Contribution Agreement: Definition & Sample

A contribution agreement, also known as a deed of contribution, is a legal document that provides for the transfer of an asset from one party to another party. It will express the conditions required including liability, indemnities and more.

With a contribution agreement you will find specific information related to which party is responsible for liabilities under the warranty, tax covenant, or indemnities through the share purchase agreement. This document allows both parties to define their responsibilities remaining upon transfer of an asset.

Common Sections in Contribution Agreements

Below is a list of common sections included in Contribution Agreements. These sections are linked to the below sample agreement for you to explore.

Contribution Agreement Sample

TRAGARA ALPHA PARTNERS LLC

LIQUID HOLDINGS GROUP, LLC

THIS CONTRIBUTION AGREEMENT (this “ Agreement ”), is entered into as of this 27th day of April, 2012, by and among Liquid Holdings Group, LLC. a Delaware limited liability company (the “ Company ”), and Tragara Alpha Partners LLC, a New York limited liability company (“ Contributor ”). Company and Contributor are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”.

WHEREAS, Contributor owns all of the rights, title and interest in and to the Contributed Assets (as defined below); and

WHEREAS, Contributor wishes to contribute to Company, and Company wishes to acquire from Contributor, all of Contributor’s rights, title and interest in and to the Contributed Assets pursuant to the terms and conditions set forth herein.

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

Section 1.01 Contribution of Assets . Subject to the terms and conditions set forth herein, Contributor hereby agrees to contribute, assign, transfer, convey and deliver to Company, and Company hereby agrees to acquire from Contributor, all of Contributor’s rights, title and interest in and to the assets (the “ Contributed Assets ”) set forth on Section 1.01 of the schedules attached hereto, free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“ Encumbrances ”).

Section 1.02 Assumed Liabilities; Retained Liabilities. Subject to the terms and conditions set forth herein, Company shall assume all liabilities and obligations related to the Contributed Assets arising after the Closing (as defined below) but only to the extent that such liabilities and obligations do not relate to any pre-Closing breach, default, omission or violation of which Seller has knowledge prior to the Closing (the “ Assumed Liabilities ”). Other than the Assumed Liabilities, the Company shall not assume any liabilities or obligations of Contributor of any kind (all liabilities of Contributor other than the Assumed Liabilities being the “ Retained Liabilities ”).

Section 1.03 Consideration. At Closing, in consideration for the Contributed Assets, the Company shall issue and deliver to Contributor an aggregate number of Class A Common Units of Company (the “ Units ”) equal to live percent (5%) of the total issued and outstanding membership interest units of Company as of the Closing. By its execution hereof, Contributor hereby directs Company to issue the Units to its sole owner, Samuel Gaer (“ Gaer ”), in full satisfaction of Company’s obligations to Contributor under this Section 1.03.

Section 1.04 Tax Consequences . The Parties agree that the transactions contemplated by this Agreement shall be treated as a capital contribution of the Contributed Assets by Contributor to the Company described in Section 721 of the Internal Revenue Code of 1986, as amended.

Section 2.01 Closing. The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Reed Smith LLP, 599 Lexington Avenue, 22 nd Floor, New York, NY 10022, on the first business day after the last of the conditions to Closing set forth in Sections 5.05 and 5.06 have been satisfied or waived by the Party or Parties entitled to waive the same or at such other time, date or place, and in such manner, as may be agreed to by the Parties. The date on which Closing actually occurs is referenced herein as the “ Closing Date ”.

Section 2.02 Closing Deliverables.

(a) At the Closing, Contributor shall deliver to Company the following:

(i) a Bill of Sale in a form mutually agreed to by the Parties, duly executed by Contributor, effecting the transfer of the Contributed Assets to Company;

(ii) the Joint Intellectual Property Ownership Agreement (the “ IP Ownership Agreement ”), substantially in the form attached hereto as Exhibit B, duly executed by Contributor and Neil Citrone as agent for Vincent Viola;

(iii) a Joinder to the Limited Liability Company Agreement of the Company, in a form reasonably acceptable to Company, duly executed by Contributor;

(iv) the LTI Letter of Entitlement Agreement (as defined below), duly executed by Gaer (or his designee);

(v) the Deed of Adherence, substantially in the form attached hereto as Exhibit E , duly executed by Gaer (or his designee); and

(vi) such other instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Company, as may be reasonably requested by Company (including, without limitation, any documents necessary to evidence and effectuate the assignment of the IP Ownership Agreement to Company);

(vii) Gaer shall deliver to the Company an investor representation letter, substantially in the form attached hereto as Exhibit D, duly executed by Gaer; and

(b) At the Closing, Company shall deliver to Contributor the following:

(i) the Units, together with any instruments or documents evidencing Gaer’s ownership thereof;

(ii) the Company’s Limited Liability Agreement, duly executed by the Company; and

(iii) the Letter of Entitlement (the “LTI Letter of Entitlement”), substantially in the form attached hereto as Exhibit A , duly executed by Liquid Trading Int’l, LLP a limited liability partnership incorporated in England and Wales.

REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR

Contributor represents and warrants to the Company that the statements contained in this Article III are true and correct as of the date hereof and as of the Closing Date, except as set forth in the disclosure schedules (the “ Disclosure Schedules ”) numbered to correspond to the Section in this Article III to which such exception relates. For purposes of this Article III, “Contributor’s knowledge”, “knowledge of Contributor” and any similar phrases shall mean the actual or constructive knowledge of Contributor and Gaer, after reasonable inquiry.

Section 3.01 Organization and Capacity. Contributor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.

Section 3.02 Authority and Enforceability, The execution, delivery and performance by Contributor of this Agreement and the consummation by Contributor of the transactions contemplated hereby are within Contributor’s limited liability company powers and have been duly authorized by all requisite limited liability company action on the part of Contributor. This Agreement has been duly and validly executed by Contributor and constitutes the legal, valid and binding agreement of Contributor, enforceable against Contributor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity.

Section 3.03 No Conflicts; Consents. The execution, delivery and performance Contributor of this Agreement and the consummation of the transactions contemplated hereby do not and will not: (a) violate or conflict with the Articles of Organization, the Operating Agreement or other organizational documents of Contributor; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Contributor or the Contributed Assets; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any material contract or other material instrument to which Contributor is a party or to which any of the Contributed Assets are subject; or (d) result in the creation or imposition of any Encumbrance on the Contributed Assets. No consent, approval, waiver or authorization is required to be obtained by Contributor from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Contributor of this Agreement or the consummation of the transactions contemplated hereby.

Section 3.04 Title to Contributed Assets. Contributor owns and has good, valid and marketable title to the Contributed Assets, free and clear of all Encumbrances.

Section 3.05 Intellectual Property.

(a) For any Intellectual Property included in the Contributed Assets (the “Contributed IP”), Contributor owns, subject to the IP Ownership Agreement, all of the Contributed IP, free and clear of all Encumbrances. Contributor is not bound by any outstanding judgment, injunction, order or decree restricting the use of the Contributed IP, or restricting the licensing thereof to any person or entity. With respect to the Contributed IP, (i) all such Intellectual Property is valid, subsisting and in full force and effect and (ii) Contributor has paid all maintenance fees and made all filings required to maintain Contributor’s ownership thereof.

(b) To the knowledge of Contributor, the Contributed Assets and the Contributed IP do not infringe, violate, dilute or misappropriate the Intellectual Property rights of any person or entity and there are no claims pending or threatened by any person or entity with respect to the ownership, validity, enforceability, effectiveness or use of the Contributed IP. To the knowledge of Contributor, no person or entity is infringing, misappropriating, diluting or otherwise violating any of Contributor’s rights in and to the Contributed Assets, and neither Contributor nor any affiliate of Contributor has made or asserted any claim, demand or notice against any person or entity alleging any such infringement, misappropriation, dilution or other violation.

(c) For purposes of this Agreement, the term “ Intellectual Property ” shall mean any and all of the following in any jurisdiction throughout the world: (i) trademarks and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (ii) copyrights, including all applications and registrations related to the foregoing; (iii) trade secrets, confidential information, know-how, inventions (whether or not patentable and whether or not reduced to practice), processes, procedures, drawings, specifications, designs, plans, proposals, technical data and other confidential and proprietary information; (iv) patents and patent applications; (v) internet domain name registrations; and (vi) other intellectual property and related proprietary rights, interests and protections (including all rights to sue and recover and retain damages, costs and attorneys’ fees for past, present and future infringement and any other rights relating to any of the foregoing).

Section 3.06 Software.

(a) The Contributed Assets are free of (i) any material defects and material errors and (ii) any disabling codes or instructions and any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components that permit unauthorized access or the unauthorized disruption, impairment, disablement or erasure of such the Contributed Assets (or any part thereof) or data or other software of users.

Section 3.07 Compliance With Laws. Contributor has at all times complied, and is in current compliance, in each case in all material respects, with all applicable federal, state and local laws and regulations applicable to ownership and use of the Contributed Assets.

Section 3.08 Legal Proceedings. There is no claim, action, suit, proceeding or governmental investigation (“ Action ”) of any nature pending or, to Contributor’s knowledge, threatened, against Contributor (a) relating to or affecting the Contributed Assets; or (b) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. To the knowledge of Contributor, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

Section 3.09 Ownership of Contributor. Gaer owns all of the issued and outstanding membership interests of Contributor free and clear of any Encumbrances.

Section 3.10 Disclosure. No representation or warranty made by Contributor in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or in any certificate or other document provided by Contributor to Company in connection with this Agreement and the transactions contemplated hereby contains any untrue statement of material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading.

REPRESENTATIONS AND WARRANTIES OF COMPANY

Company hereby represents and warrants to Contributor that the statements contained in this Article IV are true and correct as of the date hereof and as of the Closing Date, except as set forth in the Disclosure Schedules numbered to correspond to the Section in this Article IV to which such exception relates. For purposes of this Article IV, “Company’s knowledge”, “knowledge of Company” and any similar phrases shall mean the actual or constructive knowledge of any member, manager or officer of Company, after reasonable inquiry.

Section 4.01 Organization and Authority of Company; Enforceability. Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The execution, delivery and performance by Company of this Agreement and the consummation by Company of the transactions contemplated hereby are within Company’s limited liability company powers and have been duly authorized by all requisite limited liability company action on the part of Company. This Agreement has been duly and validly executed by Company and constitutes the legal, valid and binding agreement of Company, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and subject to general principles of equity.

Section 4.02 No Conflicts; Consents. The execution, delivery and performance by Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not: (a) violate or conflict with the Certificate of Formation, the Limited Liability Company Agreement or other organizational documents of Company; or (b) violate or conflict

with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Company. No consent, approval, waiver or authorization is required to be obtained by Company from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Company of this Agreement and the consummation of the transactions contemplated hereby.

Section 4.03 Legal Proceedings. There is no Action of any nature pending or, to Company’s knowledge, threatened, against or by Company that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

Section 5.01 Public Announcements, Unless otherwise required by applicable law or any applicable stock exchange requirements, no Party shall make any public announcements regarding this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed).

Section 5.02 Transfer Taxes, All transfer, documentary, sales, use, stamp, registration, value added and other such taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the consummation of the transactions contemplated hereby shall be split equally between Company, on one hand, and Contributor Parties, on the other hand.

Section 5.03 Further Assurances. Following the Closing, each of the Parties shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further action or actions as the other Parties may reasonably deem necessary or desirable to evidence and effectuate the transactions contemplated by this Agreement (including, without limitation, the covenants contained in Section 5.04). Without limiting the generality of the foregoing, Contributor Parties hereby agree to take any and all actions required or necessary to assist and/or enable Company to enforce its rights under the IP Ownership Agreement.

Section 5.04 Additional Rights,

(a) Inspection Rights . The Company hereby agrees that Gaer shall have the inspection rights described in Section 12.01 of the Company’s Limited Liability Company Agreement for so long as Gaer either (i) holds at least 2.5% of the then total issued and outstanding Units or (ii) is employed as an executive officer of the Company; in either case regardless of whether Gaer owns less than 10% of the Company’s Class A Units at such time.

(b) Preemptive Rights . The Company agrees that during the period prior to an Initial Public Offering (as such term is defined in the Company’s Limited Liability Company Agreement) it may not sell or issue (or offer to sell or issue) any additional Class A Common

Units (as such term is defined in the Company’s Limited Liability Company Agreement) to any person who is an owner of Class A Common Units on the date of this Agreement (each a “Current Class A Holder”) or any affiliate or family member of a Current Class A Holder, unless the Company offers to sell or issue to Gaer, at the same price and on the same terms as the sale or issuance to the Current Class A Holder(s), a number of Class A Common Units such that, if purchased by Gaer, would result in Gaer maintaining the same percentage interest in the Company immediately after such sale or issuance as Gaer owned immediately prior to such sale or issuance. The Company shall notify Gaer in writing at least 5 business days before any such proposed sale or issuance (or if shorter, at the same time as such proposed sale or issuance is offered to the Current Class A Holder(s)), which written notice shall specify the number of Class A Common Units that Gaer is entitled to purchase and the purchase price therefor. Gaer shall have the right, but not the obligation, to purchase up to the number of Class A Common Units as are specified in the notice by delivering a written notice to the Company (which written notice shall specify the number of Class A Units (if any) that Gaer has elected to purchase) within 3 business days of Gaer’s receipt of the Company’s written notice to him (or, if shorter, such time as the Current Class A Holder(s) must indicate whether they will participate in such proposed sale or issuance). For the avoidance of doubt, the rights specified in this Section 5.04(b) shall not apply to any offer, sale or issuance by the Company of any Non-dilutive Common Units (as such term is defined in the Company’s LLC Agreement), nor shall it apply to any Class A Common Units offered, sold or issued by the Company in connection with: (A) a grant pursuant to any Incentive Plan (as defined in the Company’s Limited Liability Company Agreement) or similar equity-based plans or other compensation agreement that is in effect as of the date of Closing and which does not exceed the number of Units reserved for such Incentive Plan as of the date of Closing; (B) the conversion or exchange of any securities of the Company outstanding on the date hereof into Class A Common Units; (C) any acquisition by the Company or any subsidiary of the Company of any equity interest, asset, property or business of any person or any merger, consolidation or other business combination involving the Company or any subsidiary of the Company; (D) any public offering of securities of the Company; or (E) any subdivision or split of the Class A Units.

Section 5.05 Conditions to the Obligations of Contributor. The obligations of Contributor to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

(a) The representations and warranties of the Company set forth in Article 4 shall be true and correct in all material respects as of the date of this Agreement and at and as of the Closing (except for those representations and warranties that contain materiality qualifications, which shall be true and correct in all respects) as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and warranties;

(b) The Company shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing and

(c) The Start Date under, and as defined in, that certain Executive Employment Agreement, dated as of the date hereof, by and between Gaer and the Company attached hereto as Exhibit C (the “ Employment Agreement ”) shall have commenced and such Employment Agreement shall be in full force and effect;

(d) The Company shall have delivered (i) each of the documents required to be delivered by the Company under Section 2.02(b) above and (ii) a certificate dated as of the Closing Date, stating that the conditions specified in Sections 5.05(a) and 5.05(b) have been satisfied.

Section 5.06 Conditions to the Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions as of the Closing Date:

(a) The representations and warranties of the Contributor set forth in Article 3 shall be true and correct in all material respects as of the date of this Agreement and at and as of the Closing (except for those representations and warranties that contain materiality qualifications, which shall be true and correct in all respects) as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and warranties;

(b) The Contributor shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing;

(c) The Start Date under, and as defined in, that the Employment Agreement shall have commenced and such Employment Agreement shall be in full force and effect; and

(d) The Contributor and Gaer shall have each delivered the documents required to be delivered thereby under Section 2.02(a) above and the Contributor shall have delivered a certificate dated as of the Closing Date, stating that the conditions specified in Sections 5.06(a) and 5.06(b) have been satisfied.

Section 5.07 Satisfaction of Conditions. Each of the Contributor and the Company shall use reasonable best efforts and proceed diligently and in good faith to cause each of the conditions to the Closing to be satisfied as promptly as practicable after the date of this Agreement.

Section 5.08 Sale of the Company or LTI. If either the Company or LTI consummates a Change of Control (as such term is defined in the Company’s Limited Liability Company Agreement), or enters into an agreement to consummate such a transaction after the date of this Agreement but prior to the Closing, then Gaer shall be entitled receive the consideration under such transaction that Gaer would have been entitled to receive had the transactions contemplated by this Agreement been consummated immediately prior to such Change of Control.

Section 6.01 Survival. All representations and warranties contained herein and all related rights to indemnification shall survive the Closing for a period of eighteen months after the Closing, except that the representations contained in Sections 3.01, 3.02, 3.04 and 4.01 shall survive the Closing indefinitely. All covenants and agreements contained herein and all related indemnification and related remedies shall survive the Closing in accordance with their respective terms.

Section 6.02 Indemnification by Contributor. Contributor shall defend, indemnify and hold harmless Company, its affiliates and their respective stockholders, members, directors, managers, officers, employees, representatives and agents from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including reasonable attorneys’ fees and disbursements, arising from or relating to:

(a) any inaccuracy in or breach of any of the representations or warranties of Contributor contained in this Agreement or any document delivered in connection herewith;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Contributor pursuant to this Agreement or any document delivered in connection herewith; and

(c) the Retained Liabilities.

Section 6.03 Indemnification by Company. Company shall defend, indemnify and hold harmless Contributor, its affiliates and their respective stockholders, members, directors, managers, officers, employees, representatives and agents from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including reasonable attorneys’ fees and disbursements, arising from or relating to:

(a) any inaccuracy in or breach of any of the representations or warranties of Company contained in this Agreement or any document delivered in connection herewith;

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Company pursuant to this Agreement or any document delivered in connection herewith; and

(c) any Assumed Liabilities.

Section 6.04 Limitations on Indemnity. Except for fraud, intentional misrepresentation, wilful breach or wilful misconduct and subject to Section 7.02, neither Contributor nor the Company shall be liable for any indemnification claim under Section 6.02 or Section 6.03, as applicable, in an amount exceeding $500,000.

Section 6.05 Indemnification Procedures. Whenever any claim shall arise for indemnification hereunder, the Party entitled to indemnification (the “ Indemnified Party ”) shall

promptly provide written notice of such claim to the Party from whom indemnification is being sought (the “ Indemnifying Party ”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after obtaining the prior consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed), on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations hereunder. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which shall not be unreasonably withheld or delayed).

Section 6.06 Sole and Exclusive Remedy. Subject to Section 5.08 and Section 7.02, the Company and Contributor agree that their sole and exclusive remedy with respect to any and all claims (other than fraud, intentional misrepresentation, wilful breach or wilful misconduct) relating to the subject matter of this Agreement shall be a claim for indemnification under Section 6.02 or Section 6.03 (as applicable), in each case subject to the limitations set forth in this Article VI.