Spear, Leeds & Xxxxxxx
000 Xxxxxxxx, Xxx Xxxx, XX 00000 212/433-7000
Addendum to the Fully Disclosed Clearing Agreement
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And/or Broker-Dealer Agreement and Consent to Loan of Securities
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This is to amend the fully Disclosed Clearing Agreement and/or the
Broker-Dealer Agreement And Consent to Loan Of Securities between (" introducing
Broker") and Xxxxx, Leeds & Xxxxxxx ("SLK"), in conformity with SEC No-Action
Letter, Dated November 3, 1998 relating to the net capital treatment of assets
in the proprietary account of an introducing broker ("PAIB") and to permit
introducing Broker to use PAIB assets in its net capital computations. The
parties shall agree to the following conditions and provisions as set forth
below:
1. SLK shall perform a computation for PAIB assets ("PAIB Reserve
Computation") of introducing Broker in accordance with the customer reserve
computation set forth in rule15c3-3 ("customer reserve formula") with the
following modifications:
A. Any credit (including a credit applied to reduce a debit) that is
included in the customer reserve formula may not be included as a credit in the
PAIB reserve computation;
B. Note E(3) to rule 15c3-3a which reduces debit balances by 1% under the
basic method and subparagraph (a)(1)(ii)(a) of the net capital rule which
reduced debit balances by 3% under the alternative method shall not apply; and
C. Neither note E(1) to rule 15c3-3 nor NYSE Interprelation/04 to item 10 of
Rule 15c3-3a regarding securities concentration charges shall be applicable to
the PAIB reserve computation.
2. The PAIB reserve computation shall include all proprietary accounts of
introducing Broker.
All PAIB assets shall be kept separate and distinct from customer assets under
the customer reserve formula in Rule 15c3-3
3. The PAIB reserve computation shall be prepared within the same time
frames as those prescribes by 15c3-3 for the customer reserve formula.
4. SLK shall establish and maintain a separate "Special Reserve Account for
the Exclusive Benefit of Customers' with a bank in conformity with the standards
of paragraph (f) of Rule 15c3-3 ["PAIB Reserve Account"]. Cash and/or qualified
securities as defined in the customer reserve formula shall be maintained in the
PAIB Reserve Account in an amount equal to the PAIB reserve requirement.
5. If the PAIB reserve copulation results in a deposit requirement, the
requirement may be satisfied to the extent of any excess debit in the customer
reserve formula of the same date. However, a deposit requirement resulting from
the customer reserve formula shall not be satisfied with excess debits from the
PAIB reserve computation.
6. Within two business days of entering into this PAIB Agreement,
introducing Broker shall notify its designated examining authority in writing
(with a copy sent to SLK upon request) that it has entered into this PAIB
Agreement.
7. Commissions receivable and other receivables of introducing Broker from
SLK (excluding clearing deposits) that are otherwise allowable assets under the
net capital rule are not to be included in the PAIB reserve computation,
provided the amounts have been clearly identified as receivables on the books
and records of introducing Broker and as payable on the books of SLK.
8. If introducing Broker is a guaranteed subsidiary of SLK or if introducing
Broker guarantees SLK (i.e., guarantees all liabilities and obligations) then
the proprietary accounts of introducing Broker shall be excluded from the PAIB
Reserve Computation.
9. Upon discovery that any deposit made to the PAIB Reserve Account did not
satisfy its deposits requirement, SLK shall by facsimile or telegram immediately
notify its designated examining authority and the Securities and Exchange
Commission ("Commission"). Unless a corrective plan is found acceptable by the
Commission and the designated examining authority, SLK shall provide written
notification within 5 business days of the date of discovery to introducing
Brokers that PAIB assets held by SLK shall not be deemed allowable assets for
net capital purposes. The notification shall also state that if introducing
Broker wishes to continue to count its PAIB assets as allowable, it has until
the last business day of the month in which the notification was made to
transfer all PAIB assets to another clearing broker. However, if the deposit
deficiency is remedied before the time at which the introducing Broker must
transfer its PAIB assets to another clearing broker, the introducing Broker may
choose to keep it assts at SLK.
10. The parties shall adhere to the terms of the No-Action letter, including
the interpretations set forth, in all respects.
FULLY DISCLOSED CLEARING AGREEMENT
OF
SPEAR, LEEDS & XXXXXXX
THIS AGREEMENT is made and entered into as of this 12th day of September by and
between Spear, Leeds & Xxxxxxx ("SLK") and TradeRight ("Broker").
1. Subject to the approval of the New York Stock Exchange, from the opening
of business on or about until the termination of this Agreement as provided for
in Paragraph 17, hereof, SLK will carry the cash and margin accounts of the
customers introduced by Broker to SLK and accepted by SLK and will clear
transactions on a fully disclosed basis for such accounts, all as more
specifically provided in Paragraph 3 hereof and subject to the terms and
conditions hereinafter set forth.
All references made to margin accounts in this agreement shall apply only if the
introducing firm introduces such accounts.
2. Representations and Warranties
(a) Broker represents and warrants that:
Broker is duly registered and in good standing as a broker/dealer with the
Securities and Exchange Commission and the National Association of Securities
Dealers ("NASD")
Broker has all requisite authority, whether arising under applicable federal or
state laws or the rules and regulations of any securities exchange or regulatory
authority to which Broker is subject, to enter into this Agreement and to retain
the services of SLK in accordance with the terms hereof, and
Broker and each of its employees is in substantial compliance and during the
term of this Agreement will remain in substantial compliance with the
registration, qualification, capital financial reporting, customer protection,
and other requirements of every securities exchange of which Broker is a member,
of the NASD, of the Securities and Exchange Commission and every state to which
jurisdiction Broker and each of its employees are subject.
(b) SLK represents and warrants that:
SLK is duly registered and in good standing as a broker/dealer with the
Securities and Exchange Commission and is a member firm in good standing of the
New York Stock Exchange ("NYSE").
SLK has all requisite authority, whether arising under applicable federal or
state laws, or the rules and regulations of any securities exchange or
regulatory authority to which SLK is subject, to enter into this Agreement: and
SLK is in substantial compliance and during the term of this Agreement will
remain in substantial compliance with the registration, qualification, capital,
financial reporting, customer protection requirements and other requirements of
every regulatory and self-regulatory organization to whose jurisdiction SLK is
subject.
3. SLK, acting as Broker's agent, shall carry the customers' cash and margin
accounts introduced by Broker on a fully disclosed basis and perform the
following services:
(a) Execute transactions in the customers' accounts and release or deposit
money or securities to or for the accounts, only upon Broker's instructions;
(b) Prepare and mail confirmations and summary monthly statements to
Broker's customers on forms disclosing that the account is carried on a fully
disclosed basis for the Broker.
(c) Settle contracts and transaction in securities (i) between Broker and
other brokers and dealers, (ii) between Broker and its customers and (iii)
between Broker and third persons; and
(d) Perform cashiering functions for such customers' accounts, including
receipt and delivery of securities purchased, sold, borrowed and loaned; make
and receive payments therefore, provide custody and safekeeping of securities
and cash; and handle margin accounts, dividends and exchanges, rights, warrants,
redemptions, and tender offers with respect to such securities.
(e) Mail to each customer a xxx of the Notice to Customers as requited by
New York Stock Exchange Rule 382 .
(f) Completing the transfer of securities and accounts on behalf of
customers.
(g) Compliance with restricted and control securities under the Securities
Act of 1933.
Notwithstanding subparagraph (a) through (d) above, SLK may, in its sole
discretion, for good cause shown, refuse to open an account for a specific
customer; close an account already opened; refuse to confirm and/or cancel a
confirmation; reject a delivery or receipt of securities and/or money; refuse to
clear any trade executed by Broker, or refuse to execute any trade for the
account of a customer introduced by Broker. Broker acknowledges that in
connection with the performance of the above described services, SLK may retain,
at its option, one of more independent data processing service bureaus to
perform any of the required functions, and agrees that SLK shall not be
responsible for any losses, damages, liability or expenses incurred by or claims
made by the Broker or its customers arising from the failure of any such service
bureau to perform said functions accurately, in accordance with specifications
or within the customary time periods. SLK's only obligation will be to cause
any such service bureau to correct any processing error in its next regularly
scheduled processing and to deliver any overdue work as soon as reasonable
practicable. In no event shall SLK be responsible for indirect or consequential
damages.
SLK may authorize certain of Broker's employees designated by Broker in writing,
to sign checks to Broker's customers for amounts due and requested by them with
respect to their accounts. All checks must be signed by two of such authorized
employees and no check or checks payable in any one day to any one customer
shall exceed $100,000. Any losses incurred by SLK in connection with such
authorization shall be charged to Broker. Any lien on the customer's property
granted by their customer to Broker or SLK shall extend to any funds, which may
be segregated in a separate account to carry out the purposes of this paragraph.
4. Services for which SLK is not Responsible
Unless otherwise expressly agreed in writing, SLK will not provide nor be
responsible for providing any services specifically enumerated in this
Paragraph:
(h) Accounting, bookkeeping or record keeping, cashiering or other services
in respect to commodity transactions, or any other transaction not involving
securities.
(i) Preparation of Broker's payroll records, financial statements or any
analysis thereof.
(j) Preparation or issuance of checks in payment of Broker's expenses, other
than expenses incurred by SLK on behalf of Broker pursuant to this Agreement:
(k) Payment of commissions to Broker's salesmen;
(l) Preparation or filing of any of Broker's reports to the Securities and
Exchange Commission, any state securities commission, or any securities
exchange, securities association or other membership to which Broker is subject;
but SLK will, at the request of Broker, furnish Broker with any necessary
information and data contained in records kept by SLK and not otherwise
available to Broker for use in making such reports by Broker; and
(m) Verification of address changes of Broker's customers
(n) Rendering investment advice to customers
5. Duties, Obligations and Responsibilities of Broker
(o) Information to be supplied by Broker:
Broker will provide SLK with such basic data and documents, including (without
limitation) copies of records of any receipts of customers' funds and securities
received directly by Broker as shall be necessary or appropriate to permit SLK
to discharge its service obligations hereunder. In all cases, such data and
documents must be compatible with the requirement of SLK's bookkeeping system.
In addition, Broker will furnish SLK such information and signatures as are
requested by SLK for the opening and carrying of customer accounts on forms,
which have been approved by SLK. All accounts shall be opened in accordance
with SLK's requirements and the acceptance of an opening of an account without
such requirements being fulfilled shall not be deemed to be a waiver of such
requirements. A duly authorized principal executive officer of Broker will
approve in writing the opening of each customer's account. Broker shall be
responsible for maintaining proper customer addresses and SLK may, for all
purposes, rely on such addresses as they are furnished by the Broker.
(p) Receipt of money and securities:
In all cash accounts, Broker shall be responsible for purchases for customers
until actual and complete payment therefore ahs been received by SLK and in the
case of checks representing such payment received by SLK, Broker shall be
responsible until they shall have been paid and the proceeds actually received
and credited to SLK by its bank. SLK agrees to use due diligence in depositing
such checks promptly.
Broker shall be responsible for sales until acceptable delivery to SLK of the
securities involved have been made. Broker agrees to turn over promptly to SLK
funds or securities received by Broker from its customers, together with such
information as may be relevant or necessary to enable SLK to promptly and
properly to record such remittance and receipts in the respective customer
accounts. Broker shall arrange for timely settlement of "delivery versus
payment" transactions and shall not introduce any retail or individual accounts
requiring settlement, on "delivery vs payment" or, "receive versus payment"
basis without the prior written approval of "partial deliveries" and to abide by
other clearance arrangements as may be directed by the New York Stock Exchange,
Inc., the American Stock Exchange Inc. or the NASD. SLK may, at its option,
charge for late payments or deliveries, any interest incurred by it accrued at
its then prevailing "Brokers Call" rate plus 1% on the principal amount of
trade, or such other rate as may be agreed upon in writing, above the Broker's
Call Rate.
SLK reserves the right to give prior oral or written notice to Broker and any
customer of failure to make timely settlement and SLK's intention to take
remedial action.
With respect to any settlement, which involves the drafting of securities, all
draft charges, including interest expense, will be borne by Broker. Interest
cost on settlement in locations not herein specified will be borne as SLK and
Broker may mutually agree in writing, with the general understanding that SLK
will bear the interest cost associated with delivering securities within New
York City and Broker will bear the costs associated with the movement of
securities from or to New York City to or from any location.
Duties of Broker with respect to customers:
The customer shall remain the customer of Broker, and Broker shall be
responsible for obtaining all of the essential facts relative to every customer,
every cash or margin account, every order and every person holding power of
attorney over any account accepted by Broker. Broker shall also be responsible
for the conduct of customer accounts and the supervision thereof, including but
not limited to, assessing the suitability of a transaction for the customer when
required under applicable rules, the authenticity of all orders signatures and
endorsements, the frequency of trading by a customer and the genuineness of all
signatures, certificates and papers, the status under the Securities Act of 1933
of securities proposed to be sold or margined by a customer, and reviewing the
accounts for, among other things, manipulative practices and xxxxxxx xxxxxxx,
and compliance with all federal, state, securities exchange and association
laws, rules and regulations to which the Broker and customer are subject.
Broker undertakes to comply with Rule 404 (1), (2) and (3) of the New York Stock
Exchange, Inc and other rules of regulatory organizations having jurisdiction
over Broker and to diligently supervise compliance through the use of a
compliance manual or other written procedures. It is understood that Broker
will establish adequate procedures regarding Rule 405 and will make a diligent
attempt in every case to conform to this rule.
Broker must notify SLK in each case where Broker and a customer authorize a
Registered Representative of Broker to exercise discretion in an account. In
addition, Broker will advise SLK at the time an order is placed if such order is
for a discretionary account of one of Broker's Registered Representatives.
It is understood that Broker warrants that, to its best knowledge, the customers
introduced to SLK by Broker shall not be minors and shall not be such as to come
under prohibitions referred to in Rule 407 of the New York Stock Exchange Inc.,
or in any other law, rule or regulation of any other regulatory authority; that
Broker's customers shall in fact be the owners of accounts opened by SLK in
their names, and that any orders and instructions given by Broker or any of
Broker's employees shall have been previously fully and properly authorized.
Prior to engaging in option trading for any of Broker's customers, Broker shall
deliver to such customer the most recent copy of the booklet titled
"Characteristics and Risks of Standardized Options", or its successor, together
with any effective supplements thereto. A current prospectus of the Option
Cleaning Corporation is optional. Broker will take all appropriate steps to
assure that customers engaging in such trading are sophisticated investors,
fully aware of the risks involved, and that option trading is suitable for such
customers. Broker will comply in all respects with SLK's options compliance
program, including the obtaining of information, written approval of option
accounts by the Senior Registered Options Principal of Broker, and execution of
forms required by SLK. SLK shall not be required to endorse any put or call
options for any account unless the account is satisfactory to SLK.
This agreement places the responsibility for "knowing the customer" and
"suitability"on the Broker. It permits SLK to satisfy itself, for its own
benefit, that Broker has the ability to comply and has complied with the
requirements of Rule 405 of the New York Stock Exchange, Inc. and comparable
requirements of similar rules of any other self-regulatory organization to which
Broker belongs.
It is understood that the preparation and possession of surveillance records or
any new data, including exception reports, by SLK on behalf of or for the use of
Broker shall neither obligate SLK to review such material nor make SLK
responsible to know its content.
(d) Financial Data
Broker agrees to furnish SLK a copy of all FOCUS reports at the same time Broker
files such with its primary examining authority.
(e) Broker shall make and maintain reports, records and regulatory filings
required to be kept by the Broker by any entity that regulates it, including any
reports and records required to be made or kept under the Currency and Foreign
Transactions Reporting Act of 1970, the money Laundering Act of 1986, and any
regulations promulgated pursuant therein.
(f) Broker shall assume all responsibility for reviewing customer orders
prior
to execution, and errors in execution.
6. Broker Indemnification
Broker hereby agrees to indemnify, defend and hold harmless SLK from and against
all claims, demands, proceedings, suits and actions made or brought against SLK
and to indemnify SLK's liabilities, losses, damages, expenses, attorneys' fees
and costs arising out of one or more of the following; except for those claims
arising out of SLK's willful misconduct.
(a) Failure of Broker or the Broker's customer to make payment when due for
securities purchased or to deliver when due securities sold for the account of
Broker or the Broker's customers;
(b) Failure of a customer of Broker to meet any initial margin call or any
maintenance call, except that SLK shall be responsible only for the portion of
any such losses that are directly attributable to SLK's failure to give proper
and timely notification to the customer of call;
Failure of Broker to properly perform its duties, obligations and
responsibilities with respect to customer accounts (as set forth in Paragraph 5,
above), it being understood that the participation of any employee of SLK In any
transaction referred to in Paragraph 5 shall not effect Brokers
indemnification obligations hereunder, unless such participation by SLK's
employee was fraudulent;
(d) Any dishonest, fraudulent, negligent or criminal act or omission on the
part of any of Brokers' officers, partners, employees, agents or customers;
(e) All claims or disputes between Broker and its customers with respect to the
matters set forth in this agreement. It being understood: (1) that Broker
guarantees the validity of customer orders in the form such orders are
transmitted to SLK by Broker and guarantees to SLK that each customer will
promptly and fully perform his commitments and obligations with respect to all
transactions in all of his account carried by SLK hereunder and (ii) that checks
received by SLK from Broker's customers shall not constitute payment until they
have been paid and the proceeds actually received any credited to SLK by its
bank;
(f) Any adverse claims with respect to any customer securities delivered or
deared by SLK it being understood that SLK shall be deemed to be an intermediary
between Broker and customer and shall be deemed to make no warranties other than
as provided in Section 9-306(3) of the Uniform Commercial Code;
(g) The default by any over-the-counter broker with whom the Broker deals on a
principal basis, giving up SLK for Clearance;
(h) The default by any third-party broker with whom the Broker deals rather
than using SLK to execute a transaction for itself or a customer;
(i) The negligence, malfeasance, or mistakes of an employee of Broker with
respect to the use of the check-signing authority granted under Paragraph 3;
(j) The breach by the Broker of any warranty made by it under this
agreement;
(k) SLK's guarantee of any signatures with respect to transactions in the
accounts of Broker's customers;
(l) The failure of Broker's customers to fulfill their obligations to the
Broker or to SLK {whether or not such failure is in the Broker's control}.
7. Omnibus account
To further assure Broker's performance of its obligations under Agreement,
including but not limited to its indemnification obligations under Paragraph 6,
Broker shall, on or before the execution of this Agreement, establish an account
at SLK or be designated as the Broker's Omnibus Account (the "Account"). The
Account shall at all times contain cash, securities, or a combination of both,
having a market value of $ 100,000. Broker shall be paid interest on the cash
balances in the Account at the rate of 100 basis points below the Broker call
rate. The Account may be used by Broker to trade securities on a proprietary
basis or to carry trades considered to be errors.
If SLK shall suffer any loss or incur any expense for which it is entitled to be
indemnified pursuant to this Agreement and Broker shall fail to make such
indemnification within ten business days after being requested to do so, SLK
shall deduct the amount of such claim, loss or expense from the commissions then
credited to Broker pursuant to Paragraph 8. If the amount of said commissions
is less than the amount of such claim, loss or expense, SLK shall have the right
to withdraw from the Account cash or securities (or both) having a market value
equal to the amount of such deficiency. Broker shall then be obligated to
immediately deposit in the Account cash or securities sufficient to bring the
Account back to a market level of at least $ 100,000.
Upon the termination of this Agreement, or as soon as practical thereafter, SLK
will pay and deliver to Broker the funds and securities in the Accounts which it
is entitled to withdraw under the preceding paragraph; provided, however, that
SLK may retain in the Account an amount to protect it from any claim or
proceeding of any type, then pending or actually threatened, until the final
determination thereof is made [should not exceed 30 days]. If a threatened
claim or proceeding is not resolved or if a legal action proceeding is not
instituted within a reasonable time after the termination of this Agreement, the
amount retained with respect to such threatened claim or proceeding shall be
paid or delivered to Broker.
8. Commission Payments
(a) SLK shall charge each of Broker's customers the commission, which Broker
directs it to charge for each transaction. If specific instructions are not
received with respect to a specific transaction in the time period required by
SLK to implement same, SLK shall charge the customer the commission prescribed
in the basic commission schedule delivered to SLK by Broker. Such basic
schedule may be amended from time to time by Broker by written instructions
delivered to SLK; provided, however, that such changes shall be implemented only
to the extent they are within the usual capabilities of SLK's data processing
and operations systems and only within such reasonable time limitations as SLK
may deem necessary to avoid disruption of its normal operating capabilities.
For purposes of confirmation preparation, Broker will also furnish from time to
time the source and amount of any commission or other payment received by Broker
in connection with transactions in the customers' accounts.
(b) Commissions charged Brokers customers shall be collected by SLK and
credited to broker, after deducting SLK's compensation referred to in Paragraph
9 (and any other amount owed to SLK pursuant to this Agreement). Such
commissions shall be credited to the Account on a settlement day basis.
Any changes regarding compensation should be in writing.
9. Compensation
As compensation for services provided hereunder by SLK, there shall be deducted
from the commissions charged Broker's customers the amounts set forth in the
fully disclosed pricing schedule attached herein. Said compensation schedule
may be changed as may be agreed to by both parties.
10. Margin Accounts
(a) Any transactions for a customer will be considered a cash transaction
until such time as Broker has furnished SLK with an executed customer's margin
agreement and consent to loan of securities in a form acceptable to SLK.
(b) All margin accounts introduced by Broker shall be subject to SLK's "house
margin requirements." SLK currently imposes a 40% maintenance requirement, but
said requirement and other margin requirements may be changed at any time by
giving the Broker 10 days prior written notice of such change. In all such
margin accounts, Broker shall be responsible for the initial margin requirement
for any transaction until such initial margin has been received by SLK in
acceptable form. SLK reserves the right to refuse to accept any transaction in
a margin account after the initial transaction, without the actual receipt of
the necessary margin, and to impose a higher margin requirement, when in SLK's
opinion, the past history or nature of such account or the securities therein
justifies such action. SLK shall endeavor to notify Broker in advance of all
margin calls, and shall provide Broker with copies of such calls. In the event
that satisfactory margin is not provided within the time specified by SLK, SLK
shall be at liberty to take such actions as SLK may, in its judgment, deem
appropriate. After such initial margin has been received, subsequent margin
calls may be made by SLK. Broker agrees to cooperate with SLK in complying with
and obtaining margin on subsequent calls.
Interest charged with respect to debit balances in customers' accounts
shall be determines in accordance with the fully disclosed pricing schedule
hereto.
(d) Broker shall be responsible for any failure on the part of a customer to
meet a "maintenance call", except to the extent directly attributable to SLK's
failure to give proper and timely notification to the customer. An officer of
Broker who has been designated by Broker (and acknowledged in writing by SLK)
may request, to the extent permitted by the margin rules, that SLK withhold
temporarily and contemplated action or "sell-out" or "buy-in" for accounts,
which have failed to meet a margin call. Such requests shall be made in writing
and shall clearly set forth the period of time during which the contemplated
action be withheld. Should SLK comply in whole or in part with such request,
Broker guarantees to reimburse SLK immediately for the maximum amount of loss or
liability which SLK may sustain or incur by reason of any compliance with such
request, by depositing sufficient funds with SLK in a reserve or other
appropriate account at a bank of SLK 's choosing over which SLK shall be
signatory, to reimburse SLK for the loss or unsecured indebtedness held in the
account of the particular customer; provided, however, that compliance with such
a request shall not be deemed a waiver by SLK of any of its rights hereunder,
including but not limited to, the right to close out a contract or position, if
in SLK's judgment, changing conditions render such action advisable.
(e) Broker shall be responsible for sending to each margin
customer a written
statement at the time of the opening of a margin account in compliance with
Rule 10b-16 under the Securities Exchange Act of 1934.
(f) Broker shall obtain from each margin account introduced to SLK a margin
Agreement, including a hypothecation authority, in a form and substance
acceptable to SLK.
11. Unsecured Debits or Unsecured Short Positions
Unsecured debits or short positions ( on a " market to market" basis) in a
customer's account not resolved by payment or delivery within thirty calendar
days shall be charged to the account of the Broker maintained by SLK to which
SLK credits the Broker with commissions due Broker. Such unpaid debits or short
positions shall be netted against commissions due on a monthly basis. Any
excess of such unpaid debits or short positions over commissions due shall be
applied against Broker's Account and be considered a claim against Broker
pursuant to paragraph 7 of this Agreement.
12. Responsibilities and Rights of SLK
SLK will maintain prescribed books and records of all transactions executed or
cleared through it. SLK also undertakes to perform in good faith the services
agreed to be performed in this Agreement, including the foregoing, but shall
not be bound to make any investigation into the facts surrounding any
transaction that it may have wit Broker or that Broker may have with its
customers or other persons, nor shall SLK be under any responsibility of
compliance by Broker with any laws or regulations which may be applicable to
Broker.
Nothing herein shall be deemed to restrict in any way the right of SLK or any
affiliate of SLK to compete with Broker in any or all aspects of Broker's
business.
SLK will keep confidential Trade Rights list of customers except in response to
subpoena and request from regulators.
13. SLK Indemnification
SLK shall have no liability to any Broker's customers for any loss suffered by
any customer. SLK's liability will be only to Broker and then only to the
extent herein expressly set forth. SLK hereby agrees to indemnify, defend and
hold harmless Broker from and against all claims, demands, proceedings, suits
and actions and all liabilities, expenses, attorney fees, and costs in
connection therewith arising out of any dishonest fraudulent, or criminal act
or omission on the part of any of its officers, partners or employees with
respect to the services provided by SLK under the Agreement.
14. Employees
Without the prior written consent of the other broker and SLK, either party will
not during the period of this agreement and for one year thereafter, hire or
attempt to hire any person who is employed by the other on the termination of
this agreement or whose employment with the other terminated within the one year
period prior to the termination of this agreement.
15. Construction Of Agreement
Neither this agreement nor the performance of the services hereunder shall be
considered to create a joint venture or partnership between SLK and between
Broker and other brokers for whom SKL may perform the same or similar services.
Neither SLK nor Broker will utilize the name of the other in any way without the
other's consent and under no circumstances shall either party employ the other's
name in such a manner as to create the impression that the relationship created
or intended between them is anything other than of clearing broker and
correspondent broker.
16. Confidentiality
Broker and SLK agree not to disclose the terms of this Agreement to any outside
parties except to regulatory bodies with appropriate jurisdiction and to
authorized employees of the Broker or SLK on a need-to know basis. Any other
publications or disclosure of the terms of this agreement may be made only with
the prior consent of the other parties.
17. Termination
This agreement shall continue until terminated as hereinafter provided
(a) Upon any unilateral change of more then 10% per annum by SLK in the
compensation schedule pursuant to paragraph 9 hereof the unreasonable rejection
by SLK of any customers or trades pursuant to paragraph 3 of this agreement,
Broker may, upon fifteen (15) days prior written notice to SLK, terminate this
agreement on the effective date of such unilateral charge.
There will be no increase in rates for at least one year.
(b) This agreement may be terminated by either party without cause upon
sixty (60) written notice delivered in person or by registered or certified
mail.
If either party terminates the Agreement pursuant to this subparagraph, SLK
shall have the right to impose reasonable limitations upon Broker's activates
during the period between the giving of notice and the transfer of Broker's
account.
In the event either party defaults in the performance of its obligations
under this agreement, the non-defaulting party may terminate this agreement on
the following terms and conditions. Written notice must be delivered to the
defaulting party specifying the nature of the default and notifying the default
is cured within a period of ten (10) days from the receipt of the notice, this
agreement may be terminated without further proceedings by the non-defaulting
party.
(d) This agreement may be terminated by SLK or Broker immediately in the
event that the other party is enjoined, disabled, suspended, prohibited or
otherwise unable to engage in the securities business or any part of it as a
result of any administrate or judicial proceeding or action by the Securities
and Exchange Commission, any state securities law administrator or any
self-regulatory organization have jurisdiction.
(e) Termination of this agreement, however caused, shall not release Broker
or SLK from any liability or responsibility to the other with respect to the
transactions effected prior the effective date of such termination, whether or
not claims relating to such transactions shall have been made before or after
such termination.
(f) If Broker terminates this agreement pursuant to subparagraph (b) above
within the first year of the date of this agreement, or SLK terminates this
Agreement pursuant to the subparagraph (c) or (d) above, Broker will pay to SLK
a termination fee equal to the reasonable expenses incurred by SLK (i) in the
establishing systems procedures and capacity for servicing Broker and its
customers, and (li) in discontinuing the clearing arrangement provided, however,
that in no event shall said termination fee be less than $5,000 or more then
$10,000. said fee shall be paid within to days after receipt of SLK's statement
setting forth in reasonable detail the expenses incurred by SLK.
18. Action Against Customers; Customer Complaints
SLK Shall have the right at all times, in its sole discretion (but shall not be
obliged)and at its sole expense to institute and prosecute in its name, upon
notice to Broker, any action or proceeding against any of Broker's customers as
to any controversy or claim arising out of SLK's transactions with Broker's
customers and nothing contained in the Agreement shall be deemed or construed to
impair or prejudice such right in any way whatsoever, nor shall the institution
or prosecution of any such action or proceeding relive Broker of any liability
or responsibility which Broker would otherwise have had under this Agreement.
Broker shall assign to SKL its rights against its customers to the extent
requested by SKL and necessary to carry out the intent of this Paragraph.
Broker and SKL shall each communication to the other any complaint/inquiry with
the respect to the other.
19. Notices
Any notice or request required or permitted to be given under this agreement
shall be sufficient if in writing and sent by hand or by certified mail, in
either case, return receipt requested, to the parties at the following address:
Broker
TradeRight
000 XX 00xx Xxxxxx Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Falken - President
SLK
Spear Leeds & Xxxxxxx
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
20. Amendments
This Agreement represents the entire agreement between the parties with respect
to the subject matter contained herein. This Agreement may not be changed
orally, but only by an agreement in writing and signed by the parties.
21. Exchange Regulation
the parties acknowledge they will be subject to the rules of the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and any other
securities exchanges or associations of which either party is or may become a
member, and of any government agendas to whose jurisdictions either party may be
subject.
22. Assignment
This Agreement shall be binding upon and shall inure to the benefit
the respective successors and assigns of Broker and SKL.
23. Applicable Law
This Agreement shall be governed by and constructed in accordance with the laws
of the State of New York.
24. ARBITRATION DISCLOSERE
- ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
* THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRAIL.
* PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM
COURT PROCEEDINGS.
- THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS
OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITTED.
- THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
25. ARBITRATION AGREEMENT
ANY CONTROVERSY BETWEEN SLK & BROKER ARISING OUT THE BUSINESS OR THIS
AGREEMENT SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE NEW YORK STOCK
EXCHANGE, INC. OR THE NATIONAL ASSOCIATION OF SECURITESDEALERS, INC. AS SLK MAY
ELECT IN ACCORDANCE WITH THE RULES OF THE SELECTED ORGANIZATION. ARBITRATION
MUST BE COMMENCED BY SERVICE UPONE THE OTHER PARTY OF A WRITTEN DEMAND FOR
ARBIRTRATION OR A WRITTEN NOTICE OF INTENTION TO ARBIRTRATE, THEREIN ELECTING
THE ARBITRATION TRIBUNAL.
26. This Agreement shall be submitted to and or approved by any
National Securities
Exchange, or other regulatory and self-regulatory bodies vested with the
authority to Review and or approve this Agreement or any amendment or
modifications hereto. In the event of any such disapproval, the parties hereto
agree to bargain in good faith to achieve the requisite approval.
27. If any provision or condition of this Agreement shall be held to be
invalid or unenforceable by any court or regulatory or self regulatory agency or
body, such invalidity or unenforceability shall attach only to such provision or
condition. The validity of the remaining provisions and conditions shall not be
affected thereby this Agreement shall be carried out as if any such
unenforceable provision or condition were not contained herein.
28. For purposes of the securities and Exchange Commission's financial
responsibility rules and the Securities Investor's Protection Act, the brokers
customers will be considered customers of SLK and not customers of the broker.
Nothing herein shall cause the broker's customers to be construed or interpreted
as customers of SLK for any other purpose, or negate the intent of any other
section this agreement, including, but not limited to, the delineation of
responsibilities as set forth elsewhere in this agreement.
29. PRIME BROKERAGE
a. Establishment of an Account
SLK agrees to establish on its books and records an account in the name of a
prime broker for introducing firm's clients and to maintain same providing SLK
receives from said clients SIA Form 151 "Executing Broker Customer Agreement"
and all other documents SLK may deem appropriate.
The introducing firm shall provide SLK with the Prime Broker tax ID number and
the full street address of its client, the "SIA Form 151", as well as, the
necessary settlement instructions.
(b) Customer Qualifications
By introducing Prime broker accounts to SLK, the introducing firm confirms that
it is aware that their client maintains a minimum net equity of $500,000 in cash
or securities with a ready market for trades executed on behalf of an account
not managed by an advisor or $100,000 in cash or securities with ready market
for trades executed on behalf of a customer account managed by an investment
advisor registered under section 203 of the Investment Advisors Act of 1940. The
introducing firm understands that if for any reason the account falls below such
a minimum net equity SLK has the right to refuse to process trades as a prime
broker transaction. Each time you enter an order you hereby represent that your
client shall be in compliance with such minimum net equity or will notify SLK
otherwise.
In the event that any prime broker disaffirms any trade you have executed you
hereby agree to be responsible and liable to SLK for settling such transaction.
Restrictions on Account
You understand that SLK in its sole discretion may refuse to accept Prime Broker
Transactions on your client's behalf or restrict or prohibit trading of
securities in your client's account or refuse to clear your client's
transactions.
b. Confirmations
Unless otherwise instructed in writing, SLK shall confirm transactions to your
client, as well as, to the prime broker by the morning of the next business day
after the trade date.
The introducing firm agrees to notify SLK, in the timely manner, the contract
amount of the transaction, the security involved, the number of shares or units,
whether the transaction is a purchase or sale, and if a sale, whether the
transaction was a short or long sale. Introducing broker is responsible for
complying with all applicable rules and regulations of the SEC and applicable
self regulatory organizations governing the execution so short sales.
This Agreement contains a pre-disputed arbitration clause in paragraph 24 on
page 12. I acknowledged receiving a copy of this agreement.
SPEAR, LEEDS & XXXXXXX
BY:__________________________
NAME:
TITLE:
TRADERIGHT
BY:__________________________
NAME:
TITLE:
