Consent to Change in Control and First Amendment to Clearing Agreement
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THIS CONSENT TO CHANGE IN CONTROL AND FIRST AMENDMENT TO CLEARING
AGREEMENT dated as of September 18, 2001 (this "Amendment"), by and between
FIRST CLEARING CORPORATION ("Clearing Firm"); OLYMPIC CASCADE FINANCIAL
CORPORATION ("Borrower"); and NATIONAL SECURITIES CORPORATION ("Introducing
Firm"), recites and provides.
Recitals.
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1. Clearing Firm and Introducing Firm entered into a Clearing Agreement
made as of August 23, 2001 (the "Clearing Agreement"). Capitalized terms used
herein and not otherwise defined shall have the meanings given them in the
Clearing Agreement. References to Articles and Sections shall be to Articles and
Sections of the Clearing Agreement.
2. Clearing Firm and Introducing Firm subsequently discovered a mutual
mistake in the last sentence of subparagraph (xii) of Section K of Article XVII
and now desire to correct such mistake as hereinafter provided.
3. Moreover, the covenant styled "Change In Control" of the Promissory
Note prohibits, in pertinent part, the sale, transfer or exchange of more than
fifty percent (50%) of the outstanding stock or voting power of or in either
Borrower or Introducing Firm in a single transaction or a series of transactions
or a material change in the management of Borrower or Introducing Firm, the
breach of such covenant being an Event of Default as defined in the Promissory
Note.
4. By Section (7) of Article XV, an Event of Default under the Promissory
Note is an Event of Default under the Clearing Agreement.
5. Borrower has proposed a "Change in Control" in Borrower as described
in the Summary of Proposed Transactions with Lonpac Investment LLC and the
Memorandum to National Association of Securities Dealers, Inc. styled
"Application for Change of Control of National Securities Corporation," copies
of which summary and memorandum are marked Exhibit A and Exhibit B,
respectively, and attached hereto as part hereof (the "Proposed Change in
Control").
6. In its capacity as lender under the Promissory Note, Clearing Firm is
willing to consent to the Proposed Change in Control in exchange for the
correction of the above mistake in the Clearing Agreement, all as hereinafter
provided.
NOW, THEREFORE, for and in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Clearing Firm and Introducing Firm
agree as follows.
1. The last sentence of subparagraph (ii) of Section K of Article XVII is
hereby deleted and the following sentence is substituted therefor:
Notwithstanding the foregoing, if the loan evidenced by the
Promissory Note has been paid in full solely by the application of
the provisions of the paragraph of the Promissory Note styled
"FORGIVENESS OF OBLIGATIONS" and there is no Event of Default
under this Agreement when such loan is so paid in full, the
Clearing Firm shall waive its right to receive any early
termination fees under this Agreement which are payable after the
date such loan is so paid in full.
2. Clearing Firm in its capacity as lender under the Promissory Note
consents to the Proposed Change in Control; provided, however, that the giving
of such consent shall not be deemed to be (a) the consent of the Clearing Firm
to any other transaction or event for which consent is required under the
Clearing Agreement, the Promissory Note or any of the other Loan Documents (as
defined in the Promissory Note) or (b) the waiver by the Clearing Firm of any of
its rights under the Clearing Agreement, the Promissory Note or any of such
other Loan Documents.
3. Except as expressly amended by this Amendment, the Clearing Firm and
Introducing Firm ratify and confirm the Clearing Agreement and agree that the
Clearing Agreement shall remain in full force and effect in accordance with its
terms.
4. Borrower hereby ratifies and confirms the Promissory Note and agrees
that the Promissory Note shall remain in full force and effect in accordance
with its terms.
WITNESS the following signatures.
FIRST CLEARING CORPORATION
By:__________________________________
Name:____________________________
Title:___________________________
OLYMPIC CASCADE FINANCIAL CORPORATION
By:_________________________________
Name:____________________________
Title:___________________________
NATIONAL SECURITIES CORPORATION
By:_________________________________
Name:____________________________
Title:___________________________
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