Exhibit 10.11
NYSE CSA FORM 1 D
SUBORDINATED LOAN AGREEMENT - CASH
THIS AGREEMENT is entered into this ____ day of ___________ 199_, between
__________________________ (the "Lender") and ________________________ XxXxxxxxx
& Co. _____________________________, (the "Organization").
1. GENERAL - Subject to the terms and conditions hereinafter set forth,
the Organization promises to pay to the Lender or assigns, on __________________
(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, $_________ and interest payable ______________________ at a rate
of ________% per annum from the date hereof. 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 alterative net capital requirement provided for in
paragraph (a)(1)(ii) of Rule l5c3-1 (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 payment by the New York
Stock Exchange, Inc. (the "Exchange") or the Securities and
Exchange Commission (the "SEC"), or
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(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
debt items computed in accordance With Exhibit A to Rule
l5c3-3 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 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
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(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
hereof 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 agrees (and the Lender
recognizes) 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
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
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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 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
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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 not capital would be
less than the minimum capital requirements 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 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.
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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
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 not 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 not 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, ff 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
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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.
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
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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
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 embodies 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 n 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 ft will not seek
to obtain payment of the note in whole or in any part by exercising any right
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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. * /X/ 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 shad not be extended.
IN WITNESS HEREOF the parties hereto have set their hands and seals
this day of , 199 .
By: LaB Investing Co. L.L.C.
By: By:
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Name: Name:
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Title: Title:
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(Organization) (Lender)
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