Second Amendment to Clearing Agreement
First Amendment to Promissory Note
THIS CONSENT AND AMENDMENT TO CERTAIN AGREEMENTS dated as of December 13,
2001 (this "Amendment"), by and among 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, as amended by Consent to Change in Control and First
Amendment to Clearing Agreement dated as of September 18, 2001, (as so amended,
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, unless otherwise indicated.
2. Clearing Firm and Borrower executed a Promissory Note made as of August
23, 2001 in the amount of Six Million and No/100 Dollars ($6,000,000.00) or such
sum as may be advanced and outstanding from time to time.
3. 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. Borrower has proposed a "Change in Control" whereby Borrower proposes
entering into a series of transactions substantially under the terms
contemplated by the Term Sheet styled "Acquisition of Interest in Olympic
Cascade Financial Corporation by Xxxx Xxxxxxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxx
(or entities controlled by them), dated as of December 6, 2001" a copy of which
is attached hereto as part hereof as Exhibit A, (the "Proposed Change of
Control"), provided that the price of such transaction has been changed to $1.50
per share.
5. In its capacity as lender under the Promissory Note, Clearing Firm is
willing to consent to the Proposed Change of Control and to reduce the
stockholders equity covenant obligation, in exchange for a modification and
extension of the Early Termination Fee.
6. Clearing Firm, Borrower and Introducing Firm now desire that the
Promissory Note and the Clearing Agreement be amended and the Proposed Change of
Control be consented to by this Amendment 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, Borrower and Introducing Firm
agree as follows.
1. Recitals. The foregoing recitals are confirmed by the parties as true
and correct, and are incorporated herein by this reference. The recitals are a
substantive, contractual part of this Amendment.
2. Promissory Note. The covenant titled "Shareholder Equity" is hereby
deleted in its entirety and the following is substituted therefor:
"Shareholder Equity. Borrower shall at all times maintain not less than Two
Million and No/100 Dollars ($2,000,000.00) of shareholder equity."
3. Consent to Change in Control. 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. Clearing Firm hereby
revokes all prior consent given to either Introducing Firm or Borrower to a
Change in Control.
4. Early Termination Fees. The table of early termination fees at Article
XVII, Section K(ii) is hereby deleted and the following table of early
termination fees is substituted therefor:
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Termination in Term Year Early Termination Fee
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1 $2,000,000
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2 $2,000,000
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3 $1,600,000
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4 $1,200,000
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5 $ 800,000
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6 $ 400,000
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5. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
6. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
7. Successors and Assigns. The terms and conditions of this Amendment shall
be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
8. Amendments. Any amendment to this Amendment, the Promissory Note or the
Clearing Agreement must be in writing, must be executed and delivered by
Clearing Firm and Introducing Firm and must expressly refer to this Amendment.
9. Headings. The headings in this Amendment are for the convenience of
reference only and shall in no way affect the interpretation or construction of
this Amendment.
10. Ratification and Confirmation of the Agreement. Clearing Firm, Borrower
and Introducing Firm ratify and confirm the Agreement and agree that the
Agreement shall remain in full force and effect in accordance with its terms.
11. Ratification and Confirmation of the Clearing Agreement. Except as
expressly amended by this Amendment, 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.
12. Ratification and Confirmation of the Promissory Note. 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.
13. Effectiveness. This Amendment to be effective immediately before the
effectiveness of the Proposed Change in Control.
WITNESS the following signatures.
FIRST CLEARING CORPORATION
By:_________________________________
Name:__________________________
Title:_________________________
OLYMPIC CASCADE FINANCIAL CORPORATION
By:_________________________________
Name:__________________________
Title:_________________________
NATIONAL SECURITIES CORPORATION
By:_________________________________
Name:__________________________
Title:_________________________
