EXHIBIT 10.2.1
Exhibit 3
This Substitute Exhibit 3 to the Fully Disclosed Clearing Agreement,
dated as of June 5, 2001, between BNY Clearing Services LLC and Xxxxxx
Securities, Inc. (the "Clearing Agreement") is made this 21st day of March,
2002. It supercedes in its entirety the Exhibit 3, dated as of June 5, 2001,
annexed to the Clearing Agreement. Terms used herein but not defined shall have
the same meanings as in the Clearing Agreement. This Substitute Exhibit 3 shall
supplement the Clearing Agreement. Nothing contained herein shall be deemed or
construed to amend, alter or delete any provision of the Clearing Agreement,
unless specifically stated herein.
In consideration of the mutual promises and covenants contained in this
Exhibit 3, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Subordinated Loan. BNYCS agrees to lend to Broker, within two (2) business
days of the date hereof, the sum of $2,500,000 as a subordinated loan,
which shall be evidenced by a Subordinated Loan Agreement (the "Loan
Agreement") in the form attached hereto ("Subordinated Loan").
2. Rebate of BNYCS Fees to Broker.
(a) As provided in this Section 2, BNYCS shall rebate and pay to Broker at
the times and in the amounts set forth herein one-half (1/2) of any
amount Broker pays to BNYCS pursuant to Section 7.0 and Exhibit 2 of
the Clearing Agreement (collectively, "BNYCS Fees"), up to a maximum
rebate amount of $2,500,000 (the Broker's Rebate").
(b) In calculating BNYCS Fees solely for purposes of determining the
amounts of the Broker's Rebate, (i) net interest on net margin debit
balances shall be multiplied by 125 basis points and included as BNYCS
Fees, (ii) money market mutual fund balances shall be multiplied by 40
basis points and included in BNYCS Fees, and (iii) all charges
included in the categories of Securities Processing Charges and Other
Charges/Credits outlined on Exhibit 2 shall be net of BNYCS's actual
cost when calculating BNYCS Fees.
(c) The Broker's Rebate shall be paid to Broker by BNYCS as follows:
(i) The amount of the Broker's Rebate from the Commencement Date
through February 28, 2003, up to a maximum of $250,000, shall be due
and payable on March 31, 2003.
(ii) The amount of the Broker's Rebate accrued from the Commencement
Date through May 31, 2003, less the amount of any payments previously
made pursuant to paragraphs (c) (i) and (c)(xi), up to a maximum of
$62,500, shall be due and payable on June 30, 2003.
(iii) The amount of the Broker's Rebate accrued from the Commencement
Date through August 31, 2003, less the amount of any payments
previously made pursuant to paragraphs (c) (i), (c)(ii) and (c)(xi),
up to a maximum of $62,500, shall be due and payable on September 30,
2003.
(iv) The amount of the Broker's Rebate accrued from the Commencement
Date through November 30, 2003, less the amount of any payments
previously made pursuant to paragraphs (c) (i) through (c)(iii) and
(c)(xi), up to a maximum of $62,500, shall be due and payable on
December 31, 2003.
(v) The amount of the Broker's Rebate accrued from the Commencement
Date through February 29, 2004, less the amount of any payments
previously made pursuant to paragraphs (c) (i)through (c)(iv) and
(c)(xi), up to a maximum of $62,500, shall be due and payable on March
31, 2004.
(vi) The amount of the Broker's Rebate accrued from the Commencement
Date through May 31, 2004, less the amount of any payments previously
made pursuant to paragraphs (c) (i) through (c)(v) and (c)(xi), up to
a maximum of $62,500, shall be due and payable on June 30, 2004.
(vii) The amount of the Broker's Rebate accrued from the Commencement
Date through August 31, 2004, less the amount of any payments
previously made pursuant to paragraphs (c) (i) through (c)(vi) and
(c)(xi), up to a maximum of $62,500, shall be due and payable on
September 30, 2004.
(viii) The amount of the Broker's Rebate accrued from the Commencement
Date through November 30, 2004, less the amount of any payments
previously made pursuant to paragraphs (c) (i) through (c)(vii) and
(c)(xi), up to a maximum of $62,500, shall be due and payable on
December 31, 2004.
(ix) The amount of the Broker's Rebate accrued from the Commencement
Date through February 28, 2004, the less the amounts of the previous
payments made pursuant to paragraphs (c)(i) through (c)(viii) and
(c)(xi), shall be due and payable on March 31, 2005.
(x) If (A)(i) Broker shall have obtained the requisite written consent
of the NASD to make a prepayment of all or a portion of the balance
owed by Broker under the Subordinated Loan and (ii) made such
prepayment to BNYCS, and (B) the amount actually accrued under the
Broker's Rebate is in excess of the payments that Broker has paid
under the Subordinated Loan, then, at the election of Broker, and upon
fifteen (15) days' prior written notice to BNYCS, BNYCS shall pay to
Broker the full amount accrued up to an amount equal to the amount of
all payments made by Broker to BNYCS under the Subordinated Loan, less
the amount of any payments previously made pursuant to paragraphs
(c)(i) through (c)(xi).
(xi) Nothing in this Exhibit 3 shall relieve Broker of its obligation
to make (A) the payments specified in Section 7.0 and Exhibit 2 of the
Clearing Agreement and (B) all payments due under the Loan Agreement,
a copy of which is annexed hereto; provided, however, in any
proceeding brought against Broker by BNYCS to collect the unpaid
balance under the Subordinated Loan, Broker shall be entitled to
set-off against the unpaid balance due the full amount accrued under
the Broker's Rebate.
3. In no event shall Broker be entitled to receive or be deemed to have
earned, and there shall not be accrued in favor of the Broker, any Broker's
Rebate: (A) at any time when an Event (as defined in the Loan Agreement)
shall have occurred and be continuing, (B) as long as the Broker shall be
in default in the payment or performance of its obligations under the
Clearing Agreement (provided that with respect to clauses (A) and (B), at
such time as the Event shall no longer be continuing and the Broker is no
longer in default in the payment or performance of its obligations, the
accrual of the Broker's Rebate shall retroactively be reinstated for the
period of time in which the accrual was suspended), or (C) in an amount in
excess of the aggregate amount of payments and prepayments paid in cash to
BNYCS in reduction of the principal balance of the Subordinated Loan,
except that in any proceeding brought against Broker by BNYCS to collect
the unpaid balance under the Subordinated Loan, Broker shall be entitled to
set-off against the unpaid balance due the full amount accrued under the
Broker's Rebate.
4. Miscellaneous. This Exhibit 3: (A) is incorporated into and made a part of
the Clearing Agreement, (B) may only be amended in accordance with the
amendment provisions of the Clearing Agreement, and (C) together with the
Loan Agreement constitutes the parties' entire agreement with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Substitute Exhibit 3
as of the date written above.
BNY Clearing Services LLC Xxxxxx Securities, Inc.
By: /s/ By: /s/
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Name: Name: Xxxxx X. Xxxxxxx
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Title: Title: Co-Chief Executive Officer
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