the
contrary, IBGI, IBG Holdings and the Members (in accordance with the IBG
Holdings Operating Agreement), on their own behalf and on behalf of each of
their affiliates, agree to report and cause to be reported for all U.S.
purposes, including for purposes of all Covered Taxes and U.S. financial
reporting purposes, all items related to Covered Taxes and this Agreement
(including without limitation the Basis Adjustment and each Tax Benefit
Payment) in a manner consistent with that specified by IBGI in any schedule,
letter or certificate required to be provided by or on behalf of IBGI under
this Agreement.  In the event that an
Advisory Firm is replaced with another firm acceptable to the Audit Committee,
such replacement Advisory Firm shall be required to perform its services under
this Agreement using procedures and methodologies consistent with the previous
Advisory Firm, unless otherwise required by law or IBGI, the Audit Committee
and IBG Holdings agree to the use of other procedures and methodologies.

 

SECTION 6.04.  Cooperation.  IBG Holdings shall (and shall cause its
affiliates to) (i) furnish to IBGI in a timely manner such information,
documents and other materials as IBGI may reasonably request for purposes of
making any determination or computation necessary or appropriate under this
Agreement, preparing any Tax Return or contesting or defending any audit,
examination or controversy with any Taxing Authority, (ii) make its employees
available to IBGI and its representatives to provide explanations of documents
and materials and such other information as IBGI or its representative may
reasonably request in connection with any of the matters described in clause
(i) above, and (iii) reasonably cooperate in connection with any such matter.

 

ARTICLE
VII

General Provisions

 

SECTION 7.01.  Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed duly
given and received (i) on the date of delivery if delivered personally, or by
facsimile upon confirmation of transmission by the sender’s fax machine if sent
on a Business Day (or otherwise on the next Business Day) or (ii) on the first
Business Day following the date of dispatch if delivered by a recognized
next-day courier service.  All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

 

14

 

if to
IBGI, to:

 

One Pickwick Plaza

Greenwich, CT  06830

Fax:  (203) 618-5934

Attention:  Thomas Peterffy, Chairman, Chief Executive
Officer and President

 

with a
copy to:

 

Dechert LLP

30 Rockefeller Plaza

New York, NY  10112

Fax:  (212) 698-3599

Attention: Adam M. Fox,
Esq.

 

if to
IBG Holdings, to:

 

One Pickwick Plaza

Greenwich, CT  06830

Fax:  (203) 618-5934

Attention:  Thomas Peterffy, Managing Member

 

Any party may change its address or fax number by
giving the other party written notice of its new address or fax number in the
manner set forth above.

 

SECTION 7.02.  Reconciliation.  In the event that IBGI and IBG Holdings are
unable to resolve a disagreement within the relevant period designated in this
Agreement, the matter shall be submitted for determination to a nationally
recognized expert in the particular area of disagreement employed by a
nationally recognized accounting firm or a law firm (other than the Advisory
Firm), which expert is mutually acceptable to both parties and the Audit
Committee.  If the matter is not resolved
before any payment that is the subject of a disagreement is due or any Tax
Return reflecting the subject of a disagreement is due, such payment shall be
made on the date prescribed by this Agreement and such Tax Return may be filed
as prepared by IBGI, subject to adjustment or amendment upon resolution.  The determinations of the expert pursuant to
this Section 7.02 shall be binding on IBGI, IBG LLC and IBG Holdings absent
manifest error.

 

SECTION 7.03.  Withholding.  IBGI shall be entitled to deduct and withhold
from any payment payable pursuant to this Agreement such amounts as IBGI is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law.  To the extent that amounts are so withheld
and paid over to the appropriate taxing authority by IBGI, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to IBG Holdings.  Each party will
cooperate to minimize withholding obligations, if any, with respect to payments
required hereunder.

 

15

 

SECTION 7.04.  Submission to
Jurisdiction; Waivers.  With respect
to any Proceeding, each party to this Agreement irrevocably (i) consents and
submits to the exclusive jurisdiction of the courts of the States of New York
and Delaware and any court of the U.S. located in the Borough of Manhattan in
New York City or the State of Delaware; (ii) waives any objection which such
party may have at any time to the laying of venue of any Proceeding brought in
any such court, waives any claim that such Proceeding has been brought in an
inconvenient forum and further waives the right to object, with respect to such
Proceeding, that such court does not have jurisdiction over such party; (iii)
consents to the service of process at the address set forth for notices in
Section 7.01 herein; provided, however, that such manner of
service of process shall not preclude the service of process in any other
manner permitted under applicable law; and (iv) waives, to the fullest extent
permitted by applicable law, any and all rights to trial by jury in connection
with any Proceeding.

 

SECTION 7.05.  Amendments.  No amendment to this Agreement shall be
effective unless it is (i) in writing, (ii) signed by IBGI and IBG Holdings and
(iii) approved by the Audit Committee.

 

SECTION 7.06.  Entire
Agreement; No Third Party Beneficiaries. 
This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. 
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and their respective successors and permitted assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.

 

SECTION 7.07.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement 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 hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.

 

SECTION 7.08.  Successors’
Assignment.  IBG Holdings may assign its
rights to Tax Benefit Payments pursuant to this Agreement to any of the Members
without the prior written consent of IBGI and the Audit Committee, which
consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, IBG Holdings may pledge some or all of its rights, interests or
entitlements under this Agreement to any U.S. money center bank in connection
with a bona fide loan or other indebtedness. 
IBGI may not assign any of its rights, interests or entitlements under
this Agreement without the consent of IBG Holdings, not to be unreasonably
withheld or delayed.  Subject to each of
the two immediately preceding sentences, this Agreement will be binding upon,
inure to the benefit of and be enforceable by, the parties and

 

16

 

their
respective successors and assigns including any acquirer of all or
substantially all of the assets of IBGI.

 

SECTION 7.09.  Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

 

SECTION 7.10.  Titles and
Subtitles.  The titles of the
sections and subsections of this Agreement are for convenience of reference only
and are not to be considered in construing this Agreement.

 

SECTION 7.11.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflict of laws.

 

17

 

IN
WITNESS WHEREOF, IBGI and IBG Holdings have duly executed this Agreement as of
the date first written above.

 

	
   

  	
  INTERACTIVE
  BROKERS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  Thomas Peterffy

  
	
   

  	
   

  	
   Title:

  	
  Chairman, Chief
  Executive Officer and

  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  One Pickwick
  Plaza

  
	
   

  	
   

  	
  Greenwich, CT
  06830

  
	
   

  	
   

  	
   

  
	
   

  	
  IBG HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   Name:

  	
  Thomas Peterffy

  
	
   

  	
   

  	
   Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  One Pickwick
  Plaza

  
	
   

  	
   

  	
  Greenwich, CT 06830

  
						

 

 

SCHEDULE A

 

VALUATION ASSUMPTIONS(1)

 

(i)            There
will be no further Exchanges from and after the Early Termination Notice.

 

(ii)           There
will be no change in the applicable rates of Covered Taxes throughout the
relevant period, except to the extent such changes have already been enacted
into law.

 

(iii)          All
taxable income of IBGI will be subject to the maximum applicable rates for
Covered Taxes throughout the relevant period.

 

(iv)          IBGI
will have income that exceeds the amount of any increase in deductions that may
be derived from the Basis Adjustment and Imputed Interest throughout the
relevant period for purposes of all Covered Taxes.

 

 

(1)           Note that
this is relevant only to Early Termination Payment computation.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]