EXHIBIT 10.17a
CASH SUBORDINATED LOAN AGREEMENT
This Cash Subordinated Loan Agreement (the "Agreement") is effective as
of the 8th day of September, 1997 by and between Xxxx X. Xxxxxxxxx (the
"Lender") and Alaron Trading Corporation (the "Borrower"), who mutually agree as
follows:
1. (a) The term "Designated Self-Regulatory
Organization" or DSRO" shall mean the Exchange(s)
and/or other Self-Regulatory Organizations which is
(are) a party to the Joint Audit Agreement and which
has (have) been designated by the Joint Audit
Committee as the Borrower's DSRO. The Borrower's DSRO
is subject to change from time to time at the Joint
Audit Committee's discretion.
(b) The term "Commission" shall mean the Commodity
Futures Trading Commission.
(c) The term "Capital Requirement" shall mean the rules,
regulations, and requirements of the Designated
Self-Regulatory Organization which were adopted
pursuant to CFTC Regulations 1.17 and 1.52.
(d) The term "CFTC Regulations" shall mean the Commodity
Futures Trading Commission's Minimum Financial
Regulations.
(e) The term "Adjusted Net Capital" shall mean adjusted
net capital as defined in Commodity Futures Trading
Commission Regulation
1.17(c)(5).
(f) The term "Subordination Agreement" shall mean either
a subordinated loan agreement or a secured demand
note agreement, as these terms are defined in
Commodity Futures Trading Commission Regulation
1.17(h)(1).
2. Lender hereby agrees to lend the sum of One Million Dollars
($1,000,000) to Borrower, and Borrower agrees to borrow the said sum from Lender
upon the terms and conditions set forth herein.
3. Subject to the terms and conditions hereinafter set forth, the
Borrower will repay the principal amount due plus interest thereon from the date
hereof to the Maturity
Date at the rate of thirteen percent (13%) per annum (the "Indebtedness") on
September 8, 1998 (the "Maturity Date").
4. The Lender hereby subordinates any right to receive any payment with
respect to this Agreement, together with accrued interest or compensation, to
the prior payment or provision for payment in full of all claims of all present
and future creditors of the Borrower arising out of any matter occurring prior
to the Maturity Date, except for claims which are the subject of subordination
agreements which rank on the same priority as or are junior to the claim of the
Lender under this Agreement.
5. The proceeds of this Agreement shall be used and dealt with by the
Borrower as part of its capital and shall be subject to the risks of its
business.
6. The Borrower shall have the right to deposit any cash proceeds of
this Agreement in an account or accounts in its own name in any bank or trust
company.
7. Borrower, at its option, but not at the option of Lender, may make a
payment of all or any portion of the Indebtedness prior to the scheduled
Maturity Date (hereinafter referred to as a "Prepayment"). No prepayment may be
made before the expiration of one year from the date this Agreement becomes
effective, unless it is a Special Prepayment made pursuant to paragraph 8
hereof. No Prepayment shall be made if, after giving effect thereto (and to all
payments of payment obligations under any other Subordination Agreements then
outstanding, the maturity or accelerated maturities of which are scheduled to
fall due within six months after the date such Prepayment is to occur pursuant
to this provision, or on or prior to the date on which the payment obligation
with respect to such Prepayment is scheduled to mature disregarding this
provision, whichever date is earlier) without reference to any projected profit
or loss of the Borrower, the Adjusted Net Capital of the Borrower is less than
the amount required by CFTC Regulation 1.17(h)(2)(vii)(A) or, if the Borrower is
a securities broker or dealer, the amount of net capital specified in Rule
15c3-1d(b)(7) of the Regulations of the Securities and Exchange Commission [17
C.F.R. 240.15c3-d(b)(7)], if it is greater.
8. Borrower, at its option, but not at the option of Lender, may make a
payment of all or any portion of the Indebtedness prior to the scheduled
Maturity Date (hereinafter referred to as a "Special Prepayment") if the written
consent of the Designated Self-Regulatory Organization is first obtained.
Provided, however, that no Special Prepayment shall be made if:
(a) After giving effect thereto (and to all payments of
payment obligations under any other Subordination
Agreements then outstanding, the maturities or
accelerated maturities of which are
scheduled to fall due within six months after the
date such Special Prepayment is to occur pursuant to
this provision or on or prior to the date on which
the payment obligation in respect to such Special
Prepayment is scheduled to mature disregarding this
provision, whichever date is earlier) without
reference to any projected profit or loss of the
Borrower, the Adjusted Net Capital of the Borrower is
less than the amount required by CFTC Regulation
1.17(h)(2)(vii)(B) or, if the Borrower is a
securities broker or dealer, the amount of net
capital specified in Rule 15c3-d(c)(5)(ii) of the
regulations of the Securities and Exchange Commission
[17 C.F.R. 240. 15c3-1d(c)(5)(ii)], if it is greater;
or
(b) Pretax losses during the latest three month period
were greater than 15% of current excess Adjusted Net
Capital.
9. (a) The payment obligation of the Borrower in respect
to this Agreement shall be suspended and shall not
mature if, after giving effect to payment of such
payment obligation (and to all payments of payment
obligations of the Borrower under any other
Subordination Agreements then outstanding which are
scheduled to mature on or before such payment
obligation), the Adjusted Net Capital of the Borrower
would be less than the amount required by CFTC
Regulation 1.17(h)(2)(viii) or, if the Borrower is a
securities broker or dealer, the amount of net
capital specified in Rule 15c3- 1d(b)(8)(i) of the
Regulations of the Securities and Exchange Commission
[17 C.F.R. 240.15c3-1d(b)(8)(i)], if it is greater.
Provided that, if the payment obligation of the
Borrower hereunder does not mature and is suspended
as a result of the requirements of this paragraph for
a period of not less than six months, the Borrower
shall then commence the rapid and orderly liquidation
of its entire business, but the right of Lender to
receive payment, together with accrued interest or
compensation, shall remain subordinate as required by
the provisions of this Agreement.
(b) In the event the Borrower is required to commence a
rapid and orderly liquidation, as permitted in
paragraph 9(a), the date on which the liquidation
commences shall be the maturity date for any
Subordination Agreement of the Borrower then
outstanding, but the rights of the respective lenders
to receive payment, together with accrued interest or
compensation, shall remain subordinate as required by
the provisions of such agreements.
10. Subject to the provisions of paragraph 9 of this Agreement, Lender
may, upon prior written notice to the Borrower and the Designated
Self-Regulatory Organization and, if required, the Commission, given not earlier
than six months after the effective date of this Agreement, accelerate the date
on which the payment obligation of the Borrower, together with accrued interest
or compensation, is scheduled to mature to a date not earlier than six months
after giving of such notice, but the rights of the Lender to receive payment
together with accrued interest or compensation, shall remain subordinate as
required by the provisions of this Agreement.
11. Notwithstanding the provisions of paragraph 9 of this Agreement,
the payment obligation of the Borrower with respect to this Agreement, together
with accrued interest and compensation, shall mature in the event of any
receivership, insolvency, liquidation pursuant to the Securities Investor
Protection Act of 1970 or otherwise, bankruptcy, assignment for the benefit of
creditors, reorganization whether or not pursuant to the bankruptcy laws, or any
other marshaling of the assets and liabilities of the Borrower, but the right of
the Lender to receive payment, together with accrued interest or compensation,
shall remain subordinate as required by the provisions of this Agreement.
12. The Borrower shall immediately notify the Designated
Self-Regulatory Organization and the Commission if, after giving effect to all
payments of payment obligations under Subordination Agreements then outstanding
which are due or mature within the following six months without reference to any
projected profit or loss of the Borrower, its Adjusted Net Capital would be less
than the amount required by CFTC Regulation 1.17(h)(3)(ii) or, if Borrower is a
securities broker or dealer, the amount of net capital specified in Rule
15c3-1d(c)(Z) of the Regulations of the Securities and Exchange Commission [17
C.F.R. 240.15c-1d(c)(Z)], if it is greater.
13. Neither this Agreement nor any note or other instrument made
hereunder is entered into in reliance upon the standing of the Borrower as a
member organization of any commodity exchange or securities exchange or upon any
such exchange's surveillance of the Borrower or its capital position. The Lender
is not relying upon any such exchange to provide any information concerning or
relating to the Borrower. No such exchange has a responsibility to disclose to
the Lender any information concerning or relating to the Borrower which it may
have now or at any future time. Neither any such exchange nor any officer or
employee of any such exchange shall be liable to the Lender with respect to this
Agreement, the Indebtedness, the repayment thereof, any interest or compensation
thereon or any damages resulting from the breach of this Agreement. Neither the
Designated Self-Regulatory Organization nor the Commission is a guarantor of
this Agreement.
14. This Agreement shall be binding upon the Lender and the Borrower
and their respective heirs, executors, administrators, successors and assigns.
15. Any note or other written instrument evidencing the Indebtedness
shall bear on its face an appropriate legend stating that such note or
instrument is issued subject to the provisions of this Agreement, which shall be
adequately referred to and incorporated by reference herein.
16. This Agreement shall not be subject to cancellation by either
party, no payment shall be made with respect thereto and this Agreement shall
not be terminated, rescinded or modified by mutual consent or otherwise if the
effect thereof would be inconsistent with the Capital Requirements or, if
applicable, the CFTC Regulations.
17. This Agreement supersedes all prior agreements of the parties with
respect to the Indebtedness.
IN WITNESS WHEREOF, the parties have set their hands this 8th day of
September, 1997.
/s/ Xxxxxx Xxxxxxxxx 9/8/97
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Borrower - Alaron Trading Corporation
/s/ Xxxx X. Xxxxxxxxx 9/8/97
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Lender - Xxxx X. Xxxxxxxxx Date
FIRST AMENDMENT TO
CASH SUBORDINATED LOAN AGREEMENT
DATED SEPTEMBER 8, 1997
BY AND BETWEEN
XXXX X. XXXXXXXXX, LENDER
AND
ALARON TRADING CORPORATION, BORROWER
This document amends the Cash Subordinated Loan Agreement effective as
of the 8th day of September, 1997 by and between Xxxx X. Xxxxxxxxx (the
"Lender") and Alaron Trading Corporation (the "Borrower") on the 28th day of
August, 1998. The parties hereto mutually agree as follows:
RECITALS
WHEREAS, Lender loaned Borrower sum of One Million & No/100 dollars
($1,000,000.00) pursuant to the terms and conditions of the Cash Subordinated
Loan Agreement dated September 8, 1997 entered into between the parties.
WHEREAS, subject to the terms and conditions set forth in the September
8, 1997 Cash Subordinated Loan Agreement, Borrower agreed to repay the principal
amount plus interest thereon from September 8, 1997, to the Maturity Date at the
rate of Thirteen (13) percent per annum on September 8, 1998 (the "Maturity
Date").
WHEREAS, the parties desire to amend said Maturity Date (September 8,
1997) to September 8, 1999, extending said Date an additional year.
NOW THEREFORE, the parties agree as follows:
AGREEMENT
1) That Borrower agrees to repay to Lender the principal amount of One Million &
No/100 Dollars ($1,000,000.00) plus interest thereon at the rate of Thirteen
(13) percent per annum on September 8, 1999.
2) This Agreement amends only paragraph three (3) of the prior agreement dated
September 8, 197 relating to the Maturity Date. The remainder of the terms of
the prior agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have set their hands this 13th day of
August, 1998.
/s/ Xxxxxx Xxxxxxxxx 8/13/98
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Borrower - Alaron Trading Corporation
/s/ Xxxx X. Xxxxxxxxx 8/13/98
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Lender - Xxxx X. Xxxxxxxxx Date
SUBORDINATION AGREEMENT
INFORMATION STATEMENT
Name and Address of Lender: Xxxx X. Xxxxxxxxx
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000 Xxxx Xxxxxxxxxx Xxxxxxxxx
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Xxxxxxx, Xxxxxxxx 00000
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Business relationship of lender to clearing member:
X Officer Partner Stockholder Other(explain)
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Did the clearing member carry funds or securities for the lender at or about the
time the proposed subordination agreement was filed?
Yes No X
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