Exhibit 10.8
NYSE CSA FORM 1D
SUBORDINATED LOAN AGREEMENT - CASH
THIS AGREEMENT is entered into this 31 day of August 1998 between NB Associates,
LLC (the "Lender") and Xxxxxxxxx & Xxxxxx, LLC (the "Organization").
1. GENERAL - Subject to the terms and conditions hereinafter set
forth, the Organization promises to pay to the Lender or assigns, on September
1, 1999 (the "Scheduled Maturity Date") (the last day of the month at least 1
year and not more than 10 years from the date thereof) at the principal office
of the Organization, the principal sum of FIFTY MILLION DOLLARS ($50,000,000)
and to pay interest on such unpaid principal amount quarterly at a rate of 6.75%
per annum from the date hereof, and has delivered to the Lender a Promissory
Note, dated the date hereof, evidencing the loan made hereunder (the "Note"). By
written notice delivered to the Organization at its principal office and to the
New York Stock Exchange, Inc. (the "Exchange") no sooner than 6 months from the
date hereof, the Lender may accelerate such payment date to the last business
day of a calendar month not less than 6 months after the receipt of such notice
by both the Organization and the Exchange, but the right of the Lender to
receive payment of the principal amount hereof and interest shall remain
subordinate as hereinafter provided.
2. SUSPENDED REPAYMENT
The Organization's obligation to pay the principal amount hereof on
the Scheduled Maturity Date or any accelerated maturity date shall be suspended
and the obligation shall not mature for any period of time during which after
giving effect to such payment (together with (a) the payment of any other
obligation of the Organization payable at or prior to the payment hereof and (b)
the return of any Secured Demand Note and the Collateral therefor held by the
Organization and returnable at or prior to the payment hereof).
(i) in the event that the Organization is not operating pursuant to
the alternative net capital requirement provided for in
paragraph (a)(1)(ii) of Rule 15c3-1 (the "Rule") under the
Securities Exchange Act of 1934, as amended (the "Act"), the
aggregate indebtedness of the Organization would exceed 1200
percent of its net capital as those terms are defined in the
Rule or any successor rule as in effect at the time payment is
to be made, or such other percent as may be made applicable to
the Organization at the time of such
Exhibit 10.8
payment by the New York Stock Exchange, Inc. (the "Exchange") or
the Securities and Exchange Commission (the "SEC"), or
(ii) in the event that the Organization is operating pursuant to such
alternative net capital requirement, the net capital of the
Organization would be less than 5 percent (or such other percent
as may be made applicable to the Organization at the time of
such payment by the Exchange or the SEC) of aggregate debit
items computed in accordance with Exhibit A to Rule 15c3- 3
under the Act or any successor rule as in effect at such time,
or
(iii) in the event that the Organization is registered as a futures
commission merchant under the Commodity Exchange Act (the
"CEA"), the net capital of the Organization (as defined in the
CEA or the regulations thereunder as in effect at the time of
such payment) would be less than 6 percent (or such other
percentum as may be made applicable to the Organization at the
time of such payment by the Commodity Futures Trading Commission
(the "CFTC") of the funds required to be segregated pursuant to
the CEA and the regulations thereunder, and the foreign futures
or foreign options secured amount less the market value of
commodity options purchased by customers on or subject to the
rules of a contract market or a foreign board of trade
(provided, however, the deduction for each customer shall be
limited to the amount of customer funds in such customer's
account(s) and foreign futures and foreign options secured
amounts), or the Organization's net capital would be less than
the minimum capital requirement as defined by the DSRO, or
(iv) the Organization's net capital, as defined in the Rule or any
successor rule as in effect at the time of such payment would be
less than 120 percent (or such other percent as may be made
applicable to the Organization at the time of such payment by
the Exchange or the SEC) of the minimum dollar amount required
by the Rule as in effect at such time (or such other dollar
amount as may be made applicable to the Organization at the time
of such payment by the Exchange or the SEC), or
(v) in the event that the Organization is registered as a futures
commission merchant under the CEA and if its net capital, as
defined in the CEA or the regulations thereunder as in effect at
the time of such payment, would be less than 120 percent (or
such other percent as may be made applicable to the Organization
at the time of such payment by the CFTC) of the minimum
Exhibit 10.8
dollar amount required by the CEA or the regulations thereunder
as in effect at such time (or such other dollar amount as may be
made applicable to the Organization at the time of such payment
by the CFTC), or
(vi) in the event that the Organization is subject to the provisions
of Paragraph (a)(6)(v) or (c)(2)(x)(C) of the Rule, the net
capital of the Organization would be less than the amount
required to satisfy the 1000 percent test (or such other
percentum test as may be made applicable to the Organization at
the time of such payment by the Exchange or the SEC) stated in
such applicable paragraph,
(the net capital necessary to enable the Organization to avoid such suspension
of its obligation to pay the principal amount hereof being hereinafter referred
to as the "Applicable Minimum Capital") and during any such suspension the
Organization shall, as promptly as consistent with the protection of its
customers, reduce its business to a condition whereby the principal amount
hereof with accrued interest thereon could be paid (together with (a) the
payment of any other obligation of the Organization payable at or prior to the
payment hereof and (b) the return of any Secured Demand Note and the Collateral
therefor held by the Organization and returnable at or prior to the payment
hereof) without the Organization's net capital being below the Applicable
Minimum Capital, at which time the Organization shall repay the principal amount
thereof plus accrued interest thereon on not less than five days' prior written
notice to the Exchange. The aggregate principal amount outstanding pursuant to
this Agreement shall mature on the first day at which under this paragraph the
Organization has an obligation to pay the principal amount hereof. If pursuant
to the terms hereof the Organization's obligation to pay the principal amount
hereof is suspended and does not mature, the Organization (and the Lender
recognizes) and agree that, if its obligation to pay the principal amount hereof
is ever suspended for a period of six months or more, it will promptly take
whatever steps are necessary to effect a rapid and orderly complete liquidation
of its business. If payment is made of all or any part of the principal hereof
on the Scheduled Maturity Date or any accelerated maturity date and if
immediately after any such payment the Organization's net capital is less than
the Applicable Minimum Capital, the Lender agrees irrevocably (whether or not
such Lender had any knowledge or notice of such fact at the time of any such
payment) to repay to the Organization, its successors or assigns, the sum so
paid, to be held by the Organization pursuant to the provisions hereof as if
such payment had never been made; provided, however, that any suit for the
recovery of any such payment must be commenced within two years of the date of
such payment.
3. SUBORDINATION OF OBLIGATIONS
Exhibit 10.8
The Lender irrevocably agrees that the obligations of the
Organization under this Agreement with respect to the payment of principal and
interest are and shall be fully and irrevocably subordinate in right of payment
and subject to the prior payment or provision for payment in full of all claims
of all other present and future creditors of the Organization whose claims are
not similarly subordinated (claims hereunder shall rank pari passu with claims
similarly subordinated) and to claims which are now or hereafter expressly
stated in the instruments creating such claims to be senior in right of payment
to the claims of the class of this claim arising out of any matter occurring
prior to the date on which the Organization's obligation to make such payment
matures consistent with the provisions hereof. In the event of the appointment
of a receiver or trustee of the Organization or in the event of its insolvency,
liquidation pursuant to the Securities Investor Protection Act of 1970 ("SIPA")
or otherwise, its bankruptcy, assignment for the benefit of creditors,
reorganization whether or not pursuant to bankruptcy laws, or any other
marshalling of the assets and liabilities of the Organization, the holder hereof
shall not be entitled to participate or share, ratably or otherwise, in the
distribution of the assets of the Organization until all claims of all other
present and future creditors of the Organization, whose claims are senior
hereto, have been fully satisfied, or adequate provision has been made therefor.
4. PERMISSIVE PREPAYMENT
With the prior written approval of the Exchange, the Organization
may, at its option, make Prepayment of all or any portion of the principal
amount hereof to the Lender prior to the Scheduled Maturity Date at any time
subsequent to one year from the effective date of this agreement. No Prepayment
shall be made, however, if after giving effect thereto (and to all other
payments of principal of outstanding subordination agreements of the
Organization, including the return of any Secured Demand Note and the Collateral
therefor held by the Organization, the maturity or accelerated maturity of which
are scheduled to occur within six months after the date such Prepayment is to
occur pursuant to the provisions of this paragraph, or on or prior to the
Scheduled Maturity Date for payment of the principal amount hereof disregarding
this paragraph, whichever date is earlier) without reference to any projected
profit or loss of the Organization.
(i) in the event that the Organization is not operating pursuant to
the alternative net capital requirement provided for in
paragraph (a)(1)(ii) of the Rule, the aggregate indebtedness of
the Organization would exceed 1000 percent of its net capital as
those terms are defined in the Rule or any successor rule as in
effect at the time such Prepayment is to be made (or such other
percent as
Exhibit 10.8
may be made applicable at such time to the Organization by the
Exchange or the SEC), or
(ii) in the event that the Organization is operating pursuant to such
alternative net capital requirement, the net capital of the
Organization would be less than 5 percent (or such other percent
as may be made applicable to the Organization at the time of
such Prepayment by the Exchange or the SEC) of aggregate debit
items computed in accordance with Exhibit A to Rule 15c3-3 under
the Act or any successor rule as in effect at such time, or
(iii) in the event that the Organization is registered as a futures
commission merchant under the CEA, the net capital of the
Organization (as defined in the CEA or the regulations
thereunder as in effect at the time of such Prepayment) would be
less than 7 percent (or such other percent as may be made
applicable to the Organization at the time of such Prepayment by
the CFTC) of the funds required to be segregated pursuant to the
CEA and the regulations thereunder, and the foreign futures or
foreign options secured amount less the market value of
commodity options purchased by customers of the Organization on
or subject to the rules of a contract market or a foreign board
of trade (provided, however, the deduction for each customer
shall be limited to the amount of customer funds in such
customer's account(s) and foreign futures and foreign options
secured amounts) or the Organization's net capital would be less
than the minimum capital requirement as defined by the DSRO, or
(iv) the Organization's net capital, as defined in the Rule or any
successor rule as in effect at the time of such Prepayment,
would be less than 120 percent (or such other percent as may be
made applicable to the Organization at the time of such
Prepayment by the Exchange or the SEC) of the minimum dollar
amount required by the Rule as in effect at such time (or such
other dollar amount as may be made applicable to the
Organization at the time of such Prepayment by the Exchange or
the SEC), or
(v) in the event that the Organization is registered as a futures
commission merchant under the CEA, its net capital, as defined
in the CEA or the regulations thereunder as in effect at the
time of such Prepayment would be less than 120 percent (or such
other percent as may be made applicable to the Organization at
the time of such Prepayment by the CFTC) of the minimum dollar
amount required by the CEA or the regulations thereunder
Exhibit 10.8
as in effect at such time or such other dollar amount as may be
made applicable to the Organization at the time of such
Prepayment by the CFTC, or
(vi) in the event that the Organization is subject to the provisions
of paragraph (a)(6)(v) or (c)(2)(x)(C) of the Rule, the net
capital of the Organization would be less than the amount
required to satisfy the 1000 percent test (or such other percent
test as may be made applicable to the Organization at the time
of such Prepayment by the Exchange or the SEC) stated in such
applicable paragraph, or
If Prepayment is made of all or any part of the principal hereof prior to the
Scheduled Maturity Date and if the Organization's net capital is less than the
amount required to permit such Prepayment pursuant to the foregoing provisions
of this Paragraph, the Lender agrees irrevocably (whether or not such Lender had
any knowledge or notice of such fact at the time of such Prepayment) to repay
the Organization, its successors or assigns, the sum so paid to be held by the
Organization pursuant to the provisions hereof as if such Prepayment had never
been made; provided, however, that any suit for the recovery of any such
Prepayment must be commenced within two years of the date of such Prepayment.
5. ACCELERATION IN EVENT OF INSOLVENCY
The Organization's obligation to pay the unpaid principal amount
hereof shall forthwith mature, together with interest accrued thereon, in the
event of any receivership, insolvency, liquidation pursuant to SIPA or
otherwise, bankruptcy, assignment for the benefit of creditors, reorganization
whether or not pursuant to bankruptcy laws, or any other marshalling of the
assets and liabilities of the Organization; but payment of the same shall remain
subordinate as hereinabove set forth.
6. EFFECT OF DEFAULT
Default in any payment hereunder, including the payment of interest,
shall not accelerate the maturity hereof except as herein specifically provided,
and the obligation to make payment shall remain subordinated as herein above set
forth.
7. NOTICE OF MATURITY OR ACCELERATED MATURITY
Exhibit 10.8
The organization shall immediately notify the Examining Authority for
such broker or dealer, if, after giving effect to all Payments of Payment
Obligations (as that term is defined in (a)(2)(iv) of Appendix D of the Rule)
under subordination agreements then outstanding that are then due or mature
within the following six months without reference to any projected profit or
loss of the broker or dealer either the aggregate indebtedness of the broker or
dealer would exceed 1200 percent of its net capital or its net capital would be
less than 120 percent of the minimum dollar amount required by the Rule, or, in
the case of a broker or dealer operating pursuant to paragraph (a)(1)(ii) of the
Rule, its net capital would be less than 5 percent of aggregate debit items
computed in accordance with Exhibit A to Rule 15c3-3 under the Act or any
successor rule as in effect at such time, or, if registered as a futures
commission merchant, 6 percent of the funds required to be segregated pursuant
to the Commodity Exchange Act and the regulations thereunder (less the market
value of commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount of
funds in the option customer's account), if greater, or less than 120 percent of
the minimum dollar amount required by paragraphs (a)(1)(ii) of the Rule.
8. NON-LIABILITY OF EXCHANGE
The Lender irrevocably agrees that the loan evidenced hereby is not
being made in reliance upon the standing of the Organization as a member
organization of the Exchange or upon the Exchange's surveillance of the
Organization's financial position or its compliance with the Constitution, Rules
and practices of the Exchange. The Lender has made such investigation of the
Organization and its partners, officers, directors and stockholders as the
Lender deems necessary and appropriate under the circumstances. The Lender is
not relying upon the Exchange to provide any information concerning or relating
to the Organization and agrees that the Exchange has no responsibility to
disclose to the Lender any information concerning or relating to the
Organization which it may now, or at any future time, have. The Lender agrees
that neither the Exchange, its Special Trust Fund, nor any director, officer,
trustee nor employee of the Exchange or said Trust Fund shall be liable to the
Lender with respect to this agreement or the repayment of the loan evidenced
hereby or of any interest thereon.
9. STATUS OF PROCEEDS
The proceeds hereof shall be dealt with in all respects as capital of
the Organization, shall be subject to the risks of its business, and may be
deposited in an account or accounts in the Organization's name in any bank or
trust company.
Exhibit 10.8
10. FUTURES COMMISSION MERCHANTS
If the Organization is a futures commission merchant, as that term is
defined in the CEA, the Organization agrees, consistent with the requirements of
Section 1.17(h) of the regulations of the CFTC (17 CFR 1.17(h)), that:
(a) whenever prior written notice by the Organization to the
Exchange is required pursuant to the provisions of this
agreement, the same prior written notice shall be given by the
Organization to (i) the CFTC at its principal office in
Washington, DC, Attention Chief Accountant of Division of
Trading and Markets, and/or (ii) the commodity exchange of which
the organization is a member and which is then designated by the
CFTC as the Organization's designated self-regulatory
organization (the "DSRO"), and
(b) whenever prior written consent, permission or approval of the
Exchange is required pursuant to the provisions of this
agreement, the Organization shall also obtain the prior written
consent, permission or approval of the CFTC and/or of the DSRO,
and
(c) whenever the Organization receives written notice of
acceleration of maturity pursuant to the provisions of this
agreement, the Organization shall promptly give written notice
thereof to the CFTC at the address stated and/or to the DSRO.
11. DEFINITION OF ORGANIZATION
The term "Organization" as used in this agreement shall include the
Organization, its heirs, executors, administrators, successors and assigns.
12. EFFECT OF EXCHANGE MEMBERSHIP TERMINATION
Upon termination of the Organization as a member organization of the
Exchange, the references herein to the Exchange shall be deemed to refer to the
Examining Authority. The term "Examining Authority" shall refer to the
regulatory body having responsibility for inspecting or examining the
Organization for compliance with financial responsibility requirements under
Section 9(c) of SIPA and Section 17(d) of the Act.
13. UPON WHOM BINDING
Exhibit 10.8
The provision of this agreement shall be binding upon the Lender, his
or its heirs, executors, administrators, successors and assigns and upon the
Organization.
14. ARBITRATION
Any controversy arising out of or relating to this agreement shall be
submitted to and settled by arbitration pursuant to the Constitution and Rules
of the Exchange. The Organization and the Lender shall be conclusively bound by
such arbitration.
15. EFFECTIVE DATE
This agreement shall be effective from the date on which it is
approved by the Exchange and shall not be modified or amended without the prior
written approval of the Exchange.
16. ENTIRE AGREEMENT
This instrument and the Note together embody the entire agreement
between the Organization and the Lender and no other evidence of such agreement
has been or will be executed without the prior written consent of the Exchange.
17. GOVERNING LAW
This agreement shall be deemed to have been made under, and shall be
governed by, the laws of the State of New York in all respects.
18. CANCELLATION
This agreement shall not be subject to cancellation by either party,
unless the new York Stock Exchange agrees in writing to such cancellation 30
days in advance.
19. NO RIGHT OF SET-OFF
The Lender agrees that it is not taking and will not take or assert
as security for the payment of the loan any security interest in or lien upon,
whether created by contract, statute or otherwise, any property of the
Organization or any property in which the Organization may have an interest,
which is or at any time may be in the possession or subject to the control of
the Lender. The Lender hereby waives, and further agrees that it will not seek
to obtain payment of the note in whole or in any part by exercising any right
Exhibit 10.8
of set-off it may assert or possess whether created by contract, statute or
otherwise. Any agreement between the organization and the Lender (whether in the
nature of a general loan and collateral agreement, a security or pledge
agreement or otherwise) shall be deemed amended hereby to the extent necessary
so as not to be inconsistent with the provision of this paragraph.
20. *|_| Check this box if you wish to incorporate the following
optional provision:
The Scheduled Maturity Date hereof in each year, without further
action by either the lender or Organization shall be extended an additional
year, unless on or before the day SEVEN MONTHS preceding the Scheduled Maturity
Date then in effect, the lender shall notify the Organization in writing, with a
written copy to the New York Stock Exchange, Inc., that such Scheduled Maturity
Date shall not be extended.
IN WITNESS HEREOF the parties hereto have set their hands and seals this 31st
day of August, 1998.
By: Xxxxxxxxx & Xxxxxx, LLC By: NB Associates, LLC
/s/ Xxxxxxxx Xxxxxxx /s/ C. Xxxx Xxxxxxxx
Title: Managing Principal Title: Secretary
(Organization) (Lender)
