
[Federal Register Volume 76, Number 64 (Monday, April 4, 2011)]
[Notices]
[Pages 18591-18613]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7935]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64144; File No. SR-NYSEAmex-2011-18]


Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of 
Proposed Rule Change Relating to the Formation of a Joint Venture 
Between the Exchange, Its Ultimate Parent NYSE Euronext, and Seven 
Other Entities To Operate an Electronic Trading Facility for Options 
Contracts

March 29, 2011.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 23, 2011, NYSE Amex LLC (the ``Exchange'' or 
``NYSE Amex'') filed with the Securities and Exchange Commission (the 
``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.

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[[Page 18592]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to form a joint venture between the Exchange, 
its ultimate parent NYSE Euronext, a Delaware corporation, and the 
following entities (each, a ``Founding Firm''): Citadel Securities LLC 
(``Citadel''); Goldman, Sachs & Co. (``Goldman Sachs''); Banc of 
America Strategic Investments Corporation (``BAML''); Citigroup 
Financial Strategies, Inc. (``Citigroup''); Datek Online Management 
Corp. (``TD Ameritrade''); UBS Americas Inc. (``UBS''); and Barclays 
Electronic Commerce Holdings Inc. (``Barclays''). The joint venture 
will operate an electronic trading facility (the ``Options Exchange'') 
that will engage in the business of listing for trading options 
contracts permitted to be listed on a national securities exchange (or 
facility thereof) and related activities. The Options Exchange will be 
operated as a ``facility'' (as such term is defined in Section 3(a)(2) 
of the Securities Exchange Act of 1934 (the ``Act'')) of the Exchange, 
which will act as the self-regulatory organization (``SRO'') for the 
Options Exchange. The Options Exchange will be operated by NYSE Amex 
Options LLC (the ``Company''), a Delaware limited liability company 
formed by NYSE Euronext, the Exchange and the Founding Firms and 
jointly owned by the Exchange and the Founding Firms. The text of the 
proposed rule change, consisting of the proposed Limited Liability 
Company Agreement of the Company (the ``LLC Agreement'') and a proposed 
Members Agreement of the Company setting forth certain additional terms 
(the ``Members Agreement''), is available at the Exchange, the 
Commission's Public Reference Room, on the Commission's Web site at 
http://www.sec.gov, and on http://www.nyse.com. The LLC Agreement is 
the source of the Company's governance and operating authority and, 
therefore, functions in a similar manner as articles of incorporation 
and by-laws function for a corporation.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is submitting this Proposed Rule Change to the 
Commission in connection with the proposed formation of a joint venture 
between the Exchange, its ultimate parent NYSE Euronext and the 
Founding Firms. The joint venture will operate an electronic trading 
facility, the Options Exchange, that will engage in the business of 
listing for trading options contracts permitted to be listed on a 
national securities exchange (or facility thereof) and related 
activities.\4\ The Options Exchange will be operated as a ``facility'' 
(as such term is defined in Section 3(a)(2) of the Act) of the 
Exchange, which will act as the SRO for the Options Exchange. The 
Options Exchange will be operated by the Company, the Exchange and the 
Founding Firms and jointly owned by the Exchange and the Founding 
Firms. The Exchange will have regulatory responsibility for the 
activities of the Options Exchange. The Exchange represents that it has 
adequate funds to discharge all regulatory functions related to the 
Options Exchange.
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    \4\ The activities of the Options Exchange are further described 
in Section 3.1(b) of the LLC Agreement.
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    The LLC Agreement is the source of the Company's governance and 
operating authority and, therefore, functions in a similar manner as 
articles of incorporation and by-laws function for a corporation. No 
changes to the Exchange's existing rules will be necessary in 
connection with the establishment of the Company and the operation of 
the Options Exchange.

Summary

    This section contains a summary of certain provisions in the 
operative documents of the Company. The provisions are more fully 
described in the sections following the summary.

Structure of the Company

    As a limited liability company, ownership of the Company is 
represented by limited liability company interests in the Company 
(``Interests''). The holders of interests are referred to as the 
members of the Company (the ``Members''). The Interests represent 
equity interests in the Company and entitle the holders thereof to 
participate in the Company's allocations and distributions. Initially, 
NYSE Amex will own 100% of the preferred non-voting Interests 
(``Preferred Interests'') and 47.2% of the Common Interests,\5\ as 
Class A Common Interests. The Founding Firms will own the remaining 
52.8% of the Common Interests, as Class B Common Interests, and no 
single Founding Firm (including its affiliates) will own Class B Common 
Interests comprising more than 19.9% of the issued and outstanding 
Common Interests. The 52.8% ownership of Class B Common Interests will 
initially be allocated as follows: 14.95% to each of Citadel and 
Goldman Sachs; 5.0% to each of BAML, Citigroup and TD Ameritrade; 4.9% 
to UBS; and 3.0% to Barclays.\6\
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    \5\ Common Interests consist of Class A Common Interests and 
Class B Common Interests.
    \6\ Following the effective date of this Proposed Rule Change, 
additional Class B Common Interests will be issued to the Founding 
Firms based, in part, on each Founding Firm's contribution to the 
annual volume of the Options Exchange from October 1, 2009 to 
December 31, 2010, as described further under the heading ``Volume-
Based Equity Plan''. The Exchange represents that this issuance of 
shares to the Founding Firms will not result in any Member (alone or 
together with its affiliates) other than NYSE Amex exceeding the 
19.9% Maximum Percentage (as defined below).
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Capital Contributions

    Members may be subject to both voluntary and mandatory capital 
calls. Mandatory capital calls may be issued by the board of directors 
of the Company (the ``Board''), up to a cap, if the Company requires 
funds to maintain its status as a facility of an SRO or for other 
regulatory compliance purposes. In addition, during the first two years 
after the Company is formed, the Board, with the approval of a simple 
majority vote of the Board, may solicit voluntary capital calls up to a 
cap. In addition, a Supermajority Vote of the Board \7\ will be able to 
approve: (i) Any voluntary capital call during the first two years

[[Page 18593]]

after the Company is formed in excess of the cap, (ii) any voluntary 
capital call after the two-year anniversary of the formation of the 
Company, and (iii) any voluntary capital call that is necessary for the 
Company to maintain its status as a facility of an SRO or any other 
regulatory compliance purposes and that is in excess of the cap for 
mandatory capital calls. Any Member that fails to participate in a 
mandatory capital call may be subject to certain customary sanctions. 
Any Member that fails to participate in a voluntary capital call will 
be diluted in its equity holdings.
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    \7\ A ``Supermajority Vote,'' as defined in the LLC Agreement, 
means, with respect to matters submitted to the Board at a validly 
called and validly noticed meeting, (x) for so long as NYSE Amex's 
percentage ownership of Common Interests equals or exceeds fifteen 
percent (15%), (A) the affirmative vote of more than fifty percent 
(50%) of the directors designated by NYSE Amex entitled to vote 
thereon and present in person or by proxy and (B) the affirmative 
vote of more than fifty percent (50%) of those directors designated 
by Founding Firms entitled to vote thereon and present in person or 
by proxy, and (y) for so long as NYSE Amex's percentage ownership of 
Common Interests is less than fifteen percent (15%), the affirmative 
vote of more than fifty percent (50%) of all directors entitled to 
vote thereon and present in person or by proxy (which excess of 
fifty percent (50%) must include more than two-thirds (\2/3\) of 
those directors designated by Founding Firms and NYSE Amex in the 
aggregate entitled to vote thereon and present in person or by 
proxy).
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Term and Termination

    The Company will continue in perpetual existence until dissolved 
pursuant to the LLC Agreement or the Delaware Limited Liability Company 
Act, as amended (the ``Delaware LLC Act''). The LLC Agreement includes 
customary provisions for the dissolution of the Company and an orderly 
liquidation of its business.

Ownership Limitations

    No Member, other than NYSE Amex, will be permitted to hold Common 
Interests in excess of nineteen and nine-tenths percent (19.9%) of the 
issued and outstanding Common Interests or any lower percentage that 
may be imposed under applicable law. Any Member that holds Common 
Interests in excess of 19.9% will be required to dispose of their 
excess Common Interests following a procedure outlined below under the 
heading ``Ownership Limitations''. In addition, any such excess 
interests will be deemed non-voting until they are transferred to a 
Member or another person or entity in whose hands they would not be in 
excess of 19.9% of the issued and outstanding Common Interests and who 
may vote such Common Interests under applicable law.

Members and Membership

    Members will be required to comply with Federal securities laws (to 
the extent such laws relate to the Company) and cooperate with the SEC 
and NYSE Amex, pursuant to NYSE Amex's regulatory authority. As 
explained more fully in the description of Section 7.6 of the LLC 
Agreement under the heading ``Members and Membership'' below, the 
Members may, upon the affirmative written consent of NYSE Amex (in its 
capacity as SRO) and a Supermajority Vote of the Board (excluding the 
vote of the director designated by the Member subject to sanction), 
suspend or terminate a Member's voting privileges in the event: (i) The 
Member has materially violated a Regulatory Matters Provision (as 
defined below) in the LLC Agreement or any applicable law; (ii) the 
Member is subject to any applicable ``statutory disqualification'' 
(within the meaning of Section 3(a)(39) of the Act); or (iii) such 
action is necessary or appropriate in the public interest or for the 
protection of investors.
    Persons or entities may become Members by acquiring Common 
Interests from an existing Member either pursuant to the transfer 
provisions described below or with approval by a Supermajority Vote.
    A Member may seek to be treated as a ``Restricted Member'' to 
comply with any legal restrictions applicable to its holdings of Common 
Interests. A Restricted Member will be subject to restrictions on the 
distributions it receives and its Common Interests may be deemed non-
voting. This election may be reversed in certain circumstances.

Governance

    Day-to-day operations of the Company and the management of its 
business and affairs will be delegated to the Company's officers and to 
NYSE Group, Inc. (``NYSE Group''), a subsidiary of NYSE Euronext, in 
accordance with a services agreement (the ``NYSE Euronext Agreement'') 
between NYSE Group and the Company. Under the NYSE Euronext Agreement, 
NYSE Group will agree to provide the Options Exchange with a broad 
range of operational and support services.
    The Board will be responsible for the oversight of the Company's 
officers and of NYSE Group's performance under the NYSE Euronext 
Agreement. The Board will consist of thirteen members. Each Founding 
Firm so authorized pursuant to the LLC Agreement will have the right to 
designate one director to the Board--for a total of six directors 
designated by Founding Firms--and NYSE Amex will have the right to 
designate the remaining seven directors. The LLC Agreement outlines the 
basic qualifications of the directors and specifies grounds for their 
removal.
    Most decisions of the Board will be taken by a simple majority 
vote; however, a specified list of actions will require the approval of 
a Supermajority Vote. An action requiring a simple majority vote of the 
Board may be taken even if none of the directors appointed by Founding 
Firms have voted in favor of such an action. Most matters subject to a 
Supermajority Vote will be essentially commercial and business issues, 
such as the offering of additional equity to new investors, certain 
capital calls and other dilutive measures, or the sale or liquidation 
of the business. Matters relating to market governance, surveillance, 
discipline, regulatory compliance, and similar oversight issues will 
not be subject to Supermajority Vote.
    In the event that there are two or fewer directors designated by 
Founding Firms or in the event that Founding Firms cease to own, in the 
aggregate, at least twenty percent (20%) of the outstanding Common 
Interests, most of the matters subject to a Supermajority Vote will 
cease to require approval by a simple majority of Founding Firms, and 
will instead require only a simple majority of the Board. In addition, 
in the event that the Founding Firms cease to own, in the aggregate, at 
least fifteen percent (15%) of the outstanding Common Interests, only 
actions that would have a materially and disproportionally 
disadvantageous effect on the Founding Firms will require a 
Supermajority Vote.
    If NYSE Amex's equity interest falls below fifteen percent (15%), 
NYSE Amex will lose the right to appoint one (or more) directors (as 
necessary to result in a board evenly split between NYSE Amex and 
Founding Firms). A Founding Firm may also lose its right to appoint a 
director under a variety of circumstances.
    The Company will have a Founding Firm Advisory Committee (the 
``Advisory Committee''), which will advise the Board on certain 
matters, including new products and market structure.

Transfers of Interests

    Transfers of Common Interests will be governed by customary 
provisions and subject to certain restrictions. In particular, Founding 
Firms wishing to transfer their Common Interests will be subject to 
certain limitations on the amount of Common Interests they may transfer 
in each year. NYSE Amex will have an initial right of first offer to 
purchase Common Interests that a Founding Firm intends to transfer, at 
a price at least equal to their fair market value. In the event NYSE 
Amex does not exercise its right of first offer, the transferring 
Founding Firm will have the right, subject to certain conditions, to 
sell its Common Interests to NYSE Amex at a price equal to their fair 
market value or to sell its Common Interests to a third party. In 
addition, following the tenth anniversary of the formation of the 
Company, NYSE Amex will have the right to buy some or all of the Class 
B Common Interests from the Founding Firms at a price equal to their 
fair market value.

[[Page 18594]]

    In the event NYSE Amex intends to transfer any of its Common 
Interests, the Founding Firms will have certain rights of first offer 
to purchase these Common Interests. However, no Founding Firm will be 
able to acquire Common Interests in this way if such acquisition would 
result in the Founding Firm's equity holdings exceeding nineteen and 
nine tenths percent (19.9%) of the total equity of the Company.
    In the event that NYSE Amex acquires any Class B Common Interests, 
such Class B Common Interests will automatically be converted into 
Class A Common Interests. Similarly, in the event any Founding Firms 
acquire Class A Common Interests, such Class A Common Interests will be 
automatically converted into Class B Common Interests.
    Subject to certain conditions, Members will be obligated to 
transfer their Common Interests where another Member, acting along or 
together with other Members, intends to make a transfer of 75% of the 
then-outstanding Common Interests and the Board, by Supermajority Vote, 
approves the sale of the Company to a person or entity who is not an 
affiliate of the Company.

Redemptions of Interests

    The Board may, by Majority Vote,\8\ redeem the equity interests of 
a Founding Firm under specified circumstances, such as (i) a transfer 
of equity interests by such Founding Firm to certain entities specified 
in the LLC Agreement, (ii) such Founding Firm's failure to satisfy a 
certain minimum volume threshold in connection with the Plan (as 
defined below) during certain twelve-month periods or (iii) such 
Founding Firm's entry into certain economic arrangements as further 
detailed below under the heading ``Redemption of Interests'' coupled 
with such Founding Firm's failure to satisfy a certain minimum volume 
threshold in connection with the Plan during certain three-month 
periods.
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    \8\ A ``Majority Vote'' is defined as (i) with respect to 
matters submitted to the Board at a validly called meeting, the 
affirmative vote by those directors representing greater than fifty 
percent (50%) of the directors entitled to vote thereon and present 
in person or by proxy at such meeting, including, in the event that 
NYSE Amex's percentage ownership of Common Interests exceeds fifteen 
percent (15%), the affirmative vote of directors representing 
greater than fifty percent (50%) of the NYSE Amex directors that are 
present in person or by proxy at the meeting and (ii) with respect 
to matters submitted to Members at a validly called meeting, the 
affirmative vote of those Members holding greater than fifty percent 
(50%) of the Common Interests entitled to vote thereon and present 
in person or by proxy at such meeting.
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Certain Regulatory and Compliance Matters

    The LLC Agreement includes regulatory provisions that govern the 
actions of the Company, the Member, NYSE Group, NYSE Euronext, NYSE 
Amex, as SRO for the Options Exchange, and the employees and directors 
of each of these entities. The Company, NYSE Euronext, NYSE Group, each 
Member and the officers, directors, agents and employees of each of 
these entities will be required to comply with Federal securities laws 
and cooperate with the SEC and NYSE Amex, pursuant to NYSE Amex's 
regulatory authority. In addition, the Board will adopt corporate 
compliance policies that will govern the conduct of employees.
    NYSE Amex, as SRO for the Options Exchange, will have broad 
authority to direct any action that it deems necessary or appropriate 
to fulfill its obligations as an SRO.

Volume-Based Equity Plan

    A volume-based equity plan (the ``Plan'') will be in place for an 
initial period of five (5) years and three (3) months following the 
formation of the Company, pursuant to which each Founding Firm will be 
entitled to receive, for no additional consideration, a predetermined 
amount of new Class B Common Interests (``Annual Incentive Shares'') 
based on the degree to which such Founding Firm has satisfied certain 
minimum volume requirements. The Plan may reallocate the equity 
interests of the Founding Firms among each other. However, the Plan 
will not affect the equity holdings of NYSE Amex and the Plan will not 
increase or decrease the aggregate equity interest of the Founding 
Firms relative to NYSE Amex. The Company will not allocate Annual 
Incentive Shares to a Founding Firm if such allocation would result in 
the Founding Firm holding Common Interests representing in excess of 
nineteen and nine tenths percent (19.9%) of the total equity of the 
Company, or any lower percentage that may be imposed under applicable 
law.

Confidentiality

    Members will be subject to customary confidentiality obligations 
with respect to information relating to the Company or any Member. 
Customary exceptions to these obligations will allow disclosure of 
information to the SEC or to NYSE Amex in its capacity as an SRO.

Capital Contributions

Regulatory Capital Contributions

    At any time, and from time to time, the Board may require each of 
the Members to participate on a pro rata basis in accordance with each 
Member's Common Interests in calls for additional capital contributions 
to the Company that may be necessary for the Company to ensure that the 
Options Exchange maintains, and complies with any regulatory 
requirements applicable to, its status as a facility of an SRO pursuant 
to the Act or to satisfy any other regulatory obligation (any such 
capital call, a ``Regulatory Capital Call'', and each such 
contribution, a ``Regulatory Capital Contribution''). The Board must 
provide each Member with not less than thirty (30) days written notice 
of such Regulatory Capital Call, which notice shall specify (i) the 
aggregate dollar amount of the Regulatory Capital Call and the 
individual dollar amount required to be contributed by such Member; 
(ii) the date by which the Regulatory Capital Contribution must be 
made; (iii) such Member's percentage ownership of the Common Interests 
as of the date of the notice; and (iv) the reason for the Regulatory 
Capital Call.\9\
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    \9\ Regulatory Capital Contributions required to be made to the 
Company by the Members cannot exceed $5,000,000 in the aggregate in 
any thirty-six (36)-month period following the effective date of the 
LLC Agreement (the ``Regulatory Capital Call Cap'').
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Voluntary Capital Contributions

    At any time during the period commencing on the effective date of 
the LLC Agreement, and ending on the second anniversary of that 
effective date, the Board may solicit the Members to make one or more 
additional capital contributions to the Company (each such 
solicitation, a ``Voluntary Capital Call'', and each such contribution, 
a ``Voluntary Capital Contribution'') for the benefit of the Company, 
up to an amount not to exceed $5,000,000 in the aggregate in any twelve 
(12) month period following the effective date of the LLC Agreement 
(the ``Voluntary Capital Call Cap''). Notwithstanding the foregoing, 
however, the Board may, by Supermajority Vote, among other things, 
solicit Voluntary Capital Contributions at any time, if such Voluntary 
Capital Contribution is necessary for the Company to ensure that the 
Options Exchange maintains, and complies with any regulatory 
requirements applicable to, its status as a facility of an SRO pursuant 
to the Act or to satisfy any other regulatory obligation, to the extent 
of any amount exceeding the Regulatory

[[Page 18595]]

Capital Call Cap. No Member shall have any obligation at any time to 
make any Voluntary Capital Contribution.

Non-Funding Members

    Any Member that fails to make its Regulatory Capital Contribution 
on or before the payment due date or any Member that elects to 
participate in a Voluntary Capital Call but subsequently fails to make 
its Voluntary Capital Contribution on or before the payment due date, 
as applicable, will be considered a ``Non-Funding Member.'' The unpaid 
subscription amount will bear interest payable to the Company equal to 
a specified default interest rate, from and after the applicable 
payment due date and until such non-payment has been cured by the Non-
Funding Member or the Non-Funded Interest (as defined below) has been 
purchased by another Member or other person or entity as described in 
the following paragraph. No such interest paid by a Non-Funding Member 
to the Company will be treated as a capital contribution but will be 
treated as interest income of the Company.
    In addition to the foregoing, upon thirty (30) days written notice 
by the Company to any Member that becomes a Non-Funding Member (and 
provided that such non-payment has not been cured by the Non-Funding 
Member within such 30-day period), the Board, in its sole discretion, 
may (i) sell to any of the other Members, on a pro rata basis, all or 
any portion of (A) in the case of a Voluntary Capital Call, the Common 
Interests that the Non-Funding Member would have received had the 
amount requested been paid in full and (B) in the case of a Regulatory 
Capital Call, the amount of Common Interests corresponding to the 
amount requested (in both cases, ``Non-Funded Interests''); or (ii) in 
the event that the entire amount of Non-Funded Interests of the Non-
Funding Member is not acquired by the Members pursuant to clause (i) 
above, so notify the Members and designate one or more persons or 
entities (subject to the agreement of such persons or entities), which 
may include Members, to acquire all or any portion of the Non-Funding 
Member's Non-Funded Interests not so acquired; provided that (A) any 
purchase of such Non-Funded Interest by any Member, in whole or in 
part, shall result in a corresponding increase to such Member's Common 
Interest and (B) any purchase of such Non-Funded Interest by a party 
that is not a Member shall be treated as a transfer by the Non-Funding 
Member to such person and shall be subject to conditions and 
limitations in the LLC Agreement relating to admission of Members and 
transfers of Interests.

Term and Termination

    Pursuant to Section 2.3 of the LLC Agreement, the Company shall 
continue in perpetual existence until dissolved pursuant to the LLC 
Agreement or the Delaware LLC Act. However, Section 12.1 of the LLC 
Agreement provides that the Company may be dissolved in the event of 
(i) a Supermajority Vote by the Board to that effect, (ii) the sale or 
other disposition of all or substantially all of the Company's assets 
and the receipt of all consideration therefrom, or (iii) the entry of a 
decree of judicial dissolution under Section 18-802 of the Delaware LLC 
Act (involving a situation where it is not reasonably practicable to 
carry on the business in conformity with a limited liability company 
agreement); provided that no Member may make an application for the 
dissolution of the Company pursuant to Section 18-802 of the Delaware 
LLC Act without approval by a Supermajority Vote of the Board. The 
dissolution of the Company will be effective as of the day on which the 
event occurs giving rise to the dissolution, but the Company will not 
terminate until the winding up of the Company has been completed, the 
assets of the Company have been distributed as provided in Section 12.2 
of the LLC Agreement (see following paragraph) and the Certificate of 
Formation of the Company has been canceled.
    Section 12.2 of the LLC Agreement provides that, upon the 
termination and dissolution of the Company, the Board must take all 
steps necessary and proper to effect an orderly liquidation of the 
Company's business and shall apply and distribute the net proceeds of 
such liquidation in the following order of priority: (a) First, to 
creditors, including Members who are creditors (but excluding 
liabilities to Members for distributions under Section 18-606 of the 
Delaware LLC Act), to the extent otherwise permitted by applicable law, 
in satisfaction of liabilities of the Company (other than contingent, 
conditional or unmatured liabilities for which reserves are established 
by the Board), whether by payment or the making of reasonable provision 
for payment thereof, (b) second, to the establishment of any reserves 
determined by the Board to be reasonably necessary or appropriate to 
provide for any contingent, conditional or unmatured Company 
liabilities and obligations (which reserves may be paid over to a bank 
or trust company, as escrow agent, to be held by such escrow agent for 
the purpose of disbursing such reserves in payment of the referenced 
liabilities and obligations) and, at the expiration of such period as 
the Board shall deem advisable, to pay over the balance thereafter 
remaining for distribution, (c) third, to the holder of Preferred 
Interests, to the extent of the Priority Claim (as defined below), and 
(d) finally, subject to such other arrangements as the Members may 
agree, to the Members, pro rata, in accordance with their percentage 
ownership of Common Interests; subject to any applicable limitations 
imposed by a Member's maximum percentage of distributions as provided 
in Section 7.5 of the LLC Agreement or such other arrangements as the 
Members may agree. In the latter situation, any distribution so limited 
shall be made to the other Members in proportion to their respective 
percentage ownership of Common Interests.
    The ``Priority Claim'' is the right of the Preferred Interest 
holder, upon any liquidation, dissolution or sale of the Company or 
other similar event, to receive the sum of (i) the amount of the non-
cash capital contribution for the Preferred Interests identified on 
Schedule A-1 to the Amended and Restated Contribution Agreement dated 
as of February 22, 2011, by and among NYSE Euronext, the Company and 
the Members (the ``Contribution Agreement''), reduced by the amount(s) 
paid by the Company (x) in respect of any redemptions of Preferred 
Interests pursuant to Section 11.5(a) of the LLC Agreement as described 
herein under ``Redemption of Interests'' or (y) pursuant to Section 
3.2(i) of the Members Agreement relating to certain redemptions of 
Class B Common Interests plus (ii) any unpaid amount that has accrued 
on the Preferred Interests. In any winding up and dissolution of the 
Company, NYSE Amex may elect to receive Company property-in-kind, 
provided that the fair market value of such property-in-kind will be 
determined by a Supermajority Vote of the Board or, if the Board is 
unable to so agree, pursuant to an appraisal thereof by an independent 
valuation firm approved by a Supermajority Vote of the Board. To the 
extent the fair market value of the Company property distributed to 
NYSE Amex is in excess of the amount it would otherwise receive under 
Section 12.2 of the LLC Agreement, it shall make a cash payment to the 
Company in the amount of the difference, with the proceeds to be 
distributed, pro rata, to all the Members other than NYSE Amex.
    Section 12.4 of the LLC Agreement establishes that, upon the 
occurrence of an event of dissolution as described

[[Page 18596]]

above, the Company shall be dissolved unless, within fifteen (15) days 
of such event, those Members representing greater than fifty percent 
(50%) of the Common Interests agree in writing to continue the business 
of the Company.

Ownership Limitations

    Section 4.9 of the LLC Agreement provides that no Member (other 
than NYSE Amex alone or, subject to receipt of SEC approval pursuant to 
the rule filing process under Section 19(b) of the Act, together with 
its Permitted Transferees \10\) shall be permitted to own or vote 
(alone or together with its affiliates), directly or indirectly, Common 
Interests in excess of the lower of (x) nineteen and nine-tenths 
percent (19.9%) of the then issued and outstanding Common Interests 
(the ``19.9% Maximum Percentage'') or (y) the maximum amount of Common 
Interests such Member (alone or together with its affiliates) may own 
or vote under applicable law and without subjecting the Company to 
material regulatory obligations or material liabilities or a reasonable 
likelihood of material regulatory obligations or material liabilities 
arising as a result of the extent of such ownership or voting interest 
(such maximum Common Interests a Member (alone or together with its 
affiliates) may own or vote under this clause (y), the ``Alternate 
Maximum Percentage'', and the amount in excess thereof or in excess of 
the 19.9% Maximum Percentage, as applicable, ``Excess Interests'').
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    \10\ A ``Permitted Transfer'' is defined in the LLC Agreement as 
(i) any transfer of Interests by any Member among any of its 
affiliates, (ii) any transfer by merger, consolidation or similar 
business combination or through the acquisition of substantially all 
of the assets and liabilities of the transferring party (except for 
a transfer to a person or entity whose assets subsequent to the 
transfer would be comprised principally of Interests) or (iii) any 
transfer required under, or effected to enable a Member to be in 
compliance with, applicable law or the requirements of a 
governmental authority or any SRO. Any transferee under clauses (i) 
and (ii) of the previous sentence is a ``Permitted Transferee,'' and 
any transferee under clause (iii) of the previous sentence is a 
``Required Transferee.''
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    In the event that the Company believes that a Member other than 
NYSE Amex (alone or together with its affiliates) has or may, as a 
result of then-contemplated events, in the near future, have Excess 
Interests (other than as a result of exceeding the 19.9% Maximum 
Percentage), the Company shall provide such Member with notice of this 
belief, setting forth the basis for the Company's position, and the 
Company and such Member shall discuss in good faith the proposed 
determination. If the Company and such Member agree that such Member 
(alone or together with its affiliates) holds Excess Interests (other 
than as a result of exceeding the 19.9% Maximum Percentage), the Member 
must, within a reasonable period after such agreement is reached, 
implement remedial measures including those described in the paragraph 
immediately below. If the Company and a Member fail to reach agreement 
as to whether the Member (alone or together with its affiliates) holds 
Excess Interests (other than as a result of exceeding the 19.9% Maximum 
Percentage), the Company shall be entitled to bring a dispute 
resolution proceeding in accordance with the dispute resolution 
provisions in Article XV of the LLC Agreement to resolve the dispute; 
and in the event the Company prevails in any such dispute resolution 
proceeding, the applicable Interests shall be deemed to be Excess 
Interests for purposes of the remedial measures described in the 
paragraph immediately below. In the event a Member (alone or together 
with its affiliates) holds Excess Interests as a result of exceeding 
the 19.9% Maximum Percentage, the Member shall, subject to applicable 
law, implement the remedial measures described in the paragraph 
immediately below and such Excess Interests shall automatically and 
immediately constitute Non-voting Common Interests \11\ as described in 
and subject to the paragraph immediately below.
---------------------------------------------------------------------------

    \11\ ``Non-voting Common Interests'' are defined in the LLC 
Agreement as Class B Common Interests (i) designated as non-voting 
at the time of issuance; (ii) deemed to be non-voting pursuant to 
Section 7.5(b) or Section 7.5(d) of the LLC Agreement; or (iii) held 
by a Member, constituting Common Interests in excess of the 19.9% 
Maximum Percentage, absent SEC approval.
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    A Member (alone or together with its affiliates) that (x) holds 
Excess Interests as a result of exceeding the 19.9% Maximum Percentage 
or (y) pursuant to the paragraph immediately above, agrees that it 
holds or is found to hold Excess Interests as a result of exceeding the 
applicable Alternate Maximum Percentage shall promptly implement the 
following remedial measures accordingly and in a manner consistent with 
the LLC Agreement and applicable law: (i) the offer of such Excess 
Interests at a price equal to the pro rata portion of the fair market 
value of the Member's (or its affiliates', if applicable) Common 
Interests attributable to the Excess Interests: first, to the remaining 
Members (other than NYSE Amex) pro rata in accordance with their 
relative Common Interests; second, if the remaining Members do not 
purchase all such Excess Interests, to NYSE Amex; and third, if NYSE 
Amex does not purchase all such Excess Interests, to any other person 
or entity approved by NYSE Amex (which approval must not be 
unreasonably withheld, conditioned or delayed), subject to the 
conditions and limitations in the LLC Agreement on the admission of 
Members, (ii) subject to applicable law, retention of the Excess 
Interests as Non-voting Common Interests, pursuant to the provisions of 
Section 7.5 of the LLC Agreement on Restricted Members (as defined and 
discussed below), or (iii) except in the case of Excess Interests 
arising as a result of such Member (alone or together with its 
affiliates) exceeding the 19.9% Maximum Percentage, any other remedial 
action discussed in good faith by the Member and the Company, in each 
case, as determined by the relevant Member to be least burdensome. A 
Member's Excess Interests arising as a result of such Member (alone or 
together with its affiliates) exceeding the 19.9% Maximum Percentage 
shall automatically and immediately constitute, absent regulatory 
approval (including SEC approval pursuant to the rule filing process 
under Section 19(b) of the Act) to the contrary, Non-voting Common 
Interests and the Aggregate Class A Voting Allocation and Aggregate 
Class B Voting Allocation (each as defined below) shall be adjusted 
accordingly. Such an adjustment may have the effect of concentrating 
the Common Interest Percentages of the other Members. The requirements 
of this provision shall be applied iteratively in the event that any 
such adjustment would result in any Member (alone or together with its 
affiliates) exceeding the 19.9% Maximum Percentage. Subject to 
applicable law, Excess Interests of a Member that constitute Non-voting 
Common Interests solely as a result of such Member (alone or together 
with its affiliates) exceeding the 19.9% Maximum Percentage shall cease 
to constitute Non-voting Common Interests (and the Aggregate Class A 
Voting Allocation and Aggregate Class B Voting Allocation shall be 
adjusted accordingly) in the event that, and to the extent that, (I) 
such Member (or, if applicable, its affiliates) transfers, in 
accordance with Article XI (Transfers) of the LLC Agreement, such 
Excess Interests to another Member or third party that (taking into 
account such Excess Interests then being transferred) does not hold 
Common Interests that would constitute Excess Interests in the hands of 
such transferee Member or third party due to such transferee Member or 
third party (in each case, alone or together with its affiliates) 
exceeding the 19.9% Maximum

[[Page 18597]]

Percentage or (II) such Excess Interests cease to be Excess Interests 
(due to such Member (alone or together with its affiliates) exceeding 
the 19.9% Maximum Percentage) because of a reduction in such Member's 
Common Interest Percentage.\12\ Notwithstanding the foregoing, nothing 
in Section 4.9 of the LLC Agreement limits Section 7.5 of the LLC 
Agreement (Restricted Members) or the ability of a Member to make a 
Restricted Member Election (as defined below), which shall impose 
separate and additional limitations with respect to Common Interests 
covered thereby. NYSE Amex may assign to one of its affiliates the 
right to purchase Excess Interests pursuant to clause (i) of this 
paragraph, subject to providing notice to, and receiving approval from, 
the SEC under Section 19(b) of the Act.
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    \12\ ``Common Interest Percentage'' is defined in the LLC 
Agreement as (i) with respect to NYSE Amex or a transferee of Class 
A Common Interests, the product of (w) the Aggregate Class A 
Economic Allocation multiplied by (x) a fraction, (A) the numerator 
of which shall be the number of Class A Common Interests then held 
by NYSE Amex or the transferee and (B) the denominator of which 
shall be the number of Class A Common Interests then held NYSE Amex 
and all such transferees, and (ii) with respect to any Founding Firm 
or a transferee of Class B Common Interests, the product of (y) the 
Aggregate Class B Economic Allocation multiplied by (z) a fraction, 
(A) the numerator of which shall be the number of Class B Common 
Interests then held by such Founding Firm or the transferee, 
including, for the purpose of determining any economic entitlement 
or entitlement to designate a director, any Non-voting Common 
Interests and (B) the denominator of which shall be the number of 
Class B Common Interests then held by all Founding Firms and all 
such transferees, including, for the purpose of determining any 
economic entitlement or entitlement to designate a director, any 
Non-voting Common Interests.
---------------------------------------------------------------------------

    In the event that material regulatory obligations or material 
liabilities of the Company arise as a result of a Member (alone or 
together with its affiliates) holding Excess Interests (other than as a 
result of exceeding the 19.9% Maximum Percentage) and such material 
obligations or liabilities may be mitigated by the Member becoming a 
Restricted Member pursuant to Section 7.5(a) of the LLC Agreement, the 
Member will be deemed to have elected to become a Restricted Member 
upon such obligation or liability arising; provided that, to the extent 
permitted under applicable law and consistent with the proviso in 
Section 7.5(a)(iii) of the LLC Agreement relating to the reversal of an 
election to be treated as a Restricted Member, the Member may revoke 
such election to be a Restricted Member in connection with either (i) 
the sale of such Member's Interests or (ii) any other remedial action 
taken by such Member, each as described in the preceding paragraph.

Members and Membership

    Section 7.3 of the LLC Agreement provides that, except as otherwise 
provided in Article XI (Transfers) of the LLC Agreement (discussed 
below), persons or entities that acquire Common Interests or Preferred 
Interests in accordance with the terms of, and subject to the 
restrictions provided in, the LLC Agreement may be admitted from time 
to time as new Members by Supermajority Vote of the Board, subject to 
the following: (a) Any new Member must make a capital contribution in 
such amount and on such terms as the Board deems appropriate based upon 
the needs of the Company, the net value of its assets, the Company's 
financial condition, and the benefits anticipated to be realized by 
such additional Member; and (b) the additional Member must agree to be 
bound by the terms of the LLC Agreement and the Members Agreement. In 
addition, pursuant to Section 7.4 of the LLC Agreement, each Member 
must maintain commercially reasonable policies and procedures, taking 
into account the structure and organization of its operations, to 
prevent disclosure of confidential information of the Company by any 
director, alternate director, observer to the Board or any committee of 
the Board or member of the Advisory Committee (as defined below) to any 
other individual appointed by such Member to perform a similar role 
with respect to, or who is an officer or employee of, a Specified 
Entity.\13\ Any individual designated to be a director, alternate 
director, observer to the Board or any committee of the Board, or 
member of the Advisory Committee may be required to acknowledge in 
writing the foregoing requirements.
---------------------------------------------------------------------------

    \13\ ``Specified Entity'' is defined in the LLC Agreement as (i) 
any U.S. securities option exchange (or facility thereof) or U.S. 
alternative trading system on which securities option contracts are 
executed (other than NYSE Amex or any of its affiliates) that lists 
for trading any option contract that competes with a contract listed 
for trading on the Options Exchange or a contract that is 
contemplated by the then-current business plan of the Company to be 
listed for trading by the Options Exchange within ninety (90) days 
of such date, (ii) any person or entity that owns or controls a U.S. 
securities option exchange or U.S. alternative trading system 
described in clause (i), and (iii) any affiliate of a person or 
entity described in clause (i) or (ii) above; provided that, in the 
event of a change in applicable law permitting the execution of 
transactions in exchange-listed securities options otherwise than on 
a national securities exchange or facility thereof (including, but 
not limited to, internalization of orders for exchange-listed 
securities options or the execution of such orders on an alternative 
trading system), (x) a system operated by or on behalf of a Founding 
Firm or its affiliates for purposes of the internalization or 
crossing of: (i) Orders of customers of such Founding Firm or its 
affiliates, (ii) orders of such Founding Firm or its affiliates or 
(iii) orders routed from a retail broker-dealer or retail brokerage 
unit, shall not be considered a Specified Entity and (y) in addition 
to the matters covered in clause (x), NYSE Amex and the Founding 
Firms will negotiate in good faith the terms of an exception from 
the definition of Specified Entity for any alternative trading 
system owned solely by an individual Founding Firm or its affiliates 
that performs order crossing in a manner that does not substantially 
compete with the Options Exchange in terms of market share and other 
relevant factors.
---------------------------------------------------------------------------

    As referenced above, the number of Class A Common Interests and 
Class B Common Interests that will be issued and outstanding to the 
initial Members will result in (i) the percentage of the aggregate 
number of Common Interests represented by the Class A Common Interests 
(the ``Aggregate Class A Economic Allocation'') initially being equal 
to 47.2% and (ii) the percentage of the aggregate number of Common 
Interests represented by the Class B Common Interests (the ``Aggregate 
Class B Economic Allocation'') initially being equal to 52.8%. The 
Class A Common Interests will also initially represent 47.2% of the 
aggregate number of Common Interests entitled to vote (such percentage, 
the ``Aggregate Class A Voting Allocation'' and together with the 
Aggregate Class A Economic Allocation, the ``Aggregate Class A 
Allocation''), while the Class B Common Interests will initially 
represent 52.8% of the aggregate number of Common Interests entitled to 
vote (such percentage, the ``Aggregate Class B Voting Allocation'' and 
together with the Aggregate Class B Economic Allocation, the 
``Aggregate Class B Allocation''). From time to time, the Aggregate 
Class A Economic Allocation and the Aggregate Class A Voting Allocation 
shall be separately or together subject to adjustment upwards or 
downwards, as applicable, in accordance with the provisions of the LLC 
Agreement and/or the Members Agreement, as will the Aggregate Class B 
Economic Allocation and the Aggregate Class B Voting Allocation.

Restricted Members

    Section 7.5 of the LLC Agreement provides that each Member (other 
than NYSE Amex alone or together with its Permitted Transferees) then 
owning (alone or together with its affiliates) any Excess Interests 
(other than as a result of exceeding the 19.9% Maximum Percentage) or 
then owning an Interest entitling that Member to distributions in 
excess of the Member's Maximum Percentage (as defined below) of the 
distributions (the ``Capped Distribution Amount'') then being made to 
all Members may from time to time make an irrevocable election 
(``Restricted Member Election'') (but subject to

[[Page 18598]]

reversal under certain specific circumstances), by written notice to 
the Company, to be treated for purposes of the LLC Agreement as a 
``Restricted Member,'' solely with respect to such Excess Interests or 
Capped Distribution Amount. ``Maximum Percentage'' means, for a Member, 
the lesser of the 19.9% Maximum Percentage and such Member's Alternate 
Maximum Percentage, if any. With respect to each Restricted Member, for 
so long as the election to be a Restricted Member remains in effect:
    (i) In the event of any distribution of Class B Common Interests, 
at the request of that Restricted Member by written notice to the 
Company, the Restricted Member will receive in lieu of Class B Common 
Interests, at the Company's sole option based on a Majority Vote of the 
disinterested directors, either (x) the cash equivalent of such 
distribution to be paid by the Company within ninety (90) days of the 
date such distribution would have otherwise been made, and the 
allocations of net profits and losses shall be adjusted accordingly to 
reflect each Member's share of such distribution or (y) a promissory 
note from the Company (i) in a principal amount equivalent to the 
amount of such distribution; (ii) having a maturity determined by 
Supermajority Vote of the disinterested directors not to exceed 5 
years; and (iii) having additional commercially reasonable terms to be 
determined by Supermajority Vote of the disinterested directors that 
are consistent with customary market practice (provided that the 
Company shall not enter into any contractual restrictions that 
specifically and directly limit the Company's ability to repay or 
redeem such promissory note except as required under applicable law), 
and the allocations of net profits and losses shall be adjusted 
accordingly to reflect each Member's share of such distribution;
    (ii) In the event of any distribution that is not a distribution of 
Class B Common Interests, and if such Restricted Member has so elected, 
then the amount of any distribution that would otherwise be made to the 
Restricted Member in excess of the Capped Distribution Amount shall be 
distributed to all other Members who are entitled to participate in 
such distribution on a pro rata basis with respect to the Common 
Interests held by such Members and the allocations of net profits and 
losses shall be adjusted accordingly to reflect each Member's share of 
such distribution; provided that with respect to any Restricted Member, 
including in the event that such distribution permits any Member to 
elect to be treated as a Restricted Member and such Member so elects, 
the distributions to any such Restricted Member shall not exceed the 
Capped Distribution Amount; and
    (iii) Such Restricted Member agrees to transfer the proceeds of any 
transfer of Common Interests by that Restricted Member (taking into 
account any proceeds received by the Restricted Member for previous 
transfers) in excess of the Restricted Member's Maximum Percentage of 
the proceeds of such transfer of Common Interests to all other Members 
who are not Restricted Members on a pro rata basis with respect to the 
number of Common Interests held by such Members; provided that with 
respect to any Restricted Member, including in the event that such 
transfer permits any Member to elect to be treated as a Restricted 
Member and such Member so elects, the amount transferred to any such 
Restricted Member shall be limited so as to not cause the Restricted 
Member's total ownership interest to exceed the Restricted Member's 
Maximum Percentage or the Capped Distribution Amount, as applicable.
    An election to become a Restricted Member will be binding upon the 
Restricted Member and its direct and indirect transferees, provided, 
however, that the Restricted Member, in its capacity as a Member and a 
Restricted Member, may (x) upon written notice to the Company at any 
time and without precondition, reverse its election with respect to 
paragraph (ii) above and (y) only under the following circumstances, 
reverse its election to be treated as a Restricted Member upon written 
notice to the Company:
    (A) The Restricted Member owns such Restricted Member's Maximum 
Percentage or less of the Common Interests then issued and outstanding 
(in which case such reversal may occur without any further consent of 
the Board or any other condition precedent);
    (B) With the written approval of the Board granted in the sole 
discretion of the majority of the disinterested directors; or
    (C) The Restricted Member provides the Board with appropriate 
written notice that such Common Interests have been transferred to the 
extent permissible under the LLC Agreement (1) as part of a widespread 
public or private offering where no single transferee (together with 
its affiliates) acquires more than 2% of the total Common Interests, 
(2) to an underwriter for the purpose of underwriting a widely 
distributed public or private offering, (3) in one or more open market 
transactions effected on a stock exchange, electronic communication 
network or similar execution system, or in the over-the-counter market 
(which may include a sale to one or more broker-dealers acting as 
market makers or otherwise intending to resell the Common Interests 
sold to them in accordance with their normal business practices), (4) 
to an acquirer which has acquired control of a majority of the total 
Common Interests, or (5) with the written approval of the U.S. Board of 
Governors of the Federal Reserve System or its staff.
    Common Interests with a voting interest in excess of the Maximum 
Percentage of the then issued and outstanding Common Interests of each 
Member who elects to be treated as a Restricted Member will be deemed 
Non-voting Common Interests, and the Aggregate Class A Voting 
Allocation and Aggregate Class B Voting Allocation will be adjusted 
accordingly. Non-voting Common Interests will not be included in 
determining whether the requisite percentage in interest of the Members 
have consented to, approved, adopted or taken any action pursuant to 
the LLC Agreement. Except as provided in this paragraph, Non-voting 
Common Interests will be identical in all regards to all other Common 
Interests held by Members.
    A Member may elect to become a Restricted Member with respect to 
any of its Class B Common Interests, even if such Class B Common 
Interests do not constitute Excess Interests. Upon such election, such 
Class B Common Interests shall be deemed Non-voting Common Interests 
and the provisions of the preceding paragraph will apply with respect 
to such Member, provided that such Member may only reverse such 
election under the circumstances described in subparagraph (C) above.
    The LLC Agreement specifies that, absent SEC approval, the Excess 
Interests of a Member (other than NYSE Amex alone or together with its 
affiliates) arising as a result of such Member (alone or together with 
its affiliates) exceeding the 19.9% Maximum Percentage shall 
immediately and automatically constitute Non-voting Common Interests.
    Section 7.6 of the LLC Agreement provides that the Company and, to 
the extent it relates to the Company, each Member, agrees to comply 
with the Federal securities laws and the rules and regulations 
promulgated thereunder and to cooperate with NYSE Amex pursuant to its 
regulatory authority and with the SEC. Furthermore, each Member must 
take into consideration whether its actions would cause the Options 
Exchange or the Company to

[[Page 18599]]

engage in conduct that fosters and does not interfere with NYSE Amex's 
or the Company's ability to carry out their respective responsibilities 
under the Act and to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protect investors and the public interest. The 
Members may, upon (A) the affirmative written consent of NYSE Amex (in 
its capacity as SRO) and (B) a Supermajority Vote of the Board 
(excluding the vote of the director designated by the Member subject to 
sanction), suspend or terminate a Member's voting privileges, including 
the ability to designate directors pursuant to Section 8.1(d) of the 
LLC Agreement in the event: (i) The Member has materially violated any 
``Regulatory Matters Provision'' \14\ or any applicable law; (ii) the 
Member is subject to any applicable ``statutory disqualification'' 
(within the meaning of Section 3(a)(39) of the Act); or (iii) such 
action is necessary or appropriate in the public interest or for the 
protection of investors. Prior to any suspension or termination, (x) 
the Company will deliver to the Member a written notice specifying in 
reasonable detail the basis for such proposed suspension or termination 
and (y) representatives of the Member will be given an opportunity to 
address the Board regarding such proposed suspension or termination 
prior to the Board voting thereon. In the event of a suspension or 
termination, the director (if any) designated by such Member will 
immediately cease to be a director and the authorized number of 
directors will be reduced accordingly.
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    \14\ A ``Regulatory Matters Provision'' is defined in the LLC 
Agreement as any of Section 4.9 of the LLC Agreement with respect to 
provisions related to the 19.9% Maximum Percentage; Section 7.6 of 
the LLC Agreement relating to Member compliance with the federal 
securities laws and cooperation with NYSE Amex pursuant to its 
regulatory authority and with the SEC; Section 8.1(d)(i) of the LLC 
Agreement relating to designation of directors to the Board; 
Sections 8.1(e)(ii) and 8.1(e)(iii) of the LLC Agreement relating to 
a director's suspension or removal in certain circumstances; Section 
8.1(h) of the LLC Agreement relating to the qualification of 
directors; Section 8.1(m) of the LLC Agreement relating to director 
compliance with the federal securities laws and cooperation with 
NYSE Amex pursuant to its regulatory authority and with the SEC; 
Section 9.3 of the LLC Agreement prohibiting Members from entering 
voting trust agreements with respect to their Common Interests; 
Section 11.8 of the LLC Agreement relating to (i) notice and rule 
filing requirements to the SEC on any acquisition of Interests that 
results in a Member's ownership of Common Interests reaching certain 
threshold levels and (ii) requirements regarding direct and indirect 
ownership of the Company; Section 13.2(c) of the LLC Agreement 
granting NYSE Amex and the SEC access to the books and records of 
the Company; Section 14.1(j) of the LLC Agreement providing for the 
confidentiality of Confidential Information (as defined below) 
pertaining to the self-regulatory functions of NYSE Amex; Section 
14.1(k) of the LLC Agreement granting NYSE Amex and the SEC access 
to confidential information; Section 16.1 of the LLC Agreement 
relating to regulatory approvals and compliance; or Section 16.10 of 
the LLC Agreement relating to amendments to the LLC Agreement and 
the requirement to file such amendments with the SEC.
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    Article IX of the LLC Agreement provides that meetings of the 
Members may be called by (i) the Board or (ii) by a Member or Members 
holding not less than thirty-five percent (35%) of the then issued and 
outstanding Common Interests. Written or printed notice stating the 
place, day and hour of the meeting and, in the case of a special 
meeting of the Members, describing the purposes for which the meeting 
is called shall be delivered not fewer than ten (10) days, but not more 
than sixty (60) days, before the date of the meeting. Such notice must 
include an agenda specifying in reasonable detail the matters to be 
discussed at the meeting and identifying any specific items to be 
considered that require a Supermajority Vote. Except as otherwise 
provided in the LLC Agreement or under applicable law, Members which 
both (x) represent greater than forty-five percent (45%) of the Common 
Interests outstanding and are entitled to vote at such time and (y) 
constitute an absolute majority of Members entitled to vote at such 
time, represented in person or by proxy, shall constitute a quorum of 
Members for purposes of conducting business. Except as otherwise 
required by the LLC Agreement or applicable law, resolutions of the 
Members at any meeting of Members shall be adopted by Majority Vote of 
the Members at such meeting at which a quorum is present.
    Section 9.3 of the LLC Agreement prohibits Members from entering 
into voting trust agreements with respect to their Common Interests.

Governance of the Company

    Section 8.1(a) of the LLC Agreement establishes the Board, which 
will be a ``manager'' of the Company within the meaning of the Delaware 
LLC Act. Each director shall be entitled to one vote. Section 8.1(b) of 
the LLC Agreement provides that the Board shall delegate the day-to-day 
operation of the Company and the management of the business and affairs 
of the Company to the officers of the Company and NYSE Group, a wholly-
owned subsidiary of NYSE Euronext, in accordance with the NYSE Euronext 
Agreement pursuant to which NYSE Group will perform certain information 
technology, operational, financial, compliance, management and other 
general corporate support services for the Company (except as otherwise 
provided in the LLC Agreement). The Board shall oversee the conduct and 
performance of the duties so delegated.
    Pursuant to Section 8.1(c) of the LLC Agreement, the authorized 
number of directors is thirteen (13) as of the effective date of the 
LLC Agreement. The Board may be expanded by Supermajority Vote of the 
Board to include any number of independent directors as may be required 
by applicable law, provided that in the event the Board is so expanded, 
the Board shall determine, by Supermajority Vote, applicable 
independence criteria in accordance with, among other appropriate 
considerations, the requirements of applicable law which shall include, 
for this purpose, SEC guidelines, if any, regarding such criteria. The 
directors shall be appointed by the Members as described in the 
immediately following paragraphs and shall hold office until their 
respective successors are elected and qualified or until their earlier 
death, resignation or removal. In the event that the Company is not 
required to appoint independent directors, the Company will authorize 
one individual to be designated by NYSE Amex to participate as a non-
voting observer in meetings of the Board, so long as the Options 
Exchange is operated as a facility of NYSE Amex.
    Under Section 8.1(d) of the LLC Agreement, each Member agrees that 
it shall vote all of such Member's Common Interests and any other 
voting equity securities of the Company over which that Member has 
voting control and shall take all other actions reasonably necessary or 
desirable within that Member's control (whether in the Member's 
capacity as a Member, director, member of a Board committee or officer 
or otherwise, and including attendance at meetings in person or by 
proxy for purposes of obtaining a quorum and execution of written 
consents in lieu of meetings), and the Company shall take all necessary 
and desirable actions within its control (including calling special 
Board and Member meetings), so that the following persons shall be 
elected to the Board:
    (i) Up to seven (7) representatives designated by NYSE Amex who 
shall initially be as specified in the LLC Agreement and, after the 
effective date of the LLC Agreement, such other persons who are 
designated by NYSE

[[Page 18600]]

Amex from time to time pursuant to this clause (i), one of whom may, in 
NYSE Amex's sole discretion, be the chief executive officer of the 
Company; provided that (x) upon any expansion of the Board to include 
any independent directors as described above, for so long as NYSE 
Amex's percentage ownership of Common Interests equals or exceeds 
fifteen percent (15%), NYSE Amex shall have the right to designate a 
number of additional directors equal to the aggregate number of 
independent directors added to the Board pursuant to Section 8.1(c) of 
the LLC Agreement or, if fewer, the largest number of additional 
directors allowable under applicable law, and the authorized number of 
directors shall be correspondingly increased and (y) upon any expansion 
of the Board to include any additional directors appointed by Members 
other than NYSE Amex pursuant to the LLC Agreement, NYSE Amex shall 
have the right to designate a number of additional directors equal to 
the aggregate number of directors so added to the Board and the 
authorized number of directors shall be correspondingly increased; 
provided, further, that each individual designated by NYSE Amex to 
serve as a director shall be reasonably acceptable to the Founding 
Firms; and provided, further, that NYSE Amex will appoint at least such 
number (not to exceed seven (7) directors) as is necessary to ensure 
that no single Founding Firm's designees to the Board constitute twenty 
percent (20%) or a greater percentage of the total number of directors 
on the Board; and
    (ii) One (1) representative designated by each Founding Firm 
authorized to designate a representative pursuant to Section 8.1(d)(ii) 
of the LLC Agreement, who shall initially be as specified in the LLC 
Agreement and, after the effective date of the LLC Agreement, such 
other person who is designated by such Founding Firm from time to time 
pursuant to this clause (ii); provided that each individual designated 
by the Founding Firms to serve as a director shall be reasonably 
acceptable to NYSE Amex; provided, further, that if such Founding 
Firm's percentage ownership of Common Interests falls below, in the 
case of Goldman Sachs and Citadel, five percent (5%), and in all other 
cases, three percent (3%), the individual designated by such Founding 
Firm shall immediately cease to be a director, such Founding Firm shall 
cease to be authorized to designate a director, and the authorized 
number of directors shall be reduced accordingly; provided, further, 
that if such Founding Firm's Class B Common Interests are subject to 
redemption, the Board (A) may require the individual designated by such 
Founding Firm to resign, (B) may permanently, or for such shorter 
period as the Board may designate, disqualify such Founding Firm from 
designating representatives to the Board pursuant to this clause (ii), 
and (C) pursuant to subclause (A) or (B) above, reduce the authorized 
number of directors accordingly; provided that the affected director 
shall not be authorized to participate in any such decision by the 
Board;
    (iii) In the event the Board is expanded to include independent 
directors as described above and NYSE Amex's percentage ownership of 
Common Interests equals or exceeds fifteen percent (15%), NYSE Amex 
shall designate one-half of the total number of independent directors 
to be so included, in consultation with the Founding Firms, and the 
Founding Firms shall designate one-half of the total number of 
independent directors to be so included, in consultation with NYSE 
Amex; provided that if the number of independent directors to be so 
included is odd, NYSE Amex shall designate a number of independent 
directors that is equal to the number of independent directors 
designated by the Founding Firms plus one; provided further that if (A) 
two or fewer Members have the right to designate a director pursuant to 
clause (ii) above or (B) the aggregate Common Interests held by all 
Founding Firms, excluding any Non-voting Common Interests, falls below 
fifteen percent (15%) of the then issued and outstanding Common 
Interests, NYSE Amex shall have the exclusive right to designate all of 
the independent directors. The independent directors designated by NYSE 
Amex and the Founding Firms shall be subject to approval by a 
Supermajority Vote of the Board. In the event that NYSE Amex's 
percentage ownership of Common Interests is less than fifteen percent 
(15%), the independent directors shall be appointed by mutual agreement 
of NYSE Amex and a majority of the Founding Firms; and
    (iv) If and for so long as NYSE Amex's then-current percentage 
ownership of Common Interests is less than fifteen percent (15%), the 
number of directors designated by NYSE Amex shall be decreased to a 
number equal to the then-current number of directors designated by 
Founding Firms, the aggregate number of representatives of the Board to 
be designated by NYSE Amex shall be decreased accordingly, and the 
number of directors shall be reduced accordingly, until such time as 
either (x) one or more Founding Firms become eligible to designate a 
director, in which case the aggregate number of representatives of the 
Board to be designated by NYSE Amex shall simultaneously be increased 
to a number equal to the number of directors designated by Founding 
Firms or (y) NYSE Amex's then-current percentage ownership of Common 
Interests again equals or exceeds fifteen percent (15%), in which case 
the aggregate number of representatives of the Board to be designated 
by NYSE Amex shall be increased to a number equal to the number of 
directors designated by Founding Firms plus one (1) and, in each case, 
the number of directors shall be increased accordingly.
    Section 8.1(e)(i) of the LLC Agreement provides that a director may 
be removed as a director at any time and for any reason by the Board, 
pursuant to the written request of the person(s) or entit(ies) entitled 
to designate such director as discussed above. A director may also be 
removed for cause (as defined in the LLC Agreement) by Majority Vote of 
the Board; provided that (i) representatives of the Member entitled to 
designate such director shall be given the opportunity to speak to the 
Board regarding such proposed removal prior to the Board voting on the 
removal of such director and (ii) the affected director shall not be 
authorized to participate in any such decision by the Board. In the 
event that a director designated by a Founding Firm fails to attend a 
majority of Board meetings during any 12-month period, the Board may 
require that Founding Firm to designate a replacement director.
    In addition, Section 8.1(e)(ii) of the LLC Agreement provides that 
the Board may, by Supermajority Vote (excluding the vote of the 
directors designated by the Member subject to sanction), suspend or 
terminate a director's service as such to the Company in the event: (A) 
the director has materially violated any Regulatory Matters Provision 
or any applicable law or (B) such action is necessary or appropriate in 
the public interest or for the protection of investors. Prior to any 
such suspension or termination, (x) the Board shall deliver to the 
Founding Firm that appointed the director a written notice specifying 
in reasonable detail the basis for the proposed suspension or 
termination and (y) representatives of the Founding Firm shall be given 
an opportunity to address the Board regarding such proposed suspension 
or termination prior to the Board voting thereon. In the event of such 
suspension or termination, the individual designated by the Founding 
Firm shall immediately cease to be a director and

[[Page 18601]]

the resulting vacancy shall be filled pursuant to Section 8.1(f) of the 
LLC Agreement (as discussed below).
    Section 8.1(e)(iii) of the LLC Agreement provides that any director 
who becomes subject to any applicable ``statutory disqualification'' 
(within the meaning of Section 3(a)(39) of the Act) shall be deemed to 
have automatically resigned from the Board.
    Pursuant to Section 8.1(f) of the LLC Agreement, in the event that 
any director designated pursuant to the terms of the LLC Agreement for 
any reason ceases to serve as a director during his or her term of 
office, the resulting vacancy shall be filled by a representative 
designated by the person or persons entitled to designate such 
director.
    Pursuant to Section 8.1(g) of the LLC Agreement, each Founding Firm 
will be permitted to appoint an alternate director, who will have the 
right to serve, act and vote as the director designated by that 
Founding Firm in the absence of the principal director from time to 
time in cases of necessity. The alternate will be permitted to attend 
all meetings of the Board even if the principal director is present at 
such meetings (it being understood that in such case the alternate will 
attend as an observer and shall not have the right to act or vote as a 
director at any such meeting). In the event a director is removed 
pursuant to Section 8.1(e)(ii) of the LLC Agreement as described above, 
the then-appointed alternate to such director shall immediately cease 
to be an alternate and shall, instead, become a director (unless the 
related Founding Firm appoints another person as its director, in which 
case the alternate shall remain an alternate). In the event a director 
is removed pursuant to Section 8.1(d)(ii) of the LLC Agreement as 
described above, any alternate to such director will immediately cease 
to be an alternate and will not become a director. To the extent a 
Founding Firm lacks representation on the Board, that Founding Firm 
shall have the right to appoint a non-voting observer to the Board.
    Section 8.1(h) of the LLC Agreement outlines the basic 
qualifications of directors and alternate directors. Each individual 
designated to the Board as a director or as an alternate, prior to 
serving on the Board, must certify in writing to the Company that he or 
she is not subject to a ``statutory disqualification'' within the 
meaning of Section 3(a)(39) of the Act. Each Founding Firm, prior to 
designating an individual to the Board (as a director, alternate or 
observer) must certify in writing to the Company that such individual 
is not then a director (or an alternate director or observer to the 
board or any committee of the board), officer or employee of a 
``Specified Entity,'' which is defined, as of any date, as (i) any U.S. 
securities option exchange (or facility thereof) or U.S. alternative 
trading system on which securities option contracts are executed (other 
than NYSE Amex or any of its affiliates) that lists for trading any 
option contract that competes with a contract listed for trading on the 
Options Exchange or a contract that is contemplated by the then-current 
business plan of the Company to be listed for trading by the Options 
Exchange within ninety (90) days of such date, (ii) any person or 
entity that owns or controls a U.S. securities option exchange or U.S. 
alternative trading system described in clause (i), and (iii) any 
affiliate of a person or entity described in clause (i) or (ii) above; 
provided that, in the event of a change in applicable law permitting 
the execution of transactions in exchange-listed securities options 
otherwise than on a national securities exchange or facility thereof 
(including, but not limited to, internalization of orders for exchange-
listed securities options or the execution of such orders on an 
alternative trading system), (x) a system operated by or on behalf of a 
Founding Firm or its affiliates for purposes of the internalization or 
crossing of: (i) orders of customers of such Founding Firm or its 
affiliates, (ii) orders of such Founding Firm or its affiliates or 
(iii) orders routed from a retail broker-dealer or retail brokerage 
unit, shall not be considered a Specified Entity and (y) in addition to 
the matters covered in clause (x), NYSE Amex and the Founding Firms 
will negotiate in good faith the terms of an exception from the 
definition of Specified Entity for any alternative trading system owned 
solely by an individual Founding Firm or its affiliates that performs 
order crossing in a manner that does not substantially compete with the 
Options Exchange in terms of market share and other relevant factors. 
In the event an individual designated by a Founding Firm or appointed 
as an alternate becomes a member of the board of directors or similar 
governing body of a Specified Entity, that individual shall immediately 
cease to be a director, alternate or observer, as applicable, and the 
resulting vacancy shall be filled pursuant to the applicable procedures 
described above.
    As provided in Section 8.1(i) of the LLC Agreement, a quorum of the 
Board for purposes of conducting business consists of a combination of 
the directors representing greater than fifty percent (50%) of the 
votes of all directors who are elected and entitled to vote on such 
matter under the LLC Agreement, including, in the case of any matter 
subject to a Supermajority Vote, a combination of directors 
representing greater than fifty percent (50%) of the votes of all 
directors designated by Founding Firms. At all times when the Board is 
conducting business at a meeting of the Board, a quorum must be present 
at such meeting. If a quorum shall not be present at any meeting of the 
Board, then the directors present at the meeting may adjourn the 
meeting from time to time, without notice other than announcement at 
the meeting, until a quorum is present, provided that if, at any duly 
called meeting wherein a matter subject to a Supermajority Vote is 
being considered, a quorum is not met solely due to the fact that a 
requisite number of Founding Firm directors are not present, such 
meeting shall be rescheduled on, absent exigent circumstances, at least 
three (3) business days' prior written notice of such rescheduled 
meeting and, for purposes of such rescheduled meeting, the absence of 
the requisite number of Founding Firm directors shall not prevent the 
Board from taking action by Supermajority Vote. A director may vote or 
be present at a meeting either in person or by proxy.
    The matters specified on Schedule 8.1(i)(v) of the LLC Agreement 
may only be taken (whether by the Company or any subsidiary) with 
approval by a Supermajority Vote of the Board; provided that any matter 
excepted from that schedule by any item on the schedule shall be deemed 
to be excepted from all items on the schedule except where expressly 
covered by another item on such schedule. Certain matters specified in 
Schedule 8.1(i)(v) of the LLC Agreement do not require a Supermajority 
Vote where NYSE Amex, acting in its capacity as an SRO, requires that 
such action be taken. These matters are (i) material amendments to the 
LLC Agreement or any other governing document of the Company or any 
subsidiary; (ii) approval of a capital expenditure (other than those 
approved in connection with the annual budget) that in the aggregate 
would exceed $3 million, (iii) entering into, amending in any material 
respect or terminating any material contract and (iv) any material 
change to fees charged by the Options Exchange. In the event that at 
any given time, (A) two or fewer Founding Firms have the right to 
designate a director or (B) the aggregate

[[Page 18602]]

number of Class B Common Interests held by all Founding Firms, 
excluding Non-voting Common Interests, falls below twenty percent (20%) 
of the then issued and outstanding Common Interests, the list of 
matters that may be taken only with approval by a Supermajority Vote of 
the Board shall include only those actions specified in items 8, 12, 
15, 16, 24 and 25 on Schedule 8.1(i)(v) of the LLC Agreement,\15\ 
provided that in the event that the aggregate number of Class B Common 
Interests held by all Founding Firms, excluding Non-voting Common 
Interests, falls below fifteen percent (15%) of the then issued and 
outstanding Common Interests, a Supermajority Vote of the Board on such 
actions shall only be required to the extent that any such action would 
have a materially and disproportionately disadvantageous effect on the 
economic or voting rights of the Founding Firms; provided further that 
a material change to the pricing of the NYSE Euronext Agreement, 
subject to the provisions therein, that is not in good faith 
consideration of (i) documented additional or enhanced services 
(subject to such additional or enhanced services being provided at 
cost) or (ii) a documented increase in the aggregate cost of the 
services provided thereunder (net of any reductions in other costs of 
services provided thereunder) will per se be deemed to have a 
materially and disproportionately disadvantageous effect on the 
economic rights of Founding Firms.
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    \15\ The six specified items are (1) material amendments to or 
termination of any of the NYSE Euronext Agreement; (2) material 
amendments to the LLC Agreement or any other governing document of 
the Company or any subsidiary (including to increase/decrease the 
number or makeup of the directors) other than any amendment directed 
by NYSE Amex in its capacity as an SRO in accordance with Section 
16.1(a) of the LLC Agreement; (3) approval of any material related 
party transactions except (i) any transaction or arrangement that 
has been approved pursuant to a different item on Schedule 8.1(i)(v) 
of the LLC Agreement or explicitly excluded from approval by any 
item on that schedule, (ii) participation in any cash pooling 
program of NYSE Euronext and any of its affiliates, or (iii) any 
transaction or arrangement that requires the Company or any 
subsidiary to receive services under the NYSE Euronext Agreement; 
(4) approval of any dividend policy and any declaration, allocation 
or distributions of profits or capital other than a tax distribution 
and other than pursuant to the terms of the LLC Agreement or a Board 
adopted (by Supermajority Vote) dividend policy (and for the 
avoidance of doubt, other than the payment of the annual coupon on 
the Preferred Interest); (5) any action that would be likely to 
result in material change in the legal or tax structure of the 
Company or any subsidiary or entering into any new business that 
would subject the Options Exchange to a regulatory regime that 
previously it was not subject to and that would impose on Members, 
in their capacity as members, material additional regulatory 
obligations; and (6) any material change to fees charged by the 
Options Exchange other than any amendment directed by NYSE Amex in 
its capacity as an SRO in accordance with Section 16.1(a) of the LLC 
Agreement, to fund the operations and/or the regulation of the 
Options Exchange. An action directed by NYSE Amex in accordance with 
Section 16.1(a) of the LLC Agreement includes any action NYSE Amex 
deems necessary or appropriate to fulfill its obligations as an SRO 
and is not limited to those actions required by applicable law.
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    Pursuant to Section 8.3 of the LLC Agreement, the Board will 
establish on the effective date of the LLC Agreement the Advisory 
Committee comprised of natural persons having the capacity to provide 
advice to the Board, which advice the Board will consider in good faith 
but shall not be bound by, with respect to subjects identified by the 
Board from time to time, including new products and market structure.
    The authorized number of Advisory Committee members is initially 
nine (9), but may be increased or decreased by Majority Vote of the 
Board; provided, that at all times each Founding Firm shall be entitled 
to have one (1) representative on the Advisory Committee (except as 
otherwise provided in the LLC Agreement). The Advisory Committee 
members shall be appointed by the Members as follows: two (2) Advisory 
Committee members appointed by NYSE Amex and one (1) Advisory Committee 
member appointed by each Founding Firm. Advisory Committee members 
shall hold office until their respective successors are appointed or 
until their earlier death, resignation or removal.
    Any Advisory Committee member may resign at any time and may be 
removed at any time and for any reason by the Board, at the request of 
the Member entitled to appoint such Advisory Committee member. In the 
event that any Advisory Committee member for any reason ceases to serve 
as an Advisory Committee member during his or her term of office, the 
resulting vacancy shall be filled by the Member entitled to appoint 
such Advisory Committee member.
    Each individual designated to the Advisory Committee, prior to 
serving on the Advisory Committee, shall certify in writing to the 
Company that he or she is not subject to a ``statutory 
disqualification'' within the meaning of Section 3(a)(39) of the Act. 
Each Founding Firm, prior to designating an individual to the Advisory 
Committee shall certify in writing to the Company that such individual 
is not then a director (or an alternate director or observer to the 
board or any committee of the board), officer or employee of a 
Specified Entity. In the event an individual designated to the Advisory 
Committee becomes a member of the board of directors or similar 
governing body of a Specified Entity, such individual shall immediately 
cease to be an Advisory Committee member and the resulting vacancy 
shall be filled as described above.

Transfers of Interests

    Article XI of the LLC Agreement and Article III of the Members 
Agreement contain numerous requirements and restrictions relating to 
transfers of Interests by a Member. Section 11.1 of the LLC Agreement 
provides that the admission of any substitute Member will not become 
effective until (i) the Board gives its written consent, which shall be 
deemed given with respect to transfers made in accordance with Section 
4.9 of the LLC Agreement relating to ownership limitations and Sections 
11.3 and/or 11.4 of the LLC Agreement (whose provisions are discussed 
below) and/or Sections 3.2, 3.3 and/or 3.4 of the Members Agreement 
(whose provisions are discussed below) and (ii) such substitute Member 
and the withdrawing Member and/or the transferor Member, as the case 
may be, shall have executed, acknowledged and delivered such 
instruments as are required by the Board. Pursuant to Section 11.1 of 
the LLC Agreement, the additional or substitute Member shall thereafter 
have all of the rights and obligations of a Member and may, in the sole 
discretion of the Board, be deemed a Founding Firm and granted all of 
the rights and obligations of a Founding Firm. Further, unless approved 
by the Board, no transfer of Common Interests shall be permitted, nor 
shall any transferee become a beneficial owner of Common Interests 
pursuant to a transfer, if that transfer (i) could cause the Company to 
be treated as a publicly traded partnership within the meaning of 
Section 7704 of the Internal Revenue Code of 1986, as amended (the 
``Code''); or (ii) would result in the sale or exchange of fifty 
percent (50%) or more of the total Interests in the Company's capital 
and profits in one or more transactions in the aggregate within a 12-
month period. No transfer of shares to any person or entity that is a 
Sanctioned Person will be permitted. A ``Sanctioned Person'' is a 
person or entity that the United States, the United Nations, 
Switzerland or the European Union (or any of its member states) has 
subjected to economic sanctions such as (i) blocking of assets, (ii) 
prohibiting any transactions with or involving such person or entity or 
(iii) any other regulatory action that restricts the ability of another 
person or entity lawfully to engage in business with,

[[Page 18603]]

make payments or distributions to, or receive payments or contributions 
from, such person or entity.
    Section 11.2 of the LLC Agreement and Section 3.1 of the Members 
Agreement provide that no Member, or any assignee or successor in 
interest of any Member, will be permitted to sell, assign or otherwise 
transfer any Common Interests to any third party except, (i) in the 
case of a transfer of Class A Common Interests or Class B Common 
Interests, as applicable, pursuant to Section 4.9 of the LLC Agreement 
relating to ownership limitations or Sections 11.3, 11.4 or 11.6 of the 
LLC Agreement (whose provisions are discussed below) or Sections 3.3 or 
3.4 of the Members Agreement (whose provisions are discussed below) or 
(ii) in the case of a transfer of Class B Common Interests, subject to 
Section 3.2 of the Members Agreement (whose provisions are discussed 
below), with the prior written consent of directors representing a 
Majority Vote of the Board without regard to the directors appointed by 
the Member or Members seeking such consent (which consent (a) may be 
withheld with or without cause in the Board's sole discretion in the 
case of a transferee that is not a Qualified Transferee \16\ and (b) 
may not be unreasonably withheld, conditioned or delayed in the case of 
a transferee that is a Qualified Transferee); provided, in each case, 
that no such transfer may be made to any person or entity whose 
affiliation with the Company would, as reasonably determined by NYSE 
Amex, cause reputational damage to NYSE Amex or any of its affiliates. 
In addition, also subject to Section 11.3 of the LLC Agreement, no 
transfers of Class B Common Interests shall be permitted to a Specified 
Entity; provided, subject to the provisions of Section 11.4(c) of the 
LLC Agreement relating to such transfers, Class B Common Interests may 
be transferred to a Specified Entity if such transfer is a Permitted 
Transfer. No equity securities of the Company may be pledged except on 
terms and conditions satisfactory to the Board.
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    \16\ A ``Qualified Transferee'' is defined as (i) with respect 
to a transfer of Class B Common Interests pursuant to Section 3.2 of 
the Members Agreement, any person or entity that meets all of the 
following criteria: (a) such person or entity is not a Specified 
Entity, (b) the affiliation of such person or entity with the 
Company would not, as reasonably determined by NYSE Amex, cause 
reputational damage to NYSE Amex or any of its affiliates, and 
(c)(I) such person or entity can reasonably be expected to provide 
either (A) material liquidity to the Options Exchange or (B) other 
material commercial or strategic support to the Company or (II) NYSE 
Amex provides its prior written waiver to satisfaction of the 
conditions specified in clause (c)(I) of this definition, which 
waiver shall not be unreasonably withheld, conditioned or delayed or 
(ii) with respect to a transfer of Class A Common Interests pursuant 
to Section 3.3(a)(ii) of the Members Agreement, any person or entity 
that meets all of the following criteria: (a) the affiliation of 
such person or entity with the Company would not, as reasonably 
determined by NYSE Amex, cause reputational damage to the Members or 
the Company, and (b) such person or entity can reasonably be 
expected to provide either (A) material liquidity to the Options 
Exchange or (B) other material commercial or strategic support to 
the Company.
---------------------------------------------------------------------------

    Following any transfer of Class A Common Interests or Class B 
Common Interests (including redemptions of the latter by the Company), 
the Aggregate Class A Allocation, the Aggregate Class B Allocation and 
each Member's percentage ownership of the Common Interests will be 
adjusted as provided in Section 11.2(b) of the LLC Agreement. Upon any 
transfer of Class A Common Interests to the Founding Firms or Class B 
Common Interests to NYSE Amex or its affiliates, as applicable, such 
Class A Common Interests or Class B Common Interests, as applicable, 
shall cease to be Class A Common Interests or Class B Common Interests, 
as applicable, and shall instead become Class B Common Interests or 
Class A Common Interests, respectively. Unless waived at the discretion 
of the Board, an opinion of counsel will be required in connection with 
the transfer of Interests by a Member stating that the transfer would 
not violate any Federal securities laws or any State or provincial 
securities or ``blue sky'' laws (including any investor suitability 
standards) applicable to the Company or the Interest to be transferred, 
or cause the Company to be required to register as an investment 
company under the Investment Company Act of 1940, as amended, or cause 
the Company to become a publicly traded partnership under Section 7704 
of the Code.
    Section 11.3 of the LLC Agreement provides for ``drag-along 
rights'' with respect to Common Interests being sold under certain 
circumstances. Specifically, if (i) a Member (the ``Selling Member''), 
acting alone or together with any other Members, intends to make a 
transfer of seventy-five percent (75%) or more of the then-outstanding 
Common Interests (other than by a public offering or a transfer to a 
Permitted Transferee), and (ii) the Board, by Supermajority Vote, 
approves a sale of the Company to a person or entity that is not an 
affiliate of the Company (any such transfer of Common Interests, an 
``Approved Sale''), then (x) the Selling Member or the Board (as 
applicable) may deliver written notice to the Members notifying them of 
the exercise of the provisions described in Section 11.3 of the LLC 
Agreement, and (y) all the Members (other than the Selling Member(s)) 
shall be obligated to participate in such transfer on a pro rata basis 
and/or to consent to, vote in favor of and raise no objections against 
the sale of the Company, as applicable. Additional provisions of 
Section 11.3 of the LLC Agreement require each Member to take certain 
affirmative actions in connection with an Approved Sale, such as making 
certain representations and warranties and to enter into certain 
indemnification obligations. Further, each holder of Common Interests 
shall, to the extent requested by the Company, pay such holder's pro 
rata portion of the expenses incurred by the holders in connection with 
an Approved Sale.
    Section 11.4(a) of the LLC Agreement provides that the restrictions 
on transfers of Interests specified in Article XI of the LLC Agreement 
do not apply to Permitted Transfers (other than those restrictions in 
Section 11.1(c)(ii) relating to the admission of substitute Members, 
those in Section 11.1(d) relating to transfers that could cause the 
Company to be treated as a publicly traded partnership or would result 
in the sale or exchange of 50% or more of the total Interests in the 
Company's capital and profits within a 12-month period, those in 
Section 11.2(d) relating to potential violations of Federal, State or 
local securities laws or transfers that could cause the Company to be 
required to register as an investment company, those in Section 11.8 
relating to (i) notice and rule filing requirements to the SEC on any 
acquisition of Interests that results in a Member's ownership of Common 
Interests exceeding certain thresholds and (ii) requirements regarding 
direct and indirect ownership of the Company and the rights triggered 
by Section 11.5(b) relating to the Company's right to redeem any or all 
of a Member's Class B Common Interests). In the case of a transfer 
required under, or effected to enable a Member to be in compliance 
with, applicable law or the requirements of a governmental authority or 
any SRO, any Founding Firm that is so required to make any such 
transfer shall submit the names of any potential transferees to the 
Board along with any information reasonably requested by the Board, and 
the Board shall identify which, if any, of the rights and obligations 
of a Founding Firm such potential transferees would have and any 
reasonable and conforming amendments to the LLC Agreement that would be 
appropriate as a result thereof and, in the event one of such 
transferees actually becomes a transferee pursuant to such transfer, 
then that transferee

[[Page 18604]]

shall have the rights and obligations of a Founding Firm so determined 
by the Board, provided that (x) the Board shall not unreasonably 
withhold, condition or delay its consent to granting such Required 
Transferee the rights of a Founding Firm, and (y) the transferring 
Founding Firm shall not have an obligation to be responsible for the 
performance of such Required Transferee under the LLC Agreement.
    Pursuant to Section 11.4(c) of the LLC Agreement, in the event of a 
Permitted Transfer to a Specified Entity by a Founding Firm, the Board 
may: (i) Require any individual, alternate or observer appointed by or 
representing such Founding Firm to the Board or individual appointed by 
such Founding Firm to the Advisory Committee to resign; (ii) disqualify 
such Specified Entity from voting for individuals to serve on the Board 
or the Advisory Committee (permanently or for such shorter period as 
the Board may designate), and (iii) redeem such Specified Entity's 
Interests pursuant to Section 11.5(b)(iii) of the LLC Agreement.
    Section 3.2(a) of the Members Agreement provides that, each year, 
Founding Firms will be able to transfer, outside of a Public Offering, 
a certain amount of Class B Common Interests during a the 3-week period 
commencing on the day that NYSE Euronext files its Form 10-K with the 
SEC (such period, the ``Sale Period''). This provision does not 
restrict Permitted Transfers.
    Pursuant to Section 3.2(b) of the Members Agreement, NYSE Amex will 
deliver to the Founding Firms relevant financial information for 
purposes of determining the pro rata portion of fair market value (over 
the twelve-calendar-month period ended at the end of the immediately 
preceding month) represented by such Class B Common Interests the 
Founding Firms seek to transfer. Any Founding Firm that wishes to 
transfer any of its transferrable Class B Common Interests will 
disclose, by written notice to NYSE Amex and the other Founding Firms, 
the amount of Common Interests it intends to transfer. NYSE Amex may, 
by written notice to the transferring Founding Firm, elect to offer to 
purchase such Common Interests at a price equal to or greater than the 
pro rata portion of fair market value (over the twelve-calendar-month 
period ended at the end of the immediately preceding month) represented 
by such Class B Common Interests. NYSE Amex may, in lieu of 
consummating the transfer contemplated hereunder, cause the Company to 
redeem any or all of such Common Interests at the same price and on the 
same terms and conditions as were negotiated by NYSE Amex and the 
transferring Founding Firm. Any redemption by the Company pursuant to 
this provision shall be funded exclusively by the Redemption Reserve 
(as defined below) until the Redemption Reserve is exhausted, and 
thereafter no redemption pursuant to this provision may be made by the 
Company.
    Pursuant to Section 3.2(c) of the Members Agreement, in the event 
that the transferring Founding Firm elects to reject NYSE Amex's offer, 
NYSE Amex elects not to make an offer, or the transfer has not occurred 
within the specified time period, the transferring Founding Firm may:
    (i) Transfer such Common Interests to a third party; provided that 
no transferee under this provision, shall acquire the Founding Firm 
Right (as defined below) unless, in such transfer, such transferee 
acquires all of the Class B Common Interests of the transferring 
Founding Firm;

or

    (ii) Require that NYSE Amex acquire such Common Interests at a 
price equal to the pro rata portion of fair market value (over the 
twelve-calendar-month period ended at the end of the immediately 
preceding month) represented by such Class B Common Interests (this 
right to require NYSE Amex to acquire the Common Interests, the 
``Founding Firm Right''). NYSE Amex may cause the Company to redeem any 
or all of such Common Interests at the same price and on the same terms 
and conditions (as applicable) as were negotiated by NYSE Amex and the 
transferring Founding Firm. Any such redemption by the Company pursuant 
to this provision shall be funded exclusively by the Redemption Reserve 
(as defined below) until the Redemption Reserve shall be exhausted, and 
no other funds of the Company may be used to fund any redemption by the 
Company pursuant to this provision. Subject to Section 4.9 of the LLC 
Agreement, which governs ownership limitations, NYSE Amex may assign to 
one of its affiliates the obligation to purchase Common Interests 
pursuant to the Founding Firm Right. Upon the acquisition of any Class 
B Common Interests by an affiliate pursuant to such an assignment, such 
Class B Common Interests will instead become Class A Common Interests 
in accordance with Section 11.2 of the LLC Agreement.
    Pursuant to Section 3.2(d) of Members Agreement, if (x) a 
transferring Founding Firm desires to exercise a Founding Firm Right 
and (y) prior to notifying NYSE Amex of its Founding Firm Right, NYSE 
Amex has notified in writing such transferring Founding Firm that it 
has identified one or more bona fide third party purchasers to which 
such Common Interests could be transferred pursuant to Section 3.1 of 
the Members Agreement and that are interested in purchasing all of such 
transferring Founding Firm's Common Interests (such sale, an 
``Alternative Sale''), then such transferring Founding Firm shall 
engage in good faith discussions and negotiations with respect to the 
sale of the Common Interests; provided that (A) the transferring 
Founding Firm shall not be obligated to transfer its Common Interests 
at a price less than the fair market value of such Common Interests 
(nor will it insist on a higher price than such fair market value) and 
(B) such transfer shall be on terms no less favorable to the 
transferring Founding Firm than the terms agreed to between NYSE Amex 
and such transferring Founding Firm.
    Section 3.2(e) of the Members Agreement provides that the 
transferring Founding Firm must notify the Company of its intent to 
either pursue the Alternate Sale or exercise the Founding Firm Right, 
provided that if such transferring Founding Firm determines to pursue 
an Alternate Sale, such transferring Founding Firm shall forfeit the 
right to exercise the Founding Firm Right with respect to the 
applicable Sale Period.
    Section 3.2(f) of the Members Agreement provides that NYSE Amex may 
elect to acquire any of the Class B Common Interests to be purchased by 
it pursuant to Section 3.2 of the Members Agreement by installment 
payments: one-third of the purchase price payable upon tender and the 
remainder in equal payments made on each of the two succeeding calendar 
year anniversaries of such date of tender, with the unpaid portion of 
the purchase price bearing interest at a specified rate, reset daily 
and payable on each payment date. Notwithstanding any installment 
payment, NYSE Amex shall become the owner of the entirety of such Class 
B Common Interests and the transferring Founding Firm shall cease to be 
a Member of the Company with respect to such Class B Common Interests 
upon tender and payment by NYSE Amex of the first installment payment. 
In the event that NYSE Amex causes the Company to redeem such Class B 
Common Interests pursuant to Sections 3.2(b)(iii) or 3.2(c)(ii) of the 
Members Agreement, the Company shall not be entitled to acquire such 
Class B

[[Page 18605]]

Common Interests by installment payments.
    Section 3.2(h) of the Members Agreement provides that, in the event 
that the financial information regarding the Company delivered pursuant 
to Section 3.2(b) of the Members Agreement is not provided at least 
five (5) business days prior to end of the Sale Period, NYSE Amex shall 
have the right to rescind its offer to purchase the Common Interests or 
the transferring Founding Firm shall have the right to rescind its 
election to exercise its Founding Firm Right, if the initial 
determination of the pro rata portion of fair market value (over the 
twelve-calendar-month period ended at the end of the immediately 
preceding month) represented by the Class B Common Interests the 
Founding Firms seek to transfer differs by more than an agreed percent 
from the final determination.
    A redemption of Class B Common Interests by the Company under 
Sections 3.2(b)(iii) or 3.2(c)(ii) of the Members Agreement is required 
to be funded by the Redemption Reserve (originally funded by NYSE 
Amex). Pursuant to Section 3.2(i) of the Members Agreement, NYSE Amex 
has the right to determine the size of the increase in the Aggregate 
Class A Allocation (and corresponding decrease in the Aggregate Class B 
Allocation) and, thereby, (x) cause the Company to treat such a 
redemption as if it were a purchase of Class B Common Interests by NYSE 
Amex, by directing an increase in the Aggregate Class A Allocation (and 
a corresponding decrease in the Aggregate Class B Allocation) equal to 
the entire percentage represented by the Class B Common Interests so 
redeemed; (y) cause the Company to treat such a redemption as an 
ordinary redemption, by directing only a pro rata increase in the 
Aggregate Class A Allocation (and a corresponding decrease in the 
Aggregate Class B Allocation) proportional to the aggregate Class A and 
Class B allocations; or (z) cause the Company to treat such a 
redemption as a hybrid purchase and redemption, by directing a 
disproportional increase in the Aggregate Class A Allocation (and a 
corresponding decrease in the Aggregate Class B Allocation) that is 
less than the entire percentage represented by the redeemed Class B 
Common Interests.\17\
---------------------------------------------------------------------------

    \17\ Consider, by way of example, an Aggregate Class A 
Allocation of 60% and an Aggregate Class B Allocation of 40% prior 
to a redemption of Class B Common Interests corresponding to 10% of 
the aggregate number of Common Interests. If NYSE Amex elected to 
treat such a redemption as though it were a purchase of these Class 
B Common Interests by NYSE Amex, it could direct an increase in the 
Class A Allocation equal to the entire 10% represented by the 
redeemed Class B Common Interests. The result would be an Aggregate 
Class A Allocation of 70% and an Aggregate Class B Allocation of 
30%.
    Alternatively, if NYSE Amex elected to treat such a redemption 
as an ordinary redemption, the 10% represented by the redeemed Class 
B Shares would effectively cease to exist and the Aggregate Class A 
Allocation would increase to (60/90)% or 66.6% (and the Aggregate 
Class B Allocation would decrease to (30/90)% or 33.3%). NYSE Amex 
could cause this result by directing a pro rata increase to the 
Aggregate Class A Allocation (and corresponding decrease in the 
Aggregate Class B Allocation), proportional to the aggregate Class A 
and Class B allocations.
    Finally, if NYSE Amex elected a hybrid treatment, it could 
direct that the Aggregate Class A Allocation be increased to a value 
between 66.6% and 70% (and that the Aggregate Class B Allocation be 
correspondingly decreased). As further described below, such a 
direction would reduce the Priority Claim by the amount paid in 
respect of the allocation in excess of 66.6%.
---------------------------------------------------------------------------

    If NYSE Amex elects to receive an upward adjustment of the 
Aggregate Class A Allocation Percentage described above, the Priority 
Claim of NYSE Amex will be reduced by the amount paid by the Company 
that is attributable to the excess of such allocation over the 
allocation NYSE Amex would have received on a pro rata basis.
    The Company is required to update and distribute to each Member a 
revised Members' Schedule reflecting the adjustments made pursuant to 
Section 3.2(i) of the Members Agreement. Any Member that would exceed 
the 19.9% Maximum Percentage as a result of these adjustments will be 
subject to the provisions of Section 4.9(c) of the LLC Agreement.
    Section 3.2(j) of the Member's Agreement provides that, in the 
event that the effective date of the LLC Agreement occurs on or after 
March 11, 2011 and before June 30, 2011, then, solely with respect to 
the Sale Period occurring in 2011, (i) the phrase ``during any Sale 
Period'' in Section 3.2(a) of the Members Agreement shall be deemed to 
be a reference to ``during the 10 day period following the later of (x) 
effective date of the LLC Agreement and (y) the day on which NYSE 
Euronext files its Form 10-K with the SEC,'' (ii) NYSE Amex and the 
Company shall deliver on the effective date of the LLC Agreement the 
financial information specified in Section 3.2(b)(i) of the Members 
Agreement and required to be delivered by NYSE Amex and the Company, 
respectively, prior to or concurrent with the start of the Sale Period, 
(iii) any disputes referred to in Section 3.2(b)(i) of the Members 
Agreement shall be resolved as promptly as practicable following the 
effective date of the LLC Agreement, and (iv) the reference to ``end of 
the Sale Period'' in Section 3.2(h) of the Members Agreement shall be 
deemed to be a reference to the end of the period referred to in clause 
(i) of this paragraph.
    Section 3.3 of the Members Agreement provides for a limited ``right 
of first offer'' exercisable by each Founding Firm with respect to any 
Common Interests NYSE Amex proposes to transfer. Pursuant to Section 
4.9 of the LLC Agreement, no Founding Firm will be permitted to so 
acquire Common Interests if such acquisition would result in the 
Founding Firm holding Excess Interests.
    Pursuant to Section 3.3(a) of the Members Agreement, in the event 
that NYSE Amex intends to transfer any Class A Common Interests (other 
than by a Public Offering or a transfer to a Permitted Transferee), 
NYSE Amex shall deliver a written notice to the Founding Firms 
disclosing the amount of Class A Common Interests proposed to be 
transferred and the identity of the prospective transferee, which 
transferee shall be an NYSE Amex Qualified Transferee.
    Pursuant to Section 3.3(b) of the Members Agreement, each Founding 
Firm may elect to offer to purchase (each such Founding Firm, an 
``Offering Founding Firm''), by written notice to NYSE Amex, its pro 
rata portion of the Class A Common Interests proposed to be so 
transferred. If the Founding Firms have not elected to fully purchase 
all of the Interests proposed to be transferred, NYSE Amex shall 
provide written notice to all Offering Founding Firms specifying the 
number of remaining Class A Common Interests, and each Offering 
Founding Firm may elect to purchase such remaining Class A Common 
Interests by written notice to NYSE Amex; provided that if the Offering 
Founding Firms collectively elect to purchase more than the remaining 
number of Class A Common Interests, each Offering Founding Firm shall 
be entitled to purchase its pro rata portion thereof (with such pro 
rata portion determined solely by reference to the Offering Founding 
Firms' respective percentage of Common Interests). The Founding Firms' 
right to purchase Class A Common Interests pursuant to this provision 
shall be contingent on the purchase by one or more Founding Firms of 
all of the Class A Common Interests proposed to be transferred by NYSE 
Amex. The Offering Founding Firms shall collectively determine the 
proposed price and such other terms and conditions of the proposed 
transfer. If NYSE Amex rejects the offer(s) of the Founding Firm(s), 
NYSE Amex may transfer such Class A Common Interests to the prospective 
transferee identified

[[Page 18606]]

by NYSE Amex in its notice at a price greater than the price offered by 
the Offering Founding Firms and on other terms and conditions no more 
favorable to the transferee(s) thereof than the terms offered by the 
Founding Firms. In the event that the Founding Firms elect not to make 
an offer, NYSE Amex may transfer such Class A Common Interests to the 
prospective transferee identified by NYSE Amex at a price and on other 
terms and conditions as determined by NYSE Amex.
    Pursuant to Section 3.3(c) of the Members Agreement, prior to, and 
subject to the completion by NYSE Amex of a transfer of Class A Common 
Interests that would result in NYSE Amex and its affiliates, in the 
aggregate, ceasing to own at least an agreed percent of the Aggregate 
Class A Allocation (such transfer a ``Complete Transfer'') (other than 
pursuant to Section 3.3(d) of the Members Agreement described below), 
the Members and NYSE Euronext shall, acting reasonably and in good 
faith, consider and implement any applicable and necessary amendments 
to the Members Agreement and the LLC Agreement. Until such time as NYSE 
Amex has completed a Complete Transfer, NYSE Euronext shall provide to 
or procure services for the Company materially similar to those 
provided by NYSE Group pursuant to the NYSE Euronext Agreement and on 
the pricing terms and other terms provided in the NYSE Euronext 
Agreement. Upon a Complete Transfer, at NYSE Euronext's discretion, the 
NYSE Euronext Agreement may be terminated or assigned and the NYSE Amex 
Qualified Transferee shall agree to provide to or procure services for 
the Company or NYSE Euronext shall agree to continue to provide such 
services pursuant to such terms. NYSE Amex shall reasonably compensate 
the Company to the extent the NYSE Amex Qualified Transferee agrees to 
provide or procure services on pricing terms less favorable to the 
Company or on other terms which are materially more disadvantageous to 
the Company than those provided for by the NYSE Euronext Agreement. 
NYSE Amex shall continue to provide services or compensate the Company 
as described above for a period of time equal to the lesser of (x) four 
years from the time of such transfer and (y) the minimum time 
necessary, at the time of such transfer, for all Founding Firms to 
transfer their Class B Common Interests in accordance with the 
limitations of Section 3.2(a) of the Members Agreement, assuming such 
Founding Firms transfer the maximum amount of Class B Common Interests 
permitted thereunder as quickly as permitted thereunder. Following such 
period, to the extent not previously terminated or assigned, the NYSE 
Euronext Agreement shall terminate.
    Section 3.3(d) of the Members Agreement provides that, in the event 
of a Complete Transfer by NYSE Amex to one of its affiliates, such 
transferee shall be deemed to be NYSE Amex for all purposes under the 
Members Agreement and the LLC Agreement and be subject to the same 
rights and obligations as NYSE Amex thereunder, except in respect to 
NYSE Amex's rights and obligations as the SRO of the Options Exchange, 
which rights and obligations shall remain with NYSE Amex irrespective 
of any such Complete Transfer.
    Section 3.4 of the Members Agreement provides for a ``call option'' 
exercisable by NYSE Amex. Specifically, the Members grant NYSE Amex, 
the right and the option to require the Members (other than NYSE Amex) 
(and a transferee of a Member or a transferee of a transferee) 
collectively to transfer to NYSE Amex any or all of the aggregate Class 
B Common Interests held by all Members (other than NYSE Amex) (and such 
transferees) at a price equal to the pro rata portion of the fair 
market value (over the twelve-calendar-month period ended at the end of 
the immediately preceding month) represented by such Class B Common 
Interests (such right, the ``Call Option''). NYSE Amex shall have the 
right, but not the obligation, to exercise the Call Option, in whole or 
in part, in its sole discretion at any time on or after the tenth 
anniversary of the effective date of the LLC Agreement. Each Member 
(other than NYSE Amex) (and each such transferee, if any) shall tender 
to NYSE Amex such person's pro rata portion of the Class B Common 
Interests NYSE Amex desires to purchase and NYSE Amex shall pay to each 
such Member (other than NYSE Amex) (and transferee) the purchase price. 
Subject to Section 4.9 of the LLC Agreement, which governs ownership 
limitations, NYSE Amex may assign to one of its affiliates the right to 
purchase Class B Common Interests pursuant to the Call Option. Upon the 
acquisition of any Class B Common Interests by an affiliate pursuant to 
such an assignment, such Class B Common Interests will instead become 
Class A Common Interests in accordance with Section 11.2 of the LLC 
Agreement.

Redemption of Interests

    Section 11.5(a) of the LLC Agreement provides that the Company may, 
by Majority Vote of the Board, redeem any or all of the Preferred 
Interests at any time; provided that only such funds as are available 
in the Redemption Reserve may be used to fund any such redemption. The 
``Redemption Reserve'' is an independent cash reserve established by 
the Board as of the effective date of the LLC Agreement and which will 
be designated for the sole purpose of funding any redemptions of (i) 
Preferred Interests (at any time, by Majority Vote of the Board) or 
(ii) Class B Common Interests, and shall not be used for any other 
purpose. The amount of the Redemption Reserve will be agreed upon by 
the Members and will be increased to the extent of any amount accrued 
and unpaid on the unpaid Priority Claim.
    With respect to the Class B Common Interests, Section 11.5(b) of 
the LLC Agreement provides that the Company shall have the right, by 
Majority Vote of the Board, to redeem any or all of a Member's Class B 
Common Interests, at a redemption price equal to the lower of (x) the 
balance of that Member's capital account (subject to certain 
adjustments) with respect to the Class B Common Interests so redeemed 
and (y) the pro rata portion of fair market value (over the twelve-
calendar-month period ended at the end of the immediately preceding 
month) represented by such Class B Common Interests:
    (i) If that Member fails to make a Regulatory Capital Contribution 
on or before the payment date identified in the relevant written notice 
and fails to timely cure such non-payment;
    (ii) If that Member directly or indirectly acquires a controlling 
interest in or becomes the direct or indirect beneficial owner of a 
controlling interest in, grants a controlling interest to or becomes 
directly or indirectly beneficially owned by, or comes under common 
control with, a Specified Entity (for purposes hereof, ``controlling 
interest'' means greater than fifty percent (50%) of the voting equity 
of the applicable entity) and, in the event such Member becomes 
directly or indirectly beneficially owned by or comes under common 
control with a Specified Entity, has not cured such event within a 
specified time period;
    (iii) If such Member makes a Permitted Transfer to a Specified 
Entity; or
    (iv) Pursuant to Section 2.1(i) of the Members Agreement (as 
described below).
    In connection with the Plan, Section 2.1(i) of the Members 
Agreement provides that the Company also has the right, by Majority 
Vote of the Board, to redeem on the same terms as above any

[[Page 18607]]

or all of the Class B Common Interests of a Founding Firm that, as of a 
quarterly determination date, (i) has failed to satisfy a minimum 
volume threshold during the preceding 12-month period or (ii) has (A) 
failed to satisfy a minimum volume threshold during the preceding 
three-month period and (B) entered into an agreement or economic 
arrangement with (i) a Specified Entity or (ii) an affiliate of NYSE 
Amex that is a U.S. securities option exchange (or facility thereof) or 
U.S. alternative trading system on which securities option contracts 
are executed (an ``Affiliate Exchange'') under which such Founding Firm 
receives equity (whether provided through a primary issuance or a 
secondary sale) or equity-like consideration in exchange for market 
making or the provision of liquidity, order flow or volume (except 
under any volume-based fee discount or rebate program or any program or 
arrangement open to market participants generally) in any contract that 
competes with a contract that is then listed for trading by the Options 
Exchange or that is contemplated by the then current business plan of 
the Company to be listed for trading by the Options Exchange within 
ninety (90) days following the date on which such Founding Firm has 
entered into the agreement with the Specified Entity or an Affiliate 
Exchange, subject to certain exceptions.
    The Redemption Reserve shall not be used to fund any purchase of 
Class B Common Interests pursuant to Section 11.5(b) of the LLC 
Agreement or Section 2.1(i) of the Members Agreement.
    Section 11.5(c) of the LLC Agreement provides that in the event a 
Founding Firm (A) determines that (x) a Member has become a Sanctioned 
Person and (y) regulatory or other requirements necessitate such 
Member's withdrawal as a Member if such Founding Firm were to remain a 
Member and (B) provides notice of such determination to the Company, 
the Company may redeem all Common Interests owned by the Sanctioned 
Person by Supermajority Vote of the Board (excluding the vote of the 
affected Member), at a redemption price equal to the lower of (I) the 
balance of the Member's capital account (subject to certain 
adjustments) and (II) the fair market value of the Sanctioned Person's 
Common Interests; provided that if the Company fails to redeem the 
Sanctioned Member's Common Interests, such Founding Firm shall have the 
right to put its Common Interests to the Company at a price equal to 
one dollar ($1).
    Section 11.5(f) of the LLC Agreement provides that all redemptions 
of Class B Common Interests by the Company pursuant to Section 11.5 of 
the LLC Agreement shall be subject to applicable restrictions contained 
in the Delaware LLC Act and in the Company's debt financing agreements, 
and if any such restrictions prohibit the redemption of Class B Common 
Interests pursuant to Section 11.5 of the LLC Agreement which the 
Company is otherwise entitled or required to make, the time periods 
provided in Section 11.5(e) of the LLC Agreement will be suspended, and 
the Company may make such redemptions as soon as any applicable 
restrictions allow; provided that the price at which such redemption is 
made shall be fixed as of the date such redemption would have occurred 
had there not existed any restrictions on such redemption. Furthermore, 
nothing shall require the Company to segregate or set aside any funds 
or other property for the purpose of making any payment or distribution 
pursuant to Section 11.5 of the LLC Agreement. The right of any Member 
or beneficiary thereof to receive any payment or distribution under 
those provisions will be an unsecured claim against the general assets 
of the Company. Notwithstanding anything to the contrary in the LLC 
Agreement, if the application of the restrictions in Section 11.5(f) 
described in this paragraph prohibits the redemption of the Class B 
Common Interests of a Sanctioned Person, the Company must redeem such 
Class B Common Interests by providing the Sanctioned Person a 
promissory note, the terms of which will be determined by the Majority 
Vote of disinterested directors, in a principal amount equal to the 
lower of (I) the balance of that Member's capital account (subject to 
certain adjustments) and (II) the fair market value of the Sanctioned 
Person's Common Interests, in each case, determined as of the date the 
Company determines to redeem the Sanctioned Person's Common Interests, 
payable at such time as any applicable restrictions allow, and the 
Company shall become the owner of such Class B Common Interests upon 
tender of the promissory note.
    In the event the Company elects not to exercise its option to 
redeem all or any portion of the Class B Common Interests under Section 
11.5(b) of the LLC Agreement as discussed above, NYSE Amex shall have 
the right, but not the obligation, within thirty (30) days of the event 
triggering such right, to require the applicable Founding Firm to 
transfer any or all of such unredeemed Class B Common Interests to NYSE 
Amex at a price equal to the pro rata portion of fair market value 
(over the twelve-calendar-month period ended at the end of the 
immediately preceding calendar month) represented by such Class B 
Common Interests. NYSE Amex may assign to an affiliate the right to 
purchase Class B Common Interests pursuant to this paragraph.
    Section 11.6 of the LLC Agreement provides the requirements for an 
initial public offering of the Company's securities, whether primary or 
secondary, pursuant to a registration statement filed under the 
Securities Act of 1933, as amended (the ``Securities Act''). At any 
time upon the determination of the Board that an initial public 
offering is in the best interests of the Company and the Members, and 
upon approval by a Supermajority Vote of the Board if such initial 
public offering does not constitute a Qualified Public Offering 
(defined as giving rise to at least $175,000,000 in gross proceeds and 
resulting in an implied valuation for the equity securities of the 
Company as a whole that will be no less than $550,000,000), subject to 
applicable law and receipt of applicable regulatory approvals, either 
(a) the Company shall be required to contribute all or a specified 
portion of the assets of the Company to a corporation newly formed 
under the laws of the State of Delaware (the ``New Company''), or (b) 
the Members shall be required to contribute their Interests to the New 
Company, in each case in exchange for shares of the New Company's stock 
having substantially the same equity interests and voting rights as the 
Interests being contributed (the ``New Company Shares''), and the 
Company shall cause the New Company to file and use its best efforts to 
have declared effective a registration statement under the Securities 
Act for an initial public offering, and to cause the New Company and 
its officers and employees to use their best efforts to market the New 
Company Shares, subject to all applicable Securities Act restrictions. 
To the extent required by the underwriters managing a registered public 
offering of the New Company Shares, each Member agrees to complete and 
execute all customary questionnaires and similar documents so required 
under the terms of such underwriting agreements. Upon the consummation 
of an initial public offering, certain specified portions of the LLC 
Agreement and such other provisions as the Board may determine, 
including the LLC Agreement in its entirety, shall terminate 
automatically

[[Page 18608]]

and be of no further force and effect. Notwithstanding anything to the 
contrary in the LLC Agreement, as a condition to an initial public 
offering, the Company or any successor thereto shall enter into a 
registration rights agreement, upon commercially reasonable terms, with 
any Member requesting such agreement with respect to the registration 
of its equity securities with customary terms and conditions and in 
form and substance reasonably satisfactory to the Board and such 
Member; provided that such registration rights agreement shall include 
(i) demand registration rights that apply (A) equally to all Members, 
(B) only after an initial public offering, and (C) subject to customary 
minimum thresholds and (ii) piggyback registration rights for all 
Members on a pro rata basis in proportion with their relative common 
equity interests.

Certain Regulatory and Compliance Matters

    As provided in Section 8.1(m) of the LLC Agreement, (A) the Board 
in carrying out its duties and without limitation on its other 
obligations under applicable law or otherwise and (B) each director, in 
carrying out his or her duties and without limitation on his or her 
other obligations under applicable law or otherwise (but subject to the 
waiver of fiduciary duties otherwise provided for in the LLC 
Agreement), shall be obligated to (x) comply with the Federal 
securities laws and the rules and regulations promulgated thereunder 
and (y) cooperate with NYSE Amex pursuant to its regulatory authority 
and the provisions of the LLC Agreement and with the SEC. Furthermore, 
each director must take into consideration whether his or her actions 
would cause the Options Exchange or the Company to engage in conduct 
that fosters and does not interfere with NYSE Amex's or the Company's 
ability to carry out their respective responsibilities under the Act 
and to prevent fraudulent and manipulative acts and practices, promote 
just and equitable principles of trade, foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, 
protect investors and the public interest.
    As further provided in Section 8.1(m) of the LLC Agreement, NYSE 
Amex must receive notice of planned or proposed changes to the Company 
(but not to include changes relating solely to non-market matters) or 
the Options Exchange and NYSE Amex must not object affirmatively to 
such changes prior to implementation, not inconsistent with the LLC 
Agreement. NYSE Amex, in the performance of its obligations as the SRO 
for the Options Exchange, shall following receipt of such notice and 
without undue delay, notify the Company whether or not it has any 
objection to such a change based on the potential for such change to 
give rise to a Regulatory Deficiency (as defined below). In the event 
that NYSE Amex, in its sole discretion, determines that such planned or 
proposed changes to the Company or the Options Exchange could cause a 
Regulatory Deficiency if implemented, NYSE Amex may direct the Company 
to, and the Company shall, modify the planned or proposed changes as 
necessary to ensure that it does not cause a Regulatory Deficiency. In 
the event that NYSE Amex, in its sole discretion, determines that a 
Regulatory Deficiency exists or is planned, NYSE Amex may direct the 
Company to, and the Company shall, undertake such modifications to the 
Company (other than as to non-market matters) as are necessary or 
appropriate to eliminate or prevent the Regulatory Deficiency and allow 
NYSE Amex to perform and fulfill its regulatory responsibilities under 
the Act.
    A ``Regulatory Deficiency'' is defined in the LLC Agreement as the 
operation of the Options Exchange or the Company (in connection with 
matters other than non-market matters) in a manner that is not 
consistent with any Regulatory Matters Provision, the rules of NYSE 
Amex, as amended from time to time, or the Federal securities laws and 
the rules and regulations promulgated thereunder, applicable to the 
Exchange or NYSE Amex options trading permit holders, or that otherwise 
impedes NYSE Amex's ability to regulate the Options Exchange or NYSE 
Amex options trading permit holders or to fulfill its obligations under 
the Act as a SRO.
    Section 8.1(n) of the LLC Agreement states that NYSE Euronext has 
developed corporate compliance policies that govern the conduct of its 
employees, officers, and directors and the employees, officers, and 
directors of its affiliates. The Board will adopt these policies on the 
effective date of the LLC Agreement, but these policies shall not apply 
to directors, alternate directors or observers to the Board appointed 
by a Founding Firm except as described in Sections 8.1(n)(ii) and 
8.1(n)(iii) of the LLC Agreement (as described below). These policies 
(except for their application to directors, alternate directors or 
observers to the Board appointed by a Founding Firm) may be revised 
from time to time by NYSE Euronext, provided that the personal trading 
policy referred to in Section 8.1(n)(ii) of the LLC Agreement, as it 
applies to directors, alternate directors and observers to the Board 
appointed by a Founding Firm, may only apply to stock and other 
securities issued by NYSE Euronext and its affiliates. Any such revised 
policies will be promptly provided to the Company. Subject to 
applicable law, all employees, officers, and directors (other than 
directors, alternate directors and observers to the Board appointed by 
a Founding Firm) of the Company or its affiliates will be expected to 
comply with these policies, except as described in Sections 8.1(n)(ii) 
and 8.1(n)(iii) of the LLC Agreement. Section 8.1(n)(ii) of the LLC 
Agreement provides that the personal trading policy of NYSE Euronext, 
including any modifications or revisions thereto, shall apply to 
directors, alternate directors, and observers to the Board appointed by 
the Founding Firms solely in their personal capacities and not in such 
a director's capacity as an employee of any Founding Firm. Section 
8.1(n)(iii) of the LLC Agreement provides for a representation by NYSE 
Euronext that it has obtained a waiver by the audit committee of the 
board of directors of NYSE Euronext exempting the directors, alternate 
directors and observers to the Board appointed by the Founding Firms 
from all of its corporate compliance policies (other than its personal 
trading policy, as and to the extent described in Section 8.1(n)(ii)).
    Section 8.1(o) of the LLC Agreement provides that NYSE Euronext or 
one of its affiliates has the right to conduct audits of all operations 
of the Company. The NYSE Euronext internal audit group will have access 
to all records and employees of the Company and will determine which 
audits to conduct and the timetable for such work. Any such audit will 
be considered in a manner consistent with the NYSE Euronext audit group 
charter, which mandates the independent role of the group and which is 
approved by the NYSE Euronext Audit Committee. If the Company engages 
an external party to conduct an audit, the NYSE Euronext audit group 
will have the right to review with the external party the nature and 
extent of the work and any resulting report and supporting written work 
product. NYSE Euronext will bear all of the costs and expenses incurred 
by the Company and its representatives related

[[Page 18609]]

to the exercise of its rights pursuant to this paragraph.
    Pursuant to Section 11.8(a) of the LLC Agreement, beginning after 
SEC approval of the LLC Agreement, the Company shall provide the SEC 
with written notice ten (10) days prior to the closing date of any 
acquisition of an Interest by a person or entity that results in a 
Member's ownership of Common Interests, alone or together with any 
affiliate, meeting or crossing the threshold level of five percent (5%) 
or the successive five percent (5%) ownership levels of ten percent 
(10%) and fifteen percent (15%) of the aggregate Common Interests.
    Section 11.8(b) of the LLC Agreement establishes certain 
requirements regarding direct ownership of the Company. Beginning after 
SEC approval of the LLC Agreement, no person or entity that is not a 
Member as of the effective date of the LLC Agreement, either alone or 
together with its affiliates, at any time, may directly own Common 
Interests that would result in such person or entity having ownership 
of Common Interests representing more than the 19.9% Maximum Percentage 
or any successive five percent (5%) ownership threshold (i.e., 24.9%, 
29.9%, etc) (the ``Concentration Limitation''). The Concentration 
Limitation shall apply to each person or entity (other than NYSE Amex 
alone or together with its affiliates, as applicable) unless and until: 
(A) Such person or entity has delivered to the Board a notice in 
writing, not less than forty-five (45) days (or such shorter period as 
the Board shall expressly consent to) prior to the acquisition of any 
Common Interests that would cause such person or entity (either alone 
or together with its affiliates) to exceed the Concentration 
Limitation, of such person or entity's intention to acquire such Common 
Interests; (B) such notice has been filed with, and approved by, the 
SEC under Section 19(b) of the Act and has become effective thereunder; 
and (C) the Board has not determined to oppose such person or entity's 
acquisition of such Common Interests.
    Pursuant to Section 11.8(b)(iii) of the LLC Agreement, the Board 
shall oppose an ownership of Common Interests by a person or entity if 
the Board shall have determined, in its sole discretion, that (A) such 
ownership of Common Interests by the person or entity, either alone or 
together with its affiliates, will impair the ability of the Company 
and the Board to carry out their functions and responsibilities, 
including but not limited to, under the Act, or is otherwise not in the 
best interests of the Company; (B) such ownership of Common Interests 
by the person or entity, either alone or together with its affiliates, 
will impair the ability of the SEC to enforce the Act; (C) the person 
or entity or its affiliates are subject to any applicable ``statutory 
disqualification'' (within the meaning of Section 3(a)(39) of the Act); 
or (D) if such Common Interests would result in the person or entity 
(alone or together with its affiliates) having an ownership interest of 
more than twenty percent (20%) of the aggregate Common Interests and 
the person or entity or one of its affiliates is either a ``member'' or 
``member organization'' of NYSE Amex (as defined in the rules of NYSE 
Amex, as such rules may be in effect from time to time). In making a 
determination pursuant to clause (C) of the preceding paragraph, the 
Board may impose such conditions and restrictions on the person or 
entity and its affiliates owning any Common Interests as the Board may 
in its sole discretion deem necessary, appropriate or desirable in 
furtherance of the objectives of the Act and the governance of the 
Company.
    Section 11.8(c) of the LLC Agreement establishes certain 
requirements regarding NYSE Amex's ownership of the Company. Beginning 
after SEC approval of the LLC Agreement, the aggregate percentage of 
Common Interests held by NYSE Amex and its affiliates, as applicable, 
shall not decline below fifteen percent (15%) unless and until: (A) 
NYSE Amex has delivered to the Board a notice in writing, not less than 
forty-five (45) days (or such shorter period as the Board shall 
expressly consent to) prior to the transfer of any Common Interests 
that would result in such a decline, of NYSE Amex's intention to 
transfer such Common Interests; and (B) such notice has been filed 
with, and approved by, the SEC under Section 19(b) of the Act and has 
become effective thereunder.
    Section 11.8(d) of the LLC Agreement establishes certain 
requirements regarding indirect ownership of the Company. Except as 
described in the last sentence of this paragraph, a ``Controlling 
Person'' (defined as a person or entity that, alone or together with 
any affiliate, owns a Controlling Interest in a Member, where a 
``Controlling Interest'' means the direct or indirect ownership of 25% 
or more of the total voting power of that Member by any person or 
entity, alone or together with any affiliate) will be required to 
execute, and the relevant Member shall take such action as is necessary 
to ensure that each of its Controlling Persons executes, an amendment 
to the LLC Agreement upon establishing a Controlling Interest in any 
Member that, alone or together with any affiliate, holds an ownership 
interest in the Company equal to or greater than 20% of the aggregate 
Common Interests. In such an amendment, the Controlling Person must 
agree (A) to become a party to the LLC Agreement and (B) to abide by 
all the provisions of the LLC Agreement relating to regulatory matters. 
Notwithstanding the foregoing, a person or entity will not be required 
to execute an amendment to the LLC Agreement pursuant to Section 
11.8(d) of the LLC Agreement if the person or entity does not, directly 
or indirectly, hold any interest in a Member.
    Beginning after SEC approval of the LLC Agreement, any amendment to 
the LLC Agreement executed pursuant to Section 11.8(d) of the LLC 
Agreement is subject to the rule filing process pursuant to Section 19 
of the Act. The non-economic rights and privileges, including all 
voting rights, of the Member in which a Controlling Interest is held 
under the LLC Agreement and the Act will be suspended until such time 
as the amendment executed pursuant to Section 11.8(d) of the LLC 
Agreement has become effective pursuant to Section 19 of the Act or the 
Controlling Person no longer holds a Controlling Interest in the 
Member.
    Section 13.2(c) of the LLC Agreement requires the books and records 
of the Company to be subject at all times to inspection and copying by 
the SEC and NYSE Amex at no additional charge to the SEC or NYSE Amex. 
The books, records, premises, officers, directors, agents and employees 
of the Company shall be deemed the books, records, premises, officers, 
directors, agents and employees of NYSE Amex for purposes of and 
subject to oversight pursuant to the Act. To the extent related to the 
Company's business, the books, records, premises, officers, directors, 
agents and employees of each Member will be deemed the books, records, 
premises, officers, directors, agents and employees of NYSE Amex for 
purposes of and subject to oversight pursuant to the Act.
    Section 16.1 of the LLC Agreement provides requirements regarding 
regulatory approvals and compliance. Section 16.1(a) provides that so 
long as the Options Exchange is a facility of NYSE Amex, in the event 
that NYSE Amex, in its sole discretion, determines that any action, 
transaction or aspect of an action or transaction, is necessary or 
appropriate for, or interferes with, the performance or fulfillment of 
NYSE Amex's regulatory functions, its responsibilities under the Act or 
as specifically required by the SEC, NYSE Amex shall have the sole and 
exclusive authority to direct that any such

[[Page 18610]]

required, necessary or appropriate action, as it may determine in its 
sole discretion, be taken or transaction be undertaken by or on behalf 
of the Company without regard to the vote, act or failure to vote or 
act by any other party in any capacity.\18\
---------------------------------------------------------------------------

    \18\ Nothing contained in the LLC Agreement or the Members 
Agreement limits the ability of NYSE Amex, in its capacity as an 
SRO, (i) to take any action or to direct the taking of any action 
that it determines is necessary or appropriate for the performance 
or fulfillment of its obligations as an SRO or (ii) to direct that 
an action that it determines interferes with the performance or 
fulfillment of its obligations as an SRO not be taken.
---------------------------------------------------------------------------

    Pursuant to Section 16.1(b) of the LLC Agreement, the Company will 
use commercially reasonable efforts to obtain such regulatory 
approval(s) as may be necessary for the Company to engage in its 
business on such schedule as shall be reasonably determined by the 
Board to be in the best interests of the Company. The Founding Firms 
will agree to cooperate with the Company as reasonable and necessary to 
obtain and maintain all regulatory approvals.
    Section 16.1(d) of the LLC Agreement provides that the Company, 
NYSE Euronext, NYSE Group, each Member, and the officers, directors, 
agents, and employees of the Company, NYSE Euronext, NYSE Group and 
each Member irrevocably submit to the jurisdiction of the U.S. Federal 
courts, the SEC and NYSE Amex (in its capacity as an SRO) for purposes 
of any suit, action or proceeding pursuant to U.S. Federal securities 
laws, and the rules and regulations promulgated thereunder, arising out 
of, or relating to, activities of the Company and agree to waive, and 
not to assert by way of motion, as a defense or otherwise in any such 
suit, action or proceeding, any claims that they are not personally 
subject to the jurisdiction of the SEC, that the suit, action or 
proceeding is an inconvenient forum or that the venue of the suit, 
action or proceeding is improper, or that the subject matter thereof 
may not be enforced in or by such courts or agency.
    Section 16.1(e) of the LLC Agreement provides that the Company, 
NYSE Euronext, NYSE Group, each Member, and the officers, directors, 
agents, and employees of the Company, NYSE Euronext, NYSE Group and 
each Member agree to comply with the Federal securities laws and the 
rules and regulations promulgated thereunder and to cooperate with NYSE 
Amex pursuant to its regulatory authority and the provisions of the LLC 
Agreement and with the SEC; and to engage in conduct that fosters and 
does not interfere with the Company's and NYSE Amex's ability to 
prevent fraudulent and manipulative acts and practices; to promote just 
and equitable principles of trade; to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in, securities; to remove impediments to and perfect the mechanisms of 
a free and open market and a national market system; and, in general, 
to protect investors and the public interest.
    Section 16.1(f) of the LLC Agreement provides that the Company, 
NYSE Euronext, NYSE Group and each Member shall take such action as is 
necessary to ensure that the officers, directors, agents, and employees 
of the Company, NYSE Euronext, NYSE Group and such Member who are 
involved in the activities of the Company or the Options Exchange, with 
respect to their activities relating to the Company or the Options 
Exchange, consent in writing to the application to them of Section 
13.2(c) of the LLC Agreement relating to inspection of books and 
records for purposes of oversight pursuant to the Act; Section 16.1(d) 
of the LLC Agreement relating to submission to the jurisdiction of the 
U.S. Federal courts, the SEC and NYSE Amex (in its capacity as an SRO) 
and waiver of certain legal claims; Section 16.1(e) of the LLC 
Agreement relating to the matters described in the immediately 
preceding paragraph; the last sentence of Section 8.1(d)(iv) of the LLC 
Agreement and Section 8.1(m)(i) of the LLC Agreement relating to each 
director's compliance with Federal securities laws and the rules and 
regulations thereunder and cooperation with NYSE Amex pursuant to its 
regulatory authority and with the SEC; Section 8.1(m)(ii) of the LLC 
Agreement relating to NYSE Amex's authority and responsibility to 
eliminate or prevent Regulatory Deficiencies; Section 14.1(i) of the 
LLC Agreement relating to the prompt return of certain confidential 
information to the other Members who disclosed it; as applicable, with 
respect to their activities relating to the Company upon the 
dissolution or termination of the Company; and Section 14.1(j) of the 
LLC Agreement relating to the confidentiality of all Confidential 
Information (as defined below) pertaining to the self-regulatory 
function of NYSE Amex.

Volume-Based Equity Plan \19\
---------------------------------------------------------------------------

    \19\ It is the Exchange's view that the Plan does not constitute 
a proposed rule change within the meaning of Section 19(b)(1) of the 
Act and Rule 19b-4 thereunder.
---------------------------------------------------------------------------

    Pursuant to Section 2.1 of the Members Agreement, for an initial 
period of five (5) years and three (3) months, each Founding Firm will 
have to satisfy certain minimum volume requirements. Under the Plan, 
for each measurement period, the Company will issue Annual Incentive 
Shares. Each Founding Firm will be entitled to receive, for no 
additional consideration, a portion of the Annual Incentive Shares such 
that it dilutes, maintains or increases its equity interest in the 
Company (relative to the other Founding Firms) based on the degree to 
which the Founding Firm has failed to achieve, achieved or exceeded its 
``Individual Target'' during the measurement period. A Founding Firm's 
Individual Target will be its pro rata portion of an aggregate Founding 
Firm target contribution to the annual volume of the Options Exchange. 
This pro rata calculation will be performed once, based on the Founding 
Firm's holdings of Class B Common Interests relative to the other 
Founding Firms at the time the Company is formed and will not change as 
a Founding Firm's equity holdings fluctuate as a result of the Plan. 
The Plan will not affect the equity holdings of NYSE Amex and the Plan 
will not increase or decrease the aggregate equity interest of the 
Founding Firms relative to NYSE Amex.
    The Annual Incentive Shares not allocated to one or more Founding 
Firms by virtue of each such Founding Firm failing to achieve its 
respective Individual Target will be either partially or fully 
reallocated among those Founding Firms that exceed their respective 
Individual Targets.
    The Company will not allocate Annual Incentive Shares to a Founding 
Firm if such allocation would result in the Founding Firm holding 
Common Interests in excess of the 19.9% Maximum Percentage or the 
Alternate Maximum Percentage. Rather, the Company will allocate such 
Annual Incentive Shares at the direction of the affected Founding Firm 
or, if the Founding Firm is prohibited from directing the allocation of 
these Annual Incentive Shares, at the direction of a Supermajority Vote 
of the Board.
    Pursuant to Section 2.2 of the Members Agreement, Annual Incentive 
Shares that are not allocated (or reallocated) as described above will 
be included in a pool of undistributed Annual Incentive Shares. The 
Board will, in its discretion, determine whether and how to dispose of 
this pool of undistributed Annual Incentive Shares; provided that (i) 
NYSE Amex will work in good faith with Founding

[[Page 18611]]

Firms that achieve their respective Individual Targets in determining 
whether and how to distribute this pool and (ii) the Company will be 
obligated to dispose of this pool within eighteen (18) months unless 
otherwise agreed by a Supermajority Vote of the Board.

Confidentiality

    Article XIV of the LLC Agreement contains provisions for the 
protection of ``Confidential Information,'' which is defined in Section 
14.1(a) of the LLC Agreement as any confidential information (i) 
relating to the Company or any Member, or the business, financial 
structure, financial position or financial results, clients or affairs 
of the Company or any Member or (ii) that is provided to any Member or 
the Company or their representatives or to which the Company or any 
Member or their representatives has access as a result of the LLC 
Agreement, activities conducted pursuant to or in connection with the 
LLC Agreement or activities conducted by the Company or on behalf of 
the Company that is either (x) marked as confidential, (y) the 
disclosing party informs the receiving party at or prior to the time of 
disclosure is confidential or (z) should be reasonably understood by 
the receiving party to be confidential. Certain exceptions are provided 
for information that is otherwise publicly available; was previously 
known to the receiving party; was received by the receiving party from 
a source lawfully having possession of such information and the right 
to disclose it; is released or disclosed to the public by the 
disclosing party; or is independently developed by the receiving party. 
When the Company or any Member or its representative directly or 
indirectly receives Confidential Information, or access to it, from 
another person or entity, Section 14.1(b) of the LLC Agreement requires 
that the receiving party will not directly or indirectly (i) disclose 
any of the Confidential Information to any third party except as 
specifically permitted by the LLC Agreement or (ii) use any of the 
Confidential Information for any purpose except as specifically 
permitted by the LLC Agreement or otherwise required to conduct the 
activities contemplated by the LLC Agreement.
    Section 14.1(c) of the LLC Agreement requires the party receiving 
Confidential Information to take all reasonable precautions and 
actions, which must be at least the same precautions and actions as the 
receiving party takes to prevent the disclosure of its own comparable 
confidential information, to prevent the disclosure to third parties of 
the Confidential Information of the disclosing party, or any part of 
it, and to ensure that the receiving party's representatives comply 
with Article XIV of the LLC Agreement.
    Notwithstanding the foregoing, Section 14.1(e) of the LLC Agreement 
provides that a receiving party or its affiliates may provide the 
Confidential Information to those third parties who have a legitimate 
``need to know'' if specifically permitted by the LLC Agreement. Other 
exceptions to non-disclosure requirements are provided in the case of 
(i) information that is required to be filed with any governmental 
authority or SRO, (ii) information that is requested by a governmental 
authority or SRO having regulatory authority over the receiving party 
or its affiliates or (iii) a determination by the receiving party in 
its sole discretion that it is necessary or appropriate to provide such 
Confidential Information to a governmental authority or SRO. Additional 
exceptions are provided for information (a) required by an auditor for 
the purpose of an audit, (b) necessary in connection with any tax 
return, (c) provided to a lender, professional adviser, vendor or 
service provider for a bona fide business purpose (subject to customary 
restrictions on further disclosure or use), (d) provided to a third 
party to which the receiving party sells or offers to sell its Interest 
or any part thereof (if the third party has agreed in writing to be 
bound by confidentiality obligations at least as protective of the 
disclosing party as the provisions of Article XIV of the LLC 
Agreement), or (e) reasonably necessary in connection with the 
enforcement or defense of any rights or remedies under the LLC 
Agreement or arising out of the transactions contemplated thereby or 
the related transaction documents.
    Section 14.1(i) of the LLC Agreement provides that the 
confidentiality obligations in Article XIV of the LLC Agreement will be 
effective from the effective date of said agreement and will continue 
to apply (A) with respect to the Company, after dissolution or 
termination of the Company pursuant to Article XII of the LLC Agreement 
for a period of three (3) years, (B) with respect to any Member, for a 
period of three (3) years after the date on which such Member ceases to 
be a Member of the Company and (C) with respect to NYSE Euronext, for a 
period of three (3) years after the date on which NYSE Amex ceases to 
be a Member of the Company. Section 14.1(i) also contains requirements, 
with exceptions, for the prompt return of Confidential Information to 
the disclosing party upon written request, or the prompt destruction 
(with prior written consent) of such Confidential Information by the 
party that received it, upon the effective date of dissolution or 
termination of the Company.
    Pursuant to Section 14.1(j) of the LLC Agreement, all Confidential 
Information pertaining to the self-regulatory function of NYSE Amex 
(including but not limited to disciplinary matters, trading data or 
information about trading practices and audit information) contained in 
the books and records of the Company shall: (i) Not be made available 
to any persons or entities other than to those officers, directors, 
employees and agents of the Company that have a reasonable need to know 
the contents thereof; (ii) be retained in confidence by the Company and 
its officers, directors, employees and agents; and (iii) not be used 
for any non-regulatory purposes. This provision shall not limit a 
Founding Firm's ability to use its own trading data.
    Section 14.1(k) of the LLC Agreement states that nothing in the LLC 
Agreement shall be interpreted to limit or impede the rights of the SEC 
or NYSE Amex to access and examine confidential information of the 
Company pursuant to U.S. Federal securities laws and the rules and 
regulations promulgated thereunder, or, subject to the notice 
requirements of Section 14.1 of the LLC Agreement, to limit or impede 
the ability of a member of the Board, Member, officer, director, agent 
or employee of a Member or of the Company to disclose confidential 
information of the Company to the SEC or NYSE Amex.

Amendment

    Unless the contrary is otherwise specifically stated in the LLC 
Agreement, the LLC Agreement and the Members Agreement may be amended 
by Supermajority Vote of the Board; provided, that: (i) Section 
8.1(d)(ii) of the LLC Agreement relating to the designation of 
directors by Founding Firms and Article XIV of the LLC Agreement 
relating to confidentiality may not be materially amended, Section 13.8 
of the LLC Agreement relating to restrictions on foreign operations and 
Section 3.1 of the Members Agreement relating to the transfer of 
Interests may not be amended, without the prior written consent of each 
Member; (ii) any amendment that would have a disproportionate, material 
and adverse effect on the rights of one or more Members (other than 
amendments of the type described in clause (iii) below) shall require 
such Member's prior written consent; (iii) any amendment

[[Page 18612]]

that would have a material adverse effect on the rights of the Members 
of a class of Interests (irrespective of whether such amendment has a 
material adverse effect on the rights of NYSE Amex) shall require the 
prior written consent of Members (other than NYSE Amex) representing 
two thirds (\2/3\) of the Interests held by such Members; (iv) any 
amendment that would impose a new and material obligation or liability 
applicable by its terms to any Member or materially increase any 
existing material obligation or liability of any Member shall require 
the prior written consent of such Member and (v) any matter specified 
in the LLC Agreement as subject to agreement by the Members may be 
modified by Supermajority Vote of the Board if so agreed by the 
Members, provided that this clause (v) does not apply to the matters 
addressed in clause (i) above and the application of this clause (v) 
shall nevertheless be subject to the application of clauses (ii), (iii) 
and (iv) above. Notwithstanding any of the foregoing, for so long as 
the Company operates a facility of NYSE Amex or a successor of NYSE 
Amex that is an SRO, any proposed amendment or repeal of any provision 
of the LLC Agreement or Members Agreement shall be submitted to the 
board of directors of NYSE Amex and, if such amendment or repeal is 
required under Section 19 of the Act and the rules promulgated 
thereunder, to be filed with, or filed with and approved by, the SEC 
before such amendment or repeal may be effective, then such amendment 
or repeal shall not be effective until filed with, or filed with and 
approved by, the SEC, as the case may be.

Redactions to the Members Agreement

    Certain information in the Members Agreement has been redacted in 
order to preserve the confidentiality of commercially sensitive 
information. The redacted provisions are limited to (i) numerical 
dollar amounts and percentage thresholds, (ii) commercially sensitive 
terms and provisions related to the calculation of ``Fair Market 
Value'' and (iii) certain competitive information.

Regulation

    NYSE Regulation, Inc. (``NYSE Regulation''), an indirect wholly-
owned subsidiary of NYSE Euronext, and the Exchange entered into a 
regulatory services agreement (an ``RSA'') dated October 1, 2008 
pursuant to which NYSE Regulation performs all of the Exchange's 
regulatory functions on the Exchange's behalf. However, certain of 
these member and market regulatory functions, which include 
surveillance, examination, investigation and related disciplinary 
functions, are performed by FINRA pursuant to a June 14, 2010 RSA among 
FINRA, NYSE Group, Inc., New York Stock Exchange LLC, NYSE Regulation, 
NYSE Arca, Inc. and the Exchange. FINRA and the Exchange have also 
entered into an allocation agreement pursuant to Section 17(d)(1) of 
the Act, and Rule 17d-2 thereunder, whereby FINRA assumed regulatory 
responsibility for specified rules that are common to FINRA and the 
Exchange and for common members. Because the Options Exchange is a 
facility of the Exchange, FINRA performs the applicable regulatory 
functions and responsibilities with respect to activity on or through 
the Options Exchange, including both general regulatory functions, as 
noted above, and targeted regulatory reviews as applicable.
    Pursuant to the RSA between NYSE Regulation and the Exchange, NYSE 
Regulation exercises oversight, on behalf of the Exchange, of FINRA's 
performance of the regulatory functions performed by FINRA as described 
above. NYSE Regulation also has responsibilities with respect to the 
Options Exchange for rule interpretation, regulatory policy and 
participation in rule development. NYSE Regulation periodically reports 
on regulatory matters to the board of directors of the Exchange, which 
has appointed a Chief Regulatory Officer (``CRO'') who is also the 
Chief Executive Officer of NYSE Regulation. The Exchange does not have 
a regulatory oversight committee of the board, but the CRO is also an 
officer of the Exchange, and in that capacity is charged with reporting 
on regulatory matters to the Exchange board. Notwithstanding the 
foregoing, the Exchange will still retain ultimate legal responsibility 
for the performance of all of its regulatory obligations as an SRO, 
including with respect to the Options Exchange, as well as the ability 
to take action as required to meet that responsibility.
    The board of directors of the Exchange currently consists of five 
(5) directors, a majority of whom are required to be individuals 
domiciled in the U.S. who are classified as independent members of the 
NYSE Euronext board of directors. At least twenty percent of the 
Exchange's directors (currently one individual) must be ``non-
affiliated'' directors who are not members of the NYSE Euronext board 
of directors and need not be independent under the independence 
requirements of NYSE Euronext. Any required non-affiliated directors of 
the Exchange are nominated and elected through a process designed to 
ensure fair representation of members of the Exchange on the Exchange's 
board. The Exchange does not have any committees of its board that 
perform functions relating to audit, governance and compensation. 
Instead, such functions are performed for the Exchange by related 
committees of the NYSE Euronext board of directors that are comprised 
solely of NYSE Euronext directors who meet the independence 
requirements of NYSE Euronext.
    Decisions on the listing of options that will trade on the Options 
Exchange will be made by the business side at the Exchange in 
accordance with the Exchange's rules. The business side will also 
continue to be responsible for new product development, participation 
in rule development, strategic analysis, administering Exchange 
programs, business development and client outreach.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) \20\ of the Act,\21\ in general, and furthers the 
objectives of Section 6(b)(1) \22\ of the Act, which requires a 
national securities exchange to be so organized and have the capacity 
to carry out the purposes of the Act and to comply, and to enforce 
compliance by its members and persons associated with its members, with 
the provisions of the Act. The proposed rule change does not modify the 
Option Exchange's trading or compliance rules and preserves the 
existing mechanisms for ensuring the Exchange's compliance with the 
Act. The structure of the proposed joint venture maintains NYSE Amex's 
regulatory control over the Options Exchange and includes provisions 
specifically designed to ensure the independence of its self-regulatory 
function and to ensure that any regulatory determinations by NYSE Amex, 
as SRO, are controlling with respect to the actions and decisions of 
the Options Exchange.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78.
    \22\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    Additionally, the LLC Agreement requires the Company, its Members 
and its directors to comply with the Federal securities laws and the 
rules and regulations promulgated thereunder and to engage in conduct 
that fosters and does not interfere with the Exchange's or the 
Company's ability to carry out its respective responsibilities under 
the Act.
    The Exchange believes the proposed rule change is also consistent 
with, and

[[Page 18613]]

furthers the objectives of Section 6(b)(5) \23\ of the Act, in that it 
preserves all of NYSE Amex's existing rules and mechanisms to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Furthermore, by establishing a new corporate structure for the 
Company that includes new owners and a new governance structure, the 
Exchange believes the proposed rule change will increases [sic] the 
breadth of representation in the governance of the Options Exchange to 
include buy side, principal trading and sell side representatives. The 
increased representation of different market constituencies in the 
governance of the Options Exchange will foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, will contribute to the identification of opportunities for 
innovation and will enhance competition.
    Finally, the Exchange believes that the proposed rule change 
accomplishes the goals of Section 6(b) of the Act by improving the 
quality and depth of the listed options market. Specifically, with the 
approval of this proposed rule change, Members will have an incentive, 
through equity ownership, to offer an options market that provides 
products, services and fees that are competitive with those of other 
options markets. Moreover, given the substantial options experience and 
resources of the Members, the approval of this proposed rule change 
will provide the opportunity for enhanced liquidity and price discovery 
for the Options Exchange, thereby creating the opportunity for better-
priced executions for options investors. A more competitive marketplace 
within the Options Exchange will also foster increased competition 
across all options markets with concomitant benefits to all U.S. 
options investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEAmex-2011-18 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEAmex-2011-18. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of the filing will also be 
available for inspection and copying at the Exchange's principal 
office. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
publicly available. All submissions should refer to File Number SR-
NYSEAmex-2011-18 and should be submitted on or before April 25, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-7935 Filed 4-1-11; 8:45 am]
BILLING CODE 8011-01-P


