REVOLVING NOTE AND CASH
SUBORDINATION AGREEMENT
THIS
AGREEMENT is entered into this 28 day of November 2005, between National
Financial Services LLC (the “Lender”) and Thomas Weisel
Partners LLC (the “Organization”).
WHEREAS,
the Lender is willing to make Advances (each, an
“Advance,” collectively, the “Advances”) to
the Organization from time to time through the 28
th day of November 2007 (“Scheduled
Maturity Date”), as reflected on the Revolving Note
(Exhibit A).
NOW,
THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as
follows:
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1.
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GENERAL
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(i)
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The
Lender agrees that from time to time between this 28 day of
November 2005 and 28 day of November 2006 (the
“Credit Period”) it will lend to the Organization sums
which, in the aggregate principal amount outstanding at any one
time, shall not exceed $40,000,000.00 (the
“Credit”).
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(ii)
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During the Credit Period, the
Organization may utilize the Credit (as then in effect) by
borrowing, prepaying outstanding Advances, in whole or in part, and
reborrowing, all in accordance with the terms and provisions
hereof. Each Advance shall be in the aggregate amount of
$100,000.00 or integral multiples thereof. The Organization is
obligated to repay the aggregate unpaid principal amount of all
Advances on or before the Scheduled Maturity Date.
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(iii)
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The
obligation of the Organization to repay the aggregate unpaid
principal amount of the Advances shall be evidenced by a promissory
note of the Organization (the “Revolving Note”) in
substantially the form attached hereto as Exhibit A, with the
blanks appropriately completed, payable to the order of the Lender,
for amounts not exceeding in the aggregate the Credit and bearing
interest at rates to be agreed upon by the Organization and the
Lender at the time of any Advance. The Revolving Note shall be
dated, and shall be delivered to the Lender, on the date of the
execution and delivery of this agreement by the Organization. The
Lender shall, and is hereby authorized by the Organization to,
endorse on the schedule contained on the Revolving Note, or on a
continuation of such schedule attached thereto and made a part
thereof, appropriate notations regarding each Advance evidenced by
the Revolving Note as specifically provided therein; provided,
however, that the failure to make, or error in making, any such
notation shall not limit or otherwise affect the obligations of the
Organization hereunder or under the Revolving Note.
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(iv)
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Whenever the Organization desires to
utilize the Credit, it shall so notify the Lender by telephone
specifying the amount of the Advance and the date on
which
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each such Advance is to be made.
Notice will also be given by telephone, confirmed in writing, to
the New York Stock Exchange, Inc. (the “Exchange”).
Such notice shall be substantially in the form of Exhibit B
attached hereto and shall specify (i) the date of the proposed
Advance (the “Borrowing Date”), (ii) the aggregate
amount of outstanding Advances and (iii) if the Advance is to
be used to repay, in whole or in part, outstanding Advances, the
amount and maturity of such Advance.
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2.
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SUSPENDED REPAYMENT
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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).
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(i)
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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 payment by the
Exchange or the Securities and Exchange Commission (the
“SEC”), or
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(ii)
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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
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(iii)
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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 120 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 Organization’s risk-based capital
requirement calculated in accordance with CFTC regulations in
effect at the time of such payment, or the Organization’s net
capital would be less than the minimum capital requirement as
defined by the DSRO, or
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(iv)
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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
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(v)
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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 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)
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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,
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(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
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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.
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3.
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SUBORDINATION OF
OBLIGATIONS
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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.
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4.
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PERMISSIVE PREPAYMENT AUTHORIZATION
WITHIN ONE YEAR
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a.
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With the prior written approval of
the Exchange, the Organization may at its option, pay all or any
portion of the principal amount hereof to the Lender prior to the
Scheduled Maturity Date (such payment being hereinafter referred to
as “Prepayment”) at any time prior to one year
following the date of any Advance. No Prepayment shall be made,
however, if:
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(i)
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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
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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, either aggregate indebtedness of the Organization
would exceed 900 percent of its net capital or its net capital
would be less than 200 percent of the minimum dollar amount
required by 17CFR240.15c3-1 or, in the case of an Organization
operating pursuant to paragraph (a)(1)(ii) of 17CFR240.15c3-1, its
net capital would be less than 6 percent of the aggregate
debit items computed in accordance with 17CFR240.15c3-3a or if
registered as a futures commission merchant, 125 percent (or
such other percentage as may be made applicable to the Company at
the time of payment by the CFTC) of the risk-based capital
requirements for futures commission merchants as set forth in
regulations of the CFTC adopted under the CEA, or its net capital
would be less than 200 percent of the minimum dollar amount
required by paragraph (a)(1)(ii) or the Organization’s net
capital would be less than the minimum capital requirement as
defined by the DSRO, or
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(ii)
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pre-tax losses during the latest
three-month period equ
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