CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of April __, 1998 (this
"Agreement"), is made and entered into by and among Roundtable Partners, L.L.C.,
a Delaware limited liability company (the "LLC"), Knight/Trimark Group, Inc., a
Delaware corporation (the "Corporation") and each Contributing Member of the LLC
that executes a counterpart signature page hereto (each, a "Contributing
Member").
WHEREAS, the Contributing Members have determined to transfer their
membership interest in the LLC to the Corporation, as a capital contribution,
and to cause the Corporation to offer shares of its common stock ("Common
Stock") to the public pursuant to an Initial Public Offering (as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Defined Terms.
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As used in this Agreement, the following terms shall have the meanings
set forth below. Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the LLC Agreement.
"Election Letter" shall mean the letter from the LLC to Contributing
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Members, dated April __, 1998, including the attachments thereto,
describing the transactions contemplated pursuant to the Agreement and
providing Contributing Members with a form of election to receive from
Newco shares of Common Stock (described in Section 7(a) hereof) with
respect to all or a portion of such Contributing Member's Undistributed
Profits.
"Initial Public Offering" shall mean the sale by the Corporation in a
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bona fide public offering on a firm commitment underwritten basis pursuant
to a registration statement filed and declared effective by the Securities
and Exchange Commission pursuant to the Securities Act of 1933, of shares
of Common Stock of the Corporation.
"LLC Agreement" shall mean the Limited Liability Company Agreement of
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Roundtable Partners, L.L.C. (as amended and in effect from time to time).
"Percentage Interest" shall mean, for any Contributing Member, the
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percentage interest (expressed as a decimal to five decimal places) set
forth opposite such Contributing Member's name in Column 4 of Schedule I
attached hereto.
"Pre-IPO Outstanding Amount" shall mean the aggregate number of shares
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of Common Stock that will be issued and outstanding immediately following
the closing of the Initial Public Offering, as disclosed in the definitive
prospectus relating thereto, including shares issued to Xxxxx & Co. upon
conversion of its subordinated promissory note and excluding (i) shares
issued pursuant to the Initial Public Offering, including any shares issued
to cover the Underwriters' exercise of their overallotment option and (ii)
shares issued by the Corporation pursuant to Section 2(b)(2) hereof.
"Undistributed Profits" shall mean, with respect to any Contributing
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Member as of March 31, 1998, (x) the aggregate amount of Company Net
Income, Knight Net Income and Trimark Net Income allocated to such
Contributing Member, minus (y) the aggregate amount of Company Net Loss,
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Knight Net Loss and Trimark Net Loss allocated to such Contributing Member
minus (z) the aggregate amount of cash or other property previously
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distributed to such Contributing Member, in each case in respect of such
Contributing Member's Common Interest in the LLC and pursuant to the terms
of the LLC Agreement in effect from time to time.
2. Contribution of Common Units; Issuance of Initial Shares.
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At the Closing, in reliance upon the representations and warranties
set forth herein, and upon the terms and conditions set forth herein:
(a) each Contributing Member shall transfer, assign and deliver to the
Corporation, as a contribution to capital, all right, title and interest of such
Contributing Member in and to the Common Units of the LLC; and
(b) the Corporation shall issue to such Contributing Member the number
of shares of Common Stock equal to (1) the Percentage Interest of such
Contributing Member multiplied by the Pre-IPO Outstanding Amount and (2) the
quotient resulting from the division of (A) the portion of such Contributing
Member's Undistributed Profits which such Contributing Member elects to have
exchanged for Common Stock pursuant to such Contributing Member's election on
the election form
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attached to the Election Letter, by (B) the Initial Public Offering price. The
Corporation shall authorize the issuance of two classes of Common Stock with
identical rights, except that one class will be non-voting. Contributing
Members may, upon request, receive shares of non-voting Common Stock in
satisfaction of their rights hereunder; and
(c) the LLC shall be dissolved in accordance with Section 12.1(d) of
the LLC Agreement.
3. Closing.
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(a) The Closing will take place concurrently with the closing of the
Initial Public Offering.
(b) At the Closing, (i) each Contributing Member will deliver to the
Corporation an instrument of transfer sufficient to effect the contribution of
all of such Contributing Member's interest in the LLC to the Corporation; and
(ii) the Corporation shall deliver to such Contributing Member stock
certificates representing the appropriate number of shares of Common Stock,
determined in the manner set forth in Section 2(b) hereof, registered in the
name of such Contributing Member, and cash in lieu of fractional shares of
Common Stock.
4. Conditions to Closing.
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The obligations of the parties under this Agreement shall be subject
to the following conditions:
(a) The closing of the Initial Public Offering shall occur
concurrently with the Closing.
(b) The Undistributed Profits of each Contributing Member accrued
through March 31, 1998, shall have been distributed by the LLC to such
Contributing Member to the extent and in the manner described in Section 7(a)
hereof.
5. Representations and Warranties of the Corporation.
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The Corporation hereby represents and warrants to the Contributing
Members, on the date hereof and on and as of the Closing Date, as follows:
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(a) Organization and Standing. The Corporation (i) is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) has all requisite corporate power and authority to own,
lease or otherwise hold its properties and to carry on its business as
contemplated; and (iii) is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where it is required by the nature
of its business to be so qualified.
(b) Authority. The Corporation has all requisite corporate power and
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authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Corporation of this
Agreement and the consummation by the Corporation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Corporation. This Agreement has been duly executed and
delivered by the Corporation and constitutes a legal, valid and binding
obligation of the Corporation, enforceable against the Corporation in accordance
with its terms. The execution and delivery by the Corporation of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, result in any violation of or default (with or without notice or
lapse of time or both) under, give rise to a right of termination, cancellation
or acceleration of any material obligation or to the loss of any material
benefit under or result in or require the creation, imposition or extension of
any lien upon any of the properties or assets of the Corporation under (i) any
material contract, (ii) any provision of the Certificate of Incorporation or By-
laws of the Corporation or (iii) any applicable law.
(c) Capitalization of the Corporation. No shares of Common Stock of
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the Corporation are issued or outstanding. The issuance of the Common Stock in
connection with this Agreement has been duly authorized, and the Common Stock,
when issued and delivered pursuant to this Agreement, will be validly issued,
fully paid and nonassessable and will not have been issued in violation of, and
will not be subject to, any preemptive or subscription rights.
(d) Prior Business. Except for the execution of this Agreement, the
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consummation of the transactions contemplated hereby and other transactions
related thereto and matters preparatory thereto, the Corporation has not since
its date of incorporation carried on any business or other activities of any
kind whatsoever. The Corporation does not have any subsidiaries or, directly or
indirectly, own any capital stock or other equity interests in any corporation,
partnership or other entity, and the Corporation is not a member of or
participant in any partnership, joint venture or similar entity.
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(e) Brokers or Finders. No person is or will be entitled to any
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broker's or finder's fee or any other commission or similar fee from the
Corporation in connection with any of the transactions contemplated hereby
(other than underwriting discounts and commissions to be paid in connection with
the Initial Public Offering).
6. Representations and Warranties of the Contributing Members.
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Each Contributing Member hereby represents and warrants to the LLC and
the Corporation, on the date hereof and on and as of the Closing Date, as
follows:
(a) Authority. The Contributing Member has all requisite corporate
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power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the
Contributing Member of this Agreement and the consummation by the Contributing
Member of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Contributing Member. This
Agreement has been duly executed and delivered by the Contributing Member and
constitutes a legal, valid and binding obligation of the Contributing Member,
enforceable against the Contributing Member in accordance with its terms. The
execution and delivery by the Contributing Member of this Agreement does, and
the consummation of the transactions contemplated hereby will not, conflict
with, result in any violation of or default (with or without notice or lapse of
time or both) under, give rise to a right of termination, cancellation or
acceleration of any material obligation or to the loss of any material benefit
under or result in or require the creation, imposition or extension of any lien
upon any of the properties or assets of the Contributing Member under (i) any
material contract, (ii) any provision of the charter or bylaws of the
Contributing Member or (iii) any applicable law.
(b) Title to Common Units. Such Contributing Member has, and upon
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consummation of the contribution contemplated by Section 2 hereof, the
Corporation will acquire, good, valid and marketable title to the Common Units
contributed by such Contributing Member to the Corporation, free and clear of
all liens or encumbrances.
(c) Acquisition for Investment. Such Contributing Member is acquiring
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the shares of Common Stock being acquired by such Contributing Member for his or
her own account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof, and such Contributing Member has no
present intention or plan to effect any distribution thereof or otherwise
dispose of any shares of Common Stock received pursuant to Section 2(b) hereof.
Each Contributing
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Member acknowledges that such shares of Common Stock have not been registered
under the Securities Act of 1933, as amended, and may be sold or disposed of in
the absence of such registration only pursuant to an exemption from such
registration and in accordance with this Agreement.
(d) Accredited Investor. The Contributing Member (i) is an
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"accredited investor" within the meaning of Rule 501 promulgated under the
Securities Act, (ii) has received all the information it considers necessary or
appropriate for deciding whether to acquire the shares of Common Stock, (iii)
has had an opportunity to ask questions and receive answers from the Corporation
regarding the terms and conditions of this Agreement and the business,
properties, prospects and financial condition of the Corporation, (iv) is able
to fend for itself and can bear the economic risk of an investment in the shares
of Common Stock, and (v) has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of an
investment in the Common Stock.
(e) Brokers or Finders. No person is or will be entitled to any
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broker's or finder's fee or any other commission or similar fee from the
Contributing Member in connection with any of the transactions contemplated
hereby.
7. Distribution of Undistributed Profits.
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(a) At least seven days prior to the first offer of the Common Stock
under the Initial Public Offering registration statement, the LLC shall
distribute to each Contributing Member who has not elected to receive Common
Stock with respect to all of such Contributing Member's Undistributed Profits
pursuant to the election form attached to the Election Letter an amount of cash
equal to the portion of such Member's Undistributed Profits which such Member
has not elected to exchange for Common Stock.
(b) In the event that the Closing shall not have occurred on or prior
to September 30, 1998, each of the Contributing Members hereby provides its
consent, pursuant to Section 13.3 of the LLC Agreement, for the amendment of the
relevant sections of the LLC Agreement to provide for priority cash
distributions to those Contributing Members who did not receive cash
distributions of all of their Undistributed Profits from the LLC pursuant to
Section 7(a), in a manner to be reasonably determined by the Advisory Committee.
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(c) Any cash distributed by the LLC to a Contributing Member in
accordance with this Agreement shall result in a reduction of such Contributing
Member's share of Undistributed Profits.
8. Waiver of Registration Rights.
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Each Contributing Member hereby waives any registration rights to
which such Contributing Member is entitled pursuant to Section 3.7 and Schedule
3.7 of the LLC Agreement in connection with the Initial Public Offering. All
Contributing Members will receive registration rights in connection with all of
the Common Stock they receive pursuant to this Agreement, pursuant to the terms
of a registration rights agreement substantially in the form of Exhibit A
hereto.
9. Holdback Agreement.
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Each Contributing Member agrees, if so requested in writing by the
Corporation, not to effect any public sale or distribution, including any
private placement or any sale pursuant to Rule 144, or any successor provision,
under the Securities Act, of any equity security of the Corporation or of any
security convertible into or exchangeable or exercisable for any equity security
of the Corporation (in each case, other than as part of such underwritten
offering) during the seven days prior to, and during the 180 day period which
begins on, the effective date of the registration statement relating to the
Initial Public Offering.
10. Legends.
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Each certificate evidencing the shares of Common Stock of the
Corporation issued to any Contributing Member pursuant to this Agreement shall,
at the time of issuance, bear a legend substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT IN
COMPLIANCE WITH SUCH ACT AND LAWS.
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11. Termination.
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If the Closing shall not have occurred on or prior to September 30,
1998, this Agreement and all obligations of the parties hereunder, except
obligations under Sections 7(b) and 12(g), shall terminate, unless extended by
mutual agreement of the parties. The LLC may, without liability to any
Contributing Member, terminate this Agreement, and all obligations of the
parties hereunder, except obligations under Sections 7(b) and 12(g), shall
terminate, if the Advisory Committee of the LLC determines not to consummate the
IPO.
12. Miscellaneous.
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(a) Entire Agreement. This Agreement contains the entire
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understanding of the parties with respect to the transactions contemplated
hereby.
(b) Counterparts. This Agreement may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(c) Cooperation. The parties agree to take, or cause to be taken, any
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and all further actions and to execute any and all additional documents, as
shall reasonably be necessary to make effective and consummate the transactions
contemplated by this Agreement.
(d) Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of New York.
(e) Signatures. This Agreement shall be effective upon delivery of
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original signature pages or facsimile copies thereof executed by each of the
parties hereto.
(f) Publicity. No public release, announcement or other form of
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publicity concerning the Initial Public Offering shall be issued without the
prior written consent of the LLC.
(g) Expenses. Whether or not the Initial Public Offering or any of
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the transactions contemplated by this Agreement are consummated, all costs and
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expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
(h) Assignment. No Contributing Member shall assign this Agreement or
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any of its rights hereunder without the prior written consent of the LLC.
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IN WITNESS WHEREOF, the LLC, the Corporation and each Contributing
Member executing a counterpart signature page hereto have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized.
THE LLC: ROUNDTABLE PARTNERS, L.L.C.
By:
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Name:
Title:
THE CORPORATION: KNIGHT/TRIMARK GROUP, INC.
By:
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Name:
Title:
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Schedule I
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Column 1 Column 2 Column 3 Column 4
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Name of Preliminary Percentage Percentage
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Contributing Member Percentage Dilution giving Interest (1)
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Interest effect to Xxxxx
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& Co. conversion
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of its Subordinated
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Promissory Note
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(1) Does not give effect to the issuance of Common Stock in exchange for
Undistributed Profits pursuant to Section 2(b) of the Agreement.
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COUNTERPART SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT
The undersigned hereby acknowledges receipt of the Contribution Agreement,
dated as of April 17, 1998 (the "Contribution Agreement"), by and among
Roundtable Partners, L.L.C. (The "LLC"), Knight/Trimark Securities Group, Inc.
(the "Corporation"), and each Contributing Member executing a Counterpart
Signature Page thereto. From and after the undersigned's execution and delivery
of this Counterpart Signature Page and the acceptance hereof by the LLC and the
Corporation, the undersigned shall be a party to the Contribution Agreement and
shall be deemed a "Contributing Member" for all purposes thereunder.
Each Contributing Member hereby irrevocably makes, constitutes and appoints
Xxxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxx, or either of them, the true and lawful
representative and attorney-in-fact of such Contributing Member, with full power
of substitution, to act in the name, place and stead of such Contributing
Member, with the power from time to time to execute and delivery any document or
instrument necessary to transfer, assign and deliver to the Corporation the
Common Units owned by such Contributing Member at the Closing or otherwise to
consummate the transactions contemplated by the Contribution Agreement.
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Printed Name of Contributing Member
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Signature of Contributing Member
By:
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Title:
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Address:
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Date:
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Agreed and Accepted
ROUNDTABLE PARTNERS, L.L.C.
By:
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Name:
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Title:
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KNIGHT/TRIMARK GROUP, INC.
By:
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Name:
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Title:
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Date:
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