Document:

Long-Term Incentive Plan

 Exhibit 10.49 
  

  
 FCSTONE GROUP, INC. 
  
 Long-Term Incentive Plan 
  
 Progress Report 
  
 September 30, 2003

  
 Riley, Dettmann & Kelsey,
LLC 
 11900 Wayzata Boulevard – Suite 104 
 Minnetonka, MN 55305 
  

	
	EXECUTIVE SUMMARY

  
 Objective

  
 To address the Board’s concern regarding the disposition of the
Plan in the event of a termination of the Plan prior to the conclusion of the Plan Life Cycle of five years. 
  
 Remedy 
  

	 	•	Provide specific wording in the Plan Document under Plan Termination to include the following: 

  

	 	    	“If the plan is terminated before the completion of the Plan Life Cycle (5 years), an award will be made immediately succeeding the plan termination. The award will be
calculated on a pro-rated basis using the level of performance attained at the time of the termination and the time the plan was in effect.” 

  

	 	•	Include in the plan award schedules covering a plan termination after years 1, 2, 3, 4, and 5 (see Pages 2-6). 

  

 - 1 - 

	
	 LONG-TERM INCENTIVE PLAN
  

AWARD SCHEDULE YEAR 1

  

													
	 	  	 	Beginning Equity = $34,500,000	 	 	 	Total Payroll = $940,200	 
					
	 	  	 1-Year
 End Class A Equity

	  	 Award Percentage
 of Base Salary

	 	 	 Total
 Award

	  	 % of Increase
 in Equity

	 
	 11% ROE Threshold
	  	$	38,300,000	  	10.0	%	 	$	94,020	  	2.5	%
	 	  	$	38,368,000	  	11.2	%	 	$	105,302	  	2.7	%
	 	  	$	38,436,000	  	12.4	%	 	$	116,585	  	3.0	%
	 	  	$	38,504,000	  	13.6	%	 	$	127,867	  	3.2	%
	 	  	$	38,572,000	  	14.8	%	 	$	139,150	  	3.4	%
	 	  	$	38,640,000	  	16.0	%	 	$	150,432	  	3.6	%
	 	  	$	38,708,000	  	17.2	%	 	$	161,714	  	3.8	%
	 	  	$	38,776,000	  	18.4	%	 	$	172,997	  	4.0	%
	 	  	$	38,844,000	  	19.6	%	 	$	184,279	  	4.2	%
	 	  	$	38,912,000	  	20.8	%	 	$	195,562	  	4.4	%
	 	  	$	38,980,000	  	22.0	%	 	$	206,844	  	4.6	%
	 	  	$	39,048,000	  	23.2	%	 	$	218,126	  	4.8	%
	 	  	$	39,116,000	  	24.4	%	 	$	229,409	  	5.0	%
	 	  	$	39,184,000	  	25.6	%	 	$	240,691	  	5.1	%
	 	  	$	39,252,000	  	26.8	%	 	$	251,974	  	5.3	%
	 	  	$	39,320,000	  	28.0	%	 	$	263,256	  	5.5	%
	 	  	$	39,388,000	  	29.2	%	 	$	274,538	  	5.6	%
	 	  	$	39,456,0000	  	30.4	%	 	$	285,821	  	5.8	%
	 	  	$	39,524,000	  	31.6	%	 	$	297,103	  	5.9	%
	 	  	$	39,592,000	  	32.8	%	 	$	308,386	  	6.1	%
	 	  	$	39,660,000	  	34.0	%	 	$	319,668	  	6.2	%
	 	  	$	39,728,000	  	35.2	%	 	$	330,950	  	6.3	%
	 	  	$	39,796,000	  	36.4/	%	 	$	342,233	  	6.5	%
	 	  	$	39,864,000	  	37.6	%	 	$	353,515	  	6.6	%
	 	  	$	39,932,000	  	38.8	%	 	$	364,798	  	6.7	%
	 16% ROE Goal
	  	$	40,000,000	  	40.0	%	 	$	376,080	  	6.8	%

  

 - 2 - 

	
	 LONG-TERM INCENTIVE PLAN
  

AWARD SCHEDULE YEAR 2

  

													
	 	  	 	Beginning Equity = $34,500,000	 	 	 	Total Payroll = $940,200	 
					
	 	  	 2-Year
 End Class A Equity

	  	 Award Percentage
 of Base Salary

	 	 	 Total
 Award

	  	 % of Increase
 in Equity

	 
	 11% ROE Threshold
	  	$	42,500,000	  	20.0	%	 	$	188,040	  	2.4	%
	 	  	$	42,656,000	  	22.4	%	 	$	210,605	  	2.6	%
	 	  	$	42,812,000	  	24.8	%	 	$	233,170	  	2.8	%
	 	  	$	42,968,000	  	27.2	%	 	$	255,734	  	3.0	%
	 	  	$	43,124,000	  	29.6	%	 	$	278,299	  	3.2	%
	 	  	$	43,280,000	  	32.0	%	 	$	300,864	  	3.4	%
	 	  	$	43,436,000	  	34.4	%	 	$	323,429	  	3.6	%
	 	  	$	43,592,000	  	36.8	%	 	$	345,994	  	3.8	%
	 	  	$	43,748,000	  	39.2	%	 	$	368,558	  	4.0	%
	 	  	$	43,904,000	  	41.6	%	 	$	391,123	  	4.2	%
	 	  	$	44,060,000	  	44.0	%	 	$	413,688	  	4.3	%
	 	  	$	44,216,000	  	46.4	%	 	$	436,253	  	4.5	%
	 	  	$	44,372,000	  	48.8	%	 	$	458,818	  	4.6	%
	 	  	$	44,528,000	  	51.2	%	 	$	481,382	  	4.8	%
	 	  	$	44,684,000	  	53.6	%	 	$	503,947	  	4.9	%
	 	  	$	44,840,000	  	56.0	%	 	$	526,512	  	5.1	%
	 	  	$	44,996,000	  	58.4	%	 	$	549,077	  	5.2	%
	 	  	$	45,152,000	  	60.8	%	 	$	571,642	  	5.4	%
	 	  	$	45,308,000	  	63.2	%	 	$	594,206	  	5.5	%
	 	  	$	45,464,000	  	65.6	%	 	$	616,771	  	5.6	%
	 	  	$	45,620,000	  	68.0	%	 	$	639,336	  	5.7	%
	 	  	$	45,776,000	  	70.4	%	 	$	661,901	  	5.9	%
	 	  	$	45,932,000	  	72.8	%	 	$	684,466	  	6.0	%
	 	  	$	46,088,000	  	75.2	%	 	$	707,030	  	6.1	%
	 	  	$	46,244,000	  	77.6	%	 	$	729,595	  	6.2	%
	 16% ROE Goal
	  	$	46,400,000	  	80.0	%	 	$	752,160	  	6.3	%

  

 - 3 - 

	
	 LONG-TERM INCENTIVE PLAN
 AWARD SCHEDULE YEAR 3

  

													
	 	  	 	Beginning Equity = $34,500,000	 	 	 	Total Payroll = $940,200	 
					
	 	  	 3-Year
 End Class A Equity

	  	 Award Percentage
 of Base Salary

	 	 	 Total
 Award

	  	 % of Increase
 in Equity

	 
	 11% ROE Threshold
	  	$	47,200,000	  	30.0	%	 	$	282,060	  	2.2	%
	 	  	$	47,468,000	  	33.6	%	 	$	315.907	  	2.4	%
	 	  	$	47,736,000	  	37.2	%	 	$	349,754	  	2.6	%
	 	  	$	48,004,000	  	40.8	%	 	$	383,602	  	2.8	%
	 	  	$	48,272,000	  	44.4	%	 	$	417,449	  	3.0	%
	 	  	$	48,540,000	  	48.0	%	 	$	451,296	  	3.2	%
	 	  	$	48,808,000	  	51.6	%	 	$	485,143	  	3.4	%
	 	  	$	49,076,000	  	55.2	%	 	$	518,990	  	3.6	%
	 	  	$	49,344,000	  	58.8	%	 	$	552,838	  	3.7	%
	 	  	$	49,612,000	  	62.4	%	 	$	586,685	  	3.9	%
	 	  	$	49,880,000	  	66.0	%	 	$	620,532	  	4.0	%
	 	  	$	50,148,000	  	69.6	%	 	$	654,379	  	4.2	%
	 	  	$	50,416,000	  	73.2	%	 	$	688,226	  	4.3	%
	 	  	$	50,684,000	  	76.8	%	 	$	722,074	  	4.5	%
	 	  	$	50,952,000	  	80.4	%	 	$	755,921	  	4.6	%
	 	  	$	51,220,000	  	84.0	%	 	$	789,768	  	4.7	%
	 	  	$	51,488,000	  	87.6	%	 	$	823,615	  	4.8	%
	 	  	$	51,756,000	  	91.2	%	 	$	857,462	  	5.0	%
	 	  	$	52,024,000	  	94.8	%	 	$	891,310	  	5.1	%
	 	  	$	52,292,000	  	98.4	%	 	$	925,157	  	5.2	%
	 	  	$	52,560,000	  	102.0	%	 	$	959,004	  	5.3	%
	 	  	$	52,828,000	  	105.6	%	 	$	992,851	  	5.4	%
	 	  	$	53,096,000	  	109.2	%	 	$	1,026,698	  	5.5	%
	 	  	$	53,364,000	  	112.8	%	 	$	1,060,546	  	5.6	%
	 	  	$	53,632,000	  	116.4	%	 	$	1,094,393	  	5.7	%
	 16% ROE Goal
	  	$	53,900,000	  	120.0	%	 	$	1,128,240	  	5.8	%

  

 - 4 - 

	
	 LONG-TERM INCENTIVE PLAN
  

AWARD SCHEDULE YEAR 4

  

													
	 	  	 	Beginning Equity = $34,500,000	 	 	 	Total Payroll = $940,200	 
					
	 	  	 4-Year
 End Class A Equity

	  	 Award Percentage
 of Base Salary

	 	 	 Total
 Award

	  	 % of Increase
 in Equity

	 
	 11% ROE Threshold
	  	$	52,400,000	  	40.0	%	 	$	376,080	  	2.1	%
	 	  	$	52,804,000	  	44.8	%	 	$	421,210	  	2.3	%
	 	  	$	53,208,000	  	49.6	%	 	$	466,339	  	2.5	%
	 	  	$	53,612,000	  	54.4	%	 	$	511,469	  	2.7	%
	 	  	$	54,016,000	  	59.2	%	 	$	556,598	  	2.9	%
	 	  	$	54,420,000	  	64.0	%	 	$	601,728	  	3.0	%
	 	  	$	54,824,000	  	68.8	%	 	$	646,858	  	3.2	%
	 	  	$	55,228,000	  	73.6	%	 	$	691,987	  	3.3	%
	 	  	$	55,632,000	  	78.4	%	 	$	737,117	  	3.5	%
	 	  	$	56,036,000	  	83.2	%	 	$	782,246	  	3.6	%
	 	  	$	56,440,000	  	88.0	%	 	$	827,376	  	3.8	%
	 	  	$	56,844,000	  	92.8	%	 	$	872,506	  	3.9	%
	 	  	$	57,248,000	  	97.6	%	 	$	917,635	  	4.0	%
	 	  	$	57,652,000	  	102.4	%	 	$	962,765	  	4.2	%
	 	  	$	58,056,000	  	107.2	%	 	$	1,007,894	  	4.3	%
	 	  	$	58,460,000	  	112.0	%	 	$	1,053,024	  	4.4	%
	 	  	$	58,864,000	  	116.8	%	 	$	1,098,154	  	4.5	%
	 	  	$	59,268,000	  	121.6	%	 	$	1,143,283	  	4.6	%
	 	  	$	59,672,000	  	126.4	%	 	$	1,188,413	  	4.7	%
	 	  	$	60,076,000	  	131.2	%	 	$	1,233,542	  	4.8	%
	 	  	$	60,480,000	  	136.0	%	 	$	1,278,672	  	4.9	%
	 	  	$	60,884,000	  	140.8	%	 	$	1,323,802	  	5.0	%
	 	  	$	61,288,000	  	145.6	%	 	$	1,368,931	  	5.1	%
	 	  	$	61,692,000	  	150.4	%	 	$	1,414,061	  	5.2	%
	 	  	$	62,096,000	  	155.2	%	 	$	1,459,190	  	5.3	%
	 16% ROE Goal
	  	$	62,500,000	  	160.0	%	 	$	1,504,320	  	5.4	%

  

 - 5 - 

	
	 LONG-TERM INCENTIVE PLAN
  

AWARD SCHEDULE YEAR 5

  

													
	 	  	 	Beginning Equity = $34,500,000	 	 	 	Total Payroll = $940,200	 
					
	 	  	 5-Year
 End Class A Equity

	  	 Award Percentage
 of Base Salary

	 	 	 Total
 Award

	  	 % of Increase
 in Equity

	 
	 11% ROE Threshold
	  	$	58,200,000	  	50.0	%	 	$	470,100	  	2.0	%
	 	  	$	58,772,000	  	56.0	%	 	$	526,512	  	2.2	%
	 	  	$	59,344,000	  	62.0	%	 	$	582,924	  	2.3	%
	 	  	$	59,916,000	  	68.0	%	 	$	639,336	  	2.5	%
	 	  	$	60,488,000	  	74.0	%	 	$	695,748	  	2.7	%
	 	  	$	61,060,000	  	80.0	%	 	$	752,160	  	2.8	%
	 	  	$	61,632,000	  	86.0	%	 	$	808,572	  	3.0	%
	 	  	$	62,204,000	  	92.0	%	 	$	864,984	  	3.1	%
	 	  	$	62,776,000	  	98.0	%	 	$	921,396	  	3.3	%
	 	  	$	63,348,000	  	104.0	%	 	$	977,808	  	3.4	%
	 	  	$	63,920,000	  	110.0	%	 	$	1,034,220	  	3.5	%
	 	  	$	64,492,000	  	116.0	%	 	$	1,090,632	  	3.6	%
	 	  	$	65,064,000	  	122.0	%	 	$	1,147,044	  	3.8	%
	 	  	$	65,636,000	  	128.0	%	 	$	1,203,456	  	3.9	%
	 	  	$	66,208,000	  	134.0	%	 	$	1,259,868	  	4.0	%
	 	  	$	66,780,000	  	140.0	%	 	$	1,316,280	  	4.1	%
	 	  	$	67,352,000	  	146.0	%	 	$	1,372,692	  	4.2	%
	 	  	$	67,924,000	  	152.0	%	 	$	1,429,104	  	4.3	%
	 	  	$	68,496,000	  	158.0	%	 	$	1,485,516	  	4.4	%
	 	  	$	69,068,000	  	164.0	%	 	$	1541,928	  	4.5	%
	 	  	$	69,640,000	  	170.0	%	 	$	1,598,340	  	4.5	%
	 	  	$	70,212,000	  	176.0	%	 	$	1,654,752	  	4.6	%
	 	  	$	70,784,000	  	182.0	%	 	$	1,711,164	  	4.7	%
	 	  	$	71,356,000	  	188.0	%	 	$	1,767,576	  	4.8	%
	 	  	$	71,928,000	  	194.0	%	 	$	1,823,988	  	4.9	%
	 16% ROE Goal
	  	$	72,500.00	  	200.0	%	 	$	1,880,400	  	4.9	%

  

 - 6 - 

	
	 LONG-TERM INCENTIVE PLAN
  

PLAN DESIGN

  
 Participation

  

	 	•	President 

  

	 	•	Chief Operating Officer 

  

	 	•	Chief Financial Officer 

  

	 	•	President – FGDI 

  

	 	•	Chief Operations Officer – Stone Division 

  
 Performance Measure 
  

	 	•	Increase in Class A Equity (plus common/preferred stock redemption) (after patronage distribution, tax and accrual for award) 

  
 Plan Life Cycle 
  

	 	•	5 years 

  

	 	•	New plan begins after 5 years 

  
 Base Salary 
  

	 	•	Participant’s base salary in effect at the beginning of the Plan Life Cycle 

  
 Target Award at Goal 
  

	 	•	200% of participant’s base salary 

  

 - 7- 

	
	 LONG-TERM INCENTIVE PLAN
  

PLAN SCHEMATIC

  
 Beginning Class A
Equity - $34.5M 
  

							
	 	  	 5-Year
 Total Class A Equity

	  	Award Percentage
of Base Salary

	 
	 Threshold
	  	$	58.2M	  	50	%
			
	 Goal
	  	$	72.5M	  	200	%

  

	 	•	Threshold represents a compounded 11% ROE. 

  

	 	•	Total increase in equity $23.7M or 69% over beginning equity $34.5M 

  

	 	•	Goal represents a compounded 16% ROE. 

  

	 	•	Total increase in equity $38.0M or 110% over beginning equity $34.5M 

  

	 	•	Threshold must be attained to activate the plan and for participants to be eligible for awards. 

  

	 	•	Performance beyond Threshold will be interpolated along the award scale. 

  

	 	•	Awards at Goal represent 4.9% of the total increase in Class A Equity at Goal. 

  

 - 8 - 

	
	 LONG-TERM INCENTIVE PLAN
  

AWARD SCHEDULE PER PLAN PARTICIPANT

  

										
	 Position

	  	 Base
 Salary

	  	 Threshold
Award
 (50%)

	  	 Goal
 Award
 (200%)

	 President/CEO
	  	$	320,000	  	$	160,000	  	$	640,000
	 Chief Operating Officer
	  	$	160,000	  	$	80,000	  	$	320,000
	 Executive Vice President/CFO
	  	$	135,200	  	$	67,600	  	$	270,400
	 President – FGDI
	  	$	175,000	  	$	87,500	  	$	350,000
	 Chief Operating Officer – Stone Division
	  	$	150,000	  	$	75,000	  	$	300,000
	 	  	
	
	  	
	
	  	
	

	 Totals
	  	$	940,200	  	$	470,100	  	$	1,880,400

  

 - 9 - 

	
	 LONG-TERM INCENTIVE PLAN
  

PLAN ADMINISTRATION OUTLINE

  

	1.	Purpose of the Plan 

  

	2.	Definition of the Plan Terms (i.e., “base salary” in effect at the start of the Plan Life Cycle) 

  

	3.	Plan Life Cycle (5 consecutive fiscal years) 

  

	4.	Effective Date – September 1, 2003 

  

	5.	Plan Administrator (Chairman of the Board) 

  

	6.	Plan Administration (follows plans guidelines, but free to interpret including issues where the plan is silent) 

  

	7.	Eligibility (to be determined by the Plan Administrator) 

  

	8.	Termination of Employment (either by executive or FCStone all rights are forfeited) 

  

	9.	Special Termination – If a Plan Participant terminates their employment or retires after three years with FCStone’s consent, the Plan Administrator will authorize a
pro-rated award based on performance up to that event. The actual payment will be made after the conclusion of the Plan Life Cycle (5 years). 

  

	10.	Amendment/Termination of the Plan (at the Plan Administrator’s discretion) 

  

	11.	Employment (Plan is not a contract) 

  

	12.	Death, Disability or Retirement (pro-rated award) 

  

	13.	Legal Requirements (in accordance with Federal, state and local statutory requirements) 

  
 Note: Plan Administration will be complete in the final document, as was the case with the Short-Term
Incentive plan. 
  

 - 10 -Cash Subordinated Loan Agreement

 Exhibit 10.50 
  
 CASH SUBORDINATED LOAN AGREEMENT 
  
 This Cash Subordinated Loan Agreement (the “Agreement”) is effective as of the 29th day of September, 2003 by and between Michael Walsh (the “Lender”), and FCStone, LLC (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 Requirements” 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 those terms are defined in Commodity Futures
Trading Commission Regulation 1.17(h)(1). 

  

	2.	Lender hereby agrees to lend the sum of two hundred fifty thousand ($250,000) 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 form the date hereof to the Maturity Date at the
rate of prime rate (            ) percent per annum (the Indebtedness”) on Oct. 1, 2004 (the “Maturity Date”). 

  

	4.	The Lender hereby subordinates any right to receive 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 subordinated loan 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 greatest of 1) seven (7) percent of the funds required to be segregated pursuant to the Commodity Exchange Act and CFTC Regulation and the foreign futures or
foreign options secured amount, exclusive of the market value of commodity options purchased by customers of the Borrower on or subject to the rules of a contract market or a foreign board of trade (provided the deduction for each customer shall be
limited to the amount of customer funds in each customer’s account(s) and foreign futures and foreign options secured amounts), or 2) 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 [17C.F.R.240.15c3-1d(b)(7)] or 3) the minimum capital requirement as defined by the DSRO. Notwithstanding the above, no prepayment shall occur without the prior written approval of the
Designated Self-Regulatory Organization. 

  

	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 such 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 greatest of 1) ten (10) percent of the funds required to be
segregated pursuant to the Commodity Exchange Act and CFTC Regulations and the foreign futures or foreign options secured amount, exclusive of the market value of commodity options purchased by customers of the 

 Borrower on or subject to the rules of a contract market or a foreign board of trade (provided that the
deduction for each option customer shall be limited to the amount of customer funds in such option customer’s account(s) and foreign futures and foreign options secured amount(s), or 2) if the Borrower is a securities broker or dealer, the
amount of net capital specified in Rule 15c3-1d(c)(5)(ii) of the regulations of the Securities and Exchange Commission, [17C.F.R.240.15c3-1d(5)(ii)] or 3) the minimum capital requirement as defined by the DSRO; or 
  

	 	(b)	Pre-tax 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 of 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 greatest
of 1) six (6) percent of the funds required to be segregated pursuant to the Commodity Exchange Act and CFTC Regulations and the foreign futures or foreign options secured amount, exclusive of the market value of commodity options purchased by
option customers of the Borrower on or subject to the rules of a contract market or a foreign board of trade (provided the deduction for each option customer shall be limited to the amount of customer funds in such option customer’s account(s)
and foreign futures and foreign options secured amount(s), or 2) 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,
[17C.F.R.240.15c3-1d(b)(8)(i)] or 3) the minimum capital requirement as defined by DSRO. [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 the 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, the 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 marshalling 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 then 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 greatest of 1) six (6) percent
of the funds required to be segregated pursuant to the Commodity Exchange Act and CFTC Regulations and the foreign futures or foreign options secured amount, exclusive of the market value of commodity options purchased by option customers of the
Borrower on or subject to the rules of a contract market or a foreign board of trade (provided that the deduction for each option customer shall be limited to the amount of customer funds in each option customer’s account(s) and foreign futures
and foreign options secured amounts), or 2) if Borrower is a securities broker or dealer, the amount of net capital specified in Rule 15c3-1d(c)(2) of the Regulations of the Securities and Exchange Commission, [17C.F.R.240.15c3-1d(b)(c)(2] or 3) the
minimum capital requirements defined by the DSRO. 

  

	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 is governed by the laws of the State of Illinois/New York. 

  

	18.	Any notice required or provided for herein shall be deemed to have been given or received when it has been delivered in person or has been deposited, postage prepaid, by United
States certified or registered mail, addressed to the person for whom intended: 

  

	 	(a)	If for Borrower: 

  
 C.C. Delbridge 
 141 W. Jackson Blvd., Suite 2730 
 Chicago, IL 60604 
  

	 	(b)	If for Lender: 

  
 Michael Walsh 
 c/o Spike Trading, Suite 1300 
 30 S. Wacker Dr., Chicago, IL 60606 
  

	 	(c)	If for Borrower’s Designated Self-Regulatory Organization: 

  
 Chicago Mercantile Exchange 
 30 S. Wacker Dr. 
 Chicago, IL 60606 
  

	19.	This Agreement supersedes all prior agreements of the parties with respect to the Indebtedness. 

  
 IN WITNESS WHEREOF, the parties hereto have set their hands this 29th day of September, 2003. 
  

			
	 /s/ Clarence Delbridge

	 	 /s/ Michael Walsh

	Borrower	 	Lender

 SUBORDINATION AGREEMENT 
  
 INFORMATION STATEMENT 
  

			
	Name and address of Lender:	 	Michael Walsh
	 	 	30 S. Wacker Dr., Suite 1300
	 	 	Chicago, IL 60606

  
 Business relationship of lender to
clearing member: 
  

			
	  ̈ Officer
	  	  ̈ Partner

	  ̈ Stockholder
	  	 x Other

  
 Did the clearing member carry funds or
securities for the lender at or about the time the proposed subordinated agreement was filed? 
  

			
	 Yes   ̈
	 	 No  x

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]