Sample Secured Demand Note Collateral Agreement

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Regulations, or 3) if Borrower is a securities broker or dealer, the amountof net capital specified in Rule 15c3-1d(c)(5)(ii) of the Regulations of theSecurities and Exchange Commission [17 C.F.R. 240.15c3-1d(c)(5)(ii)] or4) the minimum capital requirement as defined by the DSRO or(ii) Pre-tax losses during the latest three month period were greater than 15%of current excess Adjusted Net Capital.(c)Notwithstanding the provisions of this paragraph, no Prepayment or SpecialPrepayment shall occur without the prior written approval of the Designated Self-Regulatory Organization and the Commission and without meeting therequirements of Appendix A, if applicable.9. 4 Subject to the rights of the Borrower as pledgee, the Lender shall have the right at anytime to:(a)(b)(c)(d)Direct the sale of any or all Securities pledged as Collateral and substitute the netproceeds of such sale for the Collateral;Direct the purchase of any Securities with any Cash included in the Collateral andsubstitute such Securities for the Collateral;Withdraw the whole or part of any excess Collateral;Substitute Cash or other Securities for the original or other substituted Collateral.Provided, that the net proceeds of any such sale and the Cash so substituted and theSecurities so purchased or substituted shall be held by Borrower as pledgee, and shall beincluded in the Collateral to secure payment of the Note;Provided further, however, that none of the above transactions shall be permitted if, aftergiving effect thereto, the sum of the amount of any Cash, plus the Collateral Value of theSecurities then pledged as Collateral would be less than the unpaid principal amount ofthe Note;(e)(f)(g)Pledge additional Cash or Securities as Collateral;Retain ownership of the Collateral for the purpose of having the benefit of anyincreases and bearing the risk of any decreases in the value of the Collateral;Retain the right to vote securities contained within the Collateral and any right toincome therefrom or distributions thereon.4Optional.C:\Documents and Settings\nfbddrl\Local Settings\Temporary Internet Files\OLK5F\FINAL RB SDN Agreement 09.04.doc4
Provided, however, the Borrower shall have the right to receive and hold as pledgee alldividends payable in Securities and all partial and complete liquidating dividends.10. (a) If at any time the sum of the amount of any Cash, plus the Collateral Value of anySecurities, then pledged as Collateral is less than the unpaid principal amount ofthe Note, the Borrower must immediately transmit written notice to that effect tothe Lender, the Designated Self-Regulatory Organization and the Commissionand, meet the requirements of Appendix D, if applicable, and, concurrently withthe service of such written notice upon the Lender, request that the Lender pledgeadditional Collateral to meet the unpaid principal amount of the Note prior tonoon of the next business day following such notice.(b)(c)(d)Prior to noon of the business day next succeeding the transmittal of such notice,Lender may pledge as Collateral additional Cash or Securities sufficient, aftergiving effect to such pledge, to bring the sum of the amount of any Cash plus theCollateral Value of any Securities then pledged as Collateral, up to an amount notless than the unpaid principal amount of the Note.Unless additional Cash or Securities are pledged as Collateral by Lender asprovided in paragraph 10(b), (1) Borrower, at noon on the business day nextsucceeding the transmittal of notice to Lender, must commence sale for theaccount of Lender, of such of the Securities then pledged as Collateral and applyso much of the net proceeds thereof, together with such of the Cash then pledgedas Collateral as may be necessary to eliminate the unpaid principal amount of theNote. Provided, that the unpaid principal amount of the Note need not be reducedbelow the sum of the amount of any remaining Cash plus the Collateral Value ofthe remaining Securities pledged as Collateral. Borrower may not purchase for itsown account any Securities subject to such a sale.In lieu of the procedures specified in paragraph 10(c) hereof, Lender, with theprior written consent of the Borrower and the Designated Self-RegulatoryOrganization, may reduce the unpaid principal amount of the Note (hereinafterreferred to as a “Reduction”). Provided that, after giving effect to such Reduction,the Adjusted Net Capital of the Borrower would not be less than the greatest of 1)120% of the appropriate minimum dollar amount required by CFTC Regulations,or 2) 120% of the firm’s risk based capital requirement calculated in accordancewith CFTC Regulations, or 3) if the Borrower is a securities broker or dealer, theamount of net capital specified in Rule 15c3-1d(b)(6) (iii) of the Regulations ofthe Securities and Exchange Commission [17 C.F.R. 240.15c3-1d(b)(6)(iii)], or 4)the minimum capital requirement as defined by the DSRO. Provided further, thatno single secured demand note shall be permitted to be reduced by more than 15percent of its original principal amount and after such Reduction no excessCollateral may be withdrawn.C:\Documents and Settings\nfbddrl\Local Settings\Temporary Internet Files\OLK5F\FINAL RB SDN Agreement 09.04.doc5
Page 2 and 3: 3. The Lender shall execute and del
Page 6 and 7: 11. In the event of a demand by the
Page 8 and 9: (1) 9 Failure of Borrower to pay in
Page 10 and 11: or impair the Indebtedness evidence
Page 12 and 13: ___________________________________
Page 14 and 15: 15 The Borrower further agrees that
Page 16: SECURED DEMAND NOTESCHEDULE ACash P

Sample Secured Demand Note Collateral Agreement

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