AGREEMENT FOR
PRIME BROKERAGE CLEARANCE SERVICES
This Agreement sets forth the terms and conditions under which XXXXXXX
XXXXX XXXXXX XXXXXX AND XXXXX, its successors and assigns (the "Clearing
Broker"), will clear your securities transactions with such broker-
dealer as you may designate, from time to time, as your prime broker
("Prime Broker"), provided that Clearing Broker has entered into a Prime
Brokerage Agreement with such broker-dealer with respect to your prime
brokerage transactions (hereinafter referred to as "Prime Brokerage
Transaction(s)").
1. ESTABLISHMENT OF ACCOUNT
------------------------
Clearing Broker will clear your Prime Brokerage Transactions in a
broker-dealer credit account established in the name of your Prime
Broker and designated for your benefit. On the settlement date for each
Prime Brokerage Transaction, Clearing Broker will deliver or receive
your securities to or from your Prime Broker against payment in full by
or to your Prime Broker on your behalf.
2. CUSTOMER TRADES
---------------
You hereby authorize Clearing Broker to inform your Prime Broker on
the DTC I.D. System, or any successor system, of all the details for
each Prime Brokerage Transaction you instruct to be cleared by Clearing
Broker for your account, including, but not limited to, the contract
amount, the security involved, the number of shares or number of units,
and whether the transaction was a long or short sale or a purchase
(collectively, the "Trade Data"), and you hereby agree to inform your
Prime Broker of the Trade Data on trade date by the time designated to
you by your Prime Broker. In the event of any discrepancy in the Trade
Data reported to your Prime Broker by you and the Trade Data reported to
your Prime Broker by Clearing Broker, you shall be responsible for
resolving such discrepancy promptly, and you shall be liable to Clearing
Broker for any loss, cost or expense sustained by Clearing Broker
arising out of such Prime Brokerage Transaction.
3. APPLICABLE LAW AND REGULATIONS
------------------------------
All Prime Brokerage Transactions shall be subject to all applicable
laws and the rules and regulations of all federal, state and self-
regulatory agencies including, but not limited to, the Securities and
Exchange Commission, all relevant securities and commodity exchanges,
the Municipal Securities Rulemaking Board, the National Association of
Securities Dealers, the Board of Governors of the Federal Reserve
System, and the constitution, rules and customs of the exchange or
market (and its clearing house, if any) where executed. In addition,
all Prime Brokerage Transactions shall be performed in a manner not
inconsistent with the SEC No Action Letter dated January 25, 1994
relating to prime brokerage services, which was issued by the Division
of Market Regulation (the "SEC Letter"), as the same may be amended,
modified or supplemented from time to time.
4. SHORT SALES
-----------
When placing any order to sell securities short for your account,
you are responsible for designating the order as such, and you hereby
authorize Clearing Broker to xxxx the order as being "short." You
further agree to provide Clearing Broker with information concerning any
securities borrowing arrangements made by you and/or your Prime Broker
in connection with any short sales.
5. CUSTOMER QUALIFICATION
----------------------
(a) You understand that you shall be required to maintain in
your account with your Prime Broker such minimum net equity in cash or
securities as may be required, from time to time, by your Prime Broker
(the "Minimum Net Equity"), which shall in no event be less than the
minimum net equity required by the SEC Letter, as such requirement may
be amended from time to time (initially: (i) $100,000 in cash or
securities with a ready market, for trades executed on behalf of a
customer account managed by an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940 (a "Registered
Investment Adviser"), or (ii) $500,000 in cash or securities with a
ready market for trades executed on behalf of an account not managed by
a Registered Investment Adviser). You further understand that, in the
event your account falls below such Minimum Net Equity, you shall bring
your account into compliance in a timely fashion. Each time you enter
an order with Clearing Broker you hereby represent that you shall be in
compliance with such Minimum Net Equity or will notify Clearing Broker
otherwise.
(b) In the event that your Prime Broker indicates its
intention to disaffirm any trade, you hereby authorize and instruct your
Prime Broker to provide to Clearing Broker, upon the request of Clearing
Broker, the following information: (i) the account or accounts to which
any of your orders or trades relate; (ii) the instructions, if any,
provided to your Prime Broker regarding the allocation of any orders or
trades to any sub-accounts; and (iii) information available to your
Prime Broker with respect to any net equity in the account. In
addition, this Agreement will serve as further authorization and
instruction to your Prime Broker to furnish to Clearing Broker in the
event of a disaffirmance all such further and additional information
concerning an account as Clearing Broker shall request, provided that
such authorization shall have been confirmed by you in a separate letter
addressed and delivered to your Prime Broker and Clearing Broker. This
paragraph shall remain in effect so long as this Agreement is in effect,
shall survive the termination of this Agreement and shall apply to all
orders and trades given by you to Clearing Broker for clearance and
settlement through your Prime Broker. You hereby agree to release and
discharge your Prime Broker from all responsibility and liability
arising out of or incurred in connection with your grime Broker
furnishing any information to Clearing Broker pursuant to this
paragraph.
6. CONFIRMATION
------------
Clearing Broker shall confirm the Trade Data to your Prime Broker
and shall issue a confirmation for each Prime Brokerage Transaction by
the morning of the next business day after trade date. As used in this
Agreement, the term Business Day means any day which is not a Saturday
or Sunday on which The New York Stock Exchange, Inc. is open for
business. You may direct Clearing Broker to send confirmations to you
in care of your Prime Broker; the form of such directive may be obtained
from Clearing Broker and appended to this Agreement.
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7. CUSTOMER'S SETTLEMENT OBLIGATION
--------------------------------
In the event your Prime Broker indicates its intention not to
settle, or fails to settle, any of your Prime Brokerage Transactions,
you shall be responsible and liable to Clearing Broker for settling such
Prime Brokerage Transaction directly with Clearing Broker in a margin
account that Clearing Broker will open or has opened in your name on its
books in accordance with Regulation T of the Board of Governors of the
Federal Reserve System. Clearing Broker shall send you a new
confirmation of the replacement transaction(s).
8. DISCRETIONARY ACCOUNT
---------------------
(a) If your account is managed on a discretionary basis by an
investment adviser, money manager or other person ("adviser"), you
hereby acknowledge that your Prime Brokerage Transactions may be
commingled with those of other accounts of your adviser ("sub-
accounts"), according to your adviser's instructions, for clearance by
Clearing Broker in a single bulk trade and for settlement in bulk with
your Prime Broker. You further acknowledge that in the event your Prime
Broker indicates its intention not to settle or does not settle such
bulk trade because of one or more subaccounts receiving an allocation,
Clearing Broker will either cancel and rebill the bulk trade to reflect
the reduction of the securities which were originally allocated to the
objectionable sub-accounts or, if permissible, execute a corrected
allocation of the Prime Brokerage Transaction to sub-accounts in
accordance with your adviser's instructions. To facilitate such
allocation, Clearing Broker may open and carry an account in your name
on its books and you shall be solely responsible and liable to Clearing
Broker for selling such transaction directly with Clearing Broker. You
acknowledge that your adviser may resubmit the bulk trade and execute a
corrected allocation of the Prime Brokerage Transaction.
(b) If you are executing this Agreement on behalf of a
customer whose account is managed by you, you hereby represent and
covenant to Clearing Broker that: (i) each time you execute an order on
behalf of such customer, such customer is in compliance with the Minimum
Net Equity or you shall notify Clearing Broker otherwise; (ii) you shall
not enter an order for such customer in the event such customer falls
below the Minimum Net Equity; (iii) you will provide Clearing Broker
with the customer's name, address and Tax I.D. Number to enable Clearing
Broker to open and maintain an account for the benefit of such customer;
(iv) you have sufficient knowledge of such customer to make the
representation set forth in Paragraph 19 of this Agreement and; (v) you
have been duly authorized by the customer to execute this Agreement, to
bind such customer to arbitration, to enter orders to effect Prime
Brokerage Transactions, to execute a directive to Clearing Broker
regarding the mailing of confirmations, to disclose such financial
information as Clearing Broker deems necessary to effect such
transactions and to take such other actions as are contemplated by this
Agreement.
9. FEES AND CHARGES
----------------
You understand that Clearing Broker may charge commissions and
other fees for clearance or any other services furnished to you and you
hereby agree to pay such commissions and fees at the then prevailing
rates of Clearing Broker, as the case may be. You further understand
that service fees, if any, may be changed from time to time, upon 30
days prior written notice to you.
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10. RESTRICTIONS ON ACCOUNT
-----------------------
You understand that Clearing Broker, in its sole discretion, may
refuse to accept or execute Prime Brokerage Transactions on your behalf
or restrict or prohibit trading of securities in your account(s) with
Clearing Broker, or refuse to clear your securities transactions.
11. DEFAULT
-------
If; (i) you fail to perform your settlement obligations or in the
event your Prime Broker indicates its intention not to settle, or fails
to settle, any of your Prime Brokerage Transactions, as set forth in
paragraph 7 of this Agreement, (ii) any representation made by you shall
have been incorrect or untrue in any material respect when made, (iii)
you shall have admitted your inability to, or intention not to, perform
any of your obligations hereunder, (iv) you file a petition or other
proceeding in bankruptcy, insolvency, or for the appointment of a
receiver, or such a petition or proceeding is filed against you, (v) a
levy of an attachment is made against your account(s) with Clearing
Broker, (vi) you die or become mentally incompetent or you are a
corporation that dissolves, or (vii) you shall have otherwise breached
the terms of this Agreement (any one being an "Event of Default"),
Clearing Broker shall have the right to sell, without prior notice to
you, any and all property in which you have an interest held by or for
the benefit of Clearing Broker, to buy any property that may have been
sold short, to cancel any outstanding transactions and/or to purchase or
sell any other securities or other instruments to offset market risk,
and you shall be liable to Clearing Broker for all losses, costs and
expenses caused by such Event of Default, together with interest earned
thereon from the date of such Event of Default at the prime rate, until
payment in full is received by Clearing Broker.
12. LEGALLY BINDING
---------------
You hereby agree that this Agreement and all the terms hereof shall
be binding upon you and your estate, heirs, executors, administrators,
personal representatives, successors and assigns. You agree that all
Prime Brokerage Transactions shall be for your account(s) in accordance
with your oral or written instructions. You hereby waive any and all
defenses that any such instructions were not in writing as may be
required by the Statute of Frauds or any other similar law, rule or
regulation.
13. CLEARANCE ACCOUNTS
------------------
In the event your Prime Brokerage Transactions are executed by your
broker, who has introduced your account to Clearing Broker for clearance
services only, you agree that your broker and its employees are third
party beneficiaries of this Agreement, and that the terms and conditions
hereof, including, but not limited to, the Arbitration and Telephone
Conversations provisions, shall be applicable to all matters between or
among any of you, your broker and its employees, and Clearing Broker and
its employees.
14. MARGIN ACCOUNT, SECURITY INTEREST, CONSENT TO LOAN OR PLEDGE SECURITIES
-----------------------------------------------------------------------
(a) You hereby agree to deposit and maintain such margin in
your margin account as Clearing Broker may in its sole discretion
require, and you agree to pay immediately on demand any debit balance
therein. Upon your failure to pay, or at any time Clearing Broker deems
necessary for its protection, without prior demand, call or notice,
Clearing Broker shall be entitled to exercise all rights and remedies
provided herein. Unless you advise us to the contrary, you represent
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that you are not an affiliate (as defined in Rule 144(a) (1) under the
Securities Act of 1933) of the issuer of any security held in your
account.
(b) As security for the payment of your obligations to
Clearing Broker, Clearing Broker shall have a continuing security
interest in all property in which you have an interest held by or for
the benefit of Clearing Broker and may, without prior notice to-you,
use, apply or transfer any such property. In the event of a breach or
default under this Agreement Clearing Broker shall have-all rights and
remedies available to a secured creditor in addition; to the rights and
remedies provided herein.
(c) Within the limits of applicable law and regulations, you
hereby authorize Clearing Broker to lend either to itself or to others
any securities held by or for the benefit of Clearing Broker in your
account, together with all attendant rights of ownership, and to use all
such property as collateral for its general loans. Any such property;
together with all attendant rights of ownership, may be pledged,
repledged, hypothecated or rehypothecated either separately or in common
with other such property for any amounts due to Clearing Broker thereon
or for a greater sum, and Clearing Broker shall have no obligation to
retain a like amount of similar property in its possession and control.
(d) You hereby acknowledge receipt of Clearing Broker's
Truth-in-Lending disclosure statement. You understand that interest
will be charged on any debit balances in your account, in accordance
with the methods described in such statement or in any amendment or
revision thereto which may be provided to you. Any interest charged on
your debit balance which is not paid at the close of an interest period
will be added to the opening balance for the next interest period.
15. AMENDMENT; ENTIRE AGREEMENT
---------------------------
You agree that Clearing Broker may modify the terms of this
Agreement at any time upon prior written notice. If such modifications
are unacceptable to you, you must notify Clearing Broker in writing
within 30 days of Clearing Broker's transmittal of such notice. Your
account may then be terminated by Clearing Broker, after which you agree
to remain liable to Clearing Broker for all existing liabilities or
obligations. Otherwise this Agreement may not be waived or modified
absent a written instrument signed by an authorized representative of
Clearing Broker. Except as set forth above, this Agreement represents
the entire agreement and understanding between you and Clearing Broker
concerning the subject matter hereof.
16. TELEPHONE CONVERSATIONS
-----------------------
For the protection of both you and Clearing Broker, and as a tool
to correct misunderstandings, you hereby authorize Clearing Broker in
its discretion and without prior notice to you, to monitor and/or record
any or all telephone conversations between you, Clearing Broker and any
of Clearing Broker's employees or agents.
17. ASSIGNABILITY
-------------
This Agreement and the rights and obligations arising out of the
Prime Brokerage Transactions cleared pursuant hereto may not be assigned
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without the prior written consent of the other party, other than by
Clearing Broker as part of a general transfer of Clearing Broker's
business.
18. SEVERABILITY
------------
If any provision of this Agreement is or becomes inconsistent with
any applicable present or future law, rule or regulation, that provision
shall be deemed modified or, if necessary, rescinded in order to comply
with the relevant law, rule or regulation. All other provisions of this
Agreement shall continue to remain in full force and effect.
19. CAPACITY TO CONTRACT; CUSTOMER AFFILIATION
------------------------------------------
You represent that you are of legal age and that, unless you have
notified Clearing Broker to the contrary, neither you nor any member of
your immediate family is an employee of any exchange or member thereof,
an employee of the National Association of Securities Dealers, Inc. or a
member thereof, an employee of any corporation, firm or individual
engaged in the business of dealing, as broker or principal, in
securities, options or futures, or an employee of any bank, trust
company or insurance company.
20. EXTRAORDINARY EVENTS
--------------------
Clearing Broker shall not be liable for losses caused directly or
indirectly by government restrictions, exchange or market rulings,
suspension of trading, war, strikes or other conditions beyond its
control.
21. HEADINGS
--------
The headings of the provisions hereof are for descriptive purposes
only and shall not modify or qualify any of the rights or obligations
set forth in such provisions.
22. GOVERNING LAW
-------------
This Agreement shall be governed by the laws of NEW YORK STATE
without giving effect to the conflicts of law principles thereof.
23. DESIGNATION OF ADVISOR/AGENT
----------------------------
If your account is managed by an advisor, as such term is defined
in paragraph 8(a), or by an agent, and you are executing this Agreement,
you hereby authorize __________________ to engage in Prime Brokerage
Truncations on our behalf, and you hereby represent and covenant that
such advisor has been duly authorized by you to take such actions as are
contemplated by this Agreement.
24. ARBITRATION DISCLOSURES
-----------------------
* ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
* THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRIAL.
* PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND
DIFFERENT FROM COURT PROCEEDINGS.
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* 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 LIMITED.
* THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY.
25. ARBITRATION
-----------
You agree, and by agreeing to maintain an account in the name of
your Prime Broker and designated for your benefit, Clearing Broker
agrees, that controversies arising between you and the Clearing Broker,
its control persons, predecessors, subsidiaries and affiliates and all
respective successors, assigns and employees, whether arising prior to,
on or subsequent to the date hereof, shall be determined by arbitration.
Any arbitration under this Agreement shall be conducted pursuant to the
Federal Arbitration Act and the laws of the state designated in Paragraph
22, held at the facilities and before an arbitration panel appointed by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or
an arbitration facility provided by any other exchange of which the Clearing
Broker is a member, the National Association of Securities Dealers, Inc.,
or the Municipal Securities Rulemaking Board, and in accordance with the
rules then in effect of the selected organization. You may elect one of
the foregoing forums for arbitration, but if you fail to make such election
by registered mail or telegram addressed to the Clearing Broker (or any
other address of which you are advised in writing), before the expiration
of ten days after receipt of a written request from the Clearing Broker to
make such election, then the Clearing Broker may make such election. For
any arbitration solely between you and a broker for which the Clearing
Broker acts as clearing agent, such election shall be made by registered
mail to such broker at its principal place of business. The award of
the arbitrators, or of the majority of them, shall be final, and
judgment upon the award rendered may be entered in any court, state or
federal, having jurisdiction.
No person shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement
against any person who has initiated in court a putative class action or
who is a member of a putative class who has not opted out of the class
with respect to any claims encompassed by the putative class action
until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii) the customer is excluded from the class by the court.
Such forbearance to enforce an agreement to arbitrate shall
not constitute a waiver of any rights under this Agreement
except to the extent stated herein.
By signing this Agreement you acknowledge that:
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1. The securities in your margin account(s) and any securities for
which you have not fully paid, together with all attendant ownership
rights, may be loaned to Clearing Broker or loaned out to others; and
2. You have received a copy of this Agreement.
This Agreement contains a pre-dispute arbitration clause at paragraph 25.
This Agreement is dated as of May 1, 1998.
/s/ Xxxxxxx X. Xxxxx
___________________________________________
(Signature)
Xxxxxxx X. Xxxxx, President
____________________________________________
(Typed or Printed Name & Title)
____________________________________________
0000 Xxxxxxxxx Xxxx
--------------------------------------------
0000 Xxxxx Xxxxx
--------------------------------------------
Xxxxxxx, XX, 00000
--------------------------------------------
(Full Mailing Address)
Accepted by:________________________________
Clearing Broker
Date:_______________________________________
Account No.:________________________________
Social Security # Or Tax ID:________________
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SCHEDULE
List of managed accounts covered by agreement for Prim Brokerage
Clearance Services
________________________________________________________________________________
CUSTOMER NAME ADDRESS TAX ID NO.
________________________________________________________________________________
C&O Investment Partners LP- _______________________ 00-0000000
PaineWebber
________________________________________________________________________________
C&O Market Opportunity - _______________________ 00-0000000
PaineWebber
________________________________________________________________________________
____________________________ _______________________ ______________________
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____________________________ _______________________ ______________________
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APPENDIX
INSTRUCTIONS TO EXECUTING SELF-CLEARING BROKER OR CLEARING
AGENT OF EXECUTING BROKER REGARDING THE MAILING OF CONFIRMATIONS
The undersigned customer has entered into an Agreement For Prime
Brokerage Clearance Services (the "Agreement") with Clearing Broker
("CB") which provides, among other things, that CB shall issue a
confirmation for each transaction it executes or clears on behalf of the
undersigned, unless the undersigned directs CB, in writing, to send
confirmations to the undersigned in care of the undersigned's prime
broker.
The undersigned hereby requests that CB, as executing broker or as
clearing agent for an executing broker, to send confirmations to the
undersigned in care of the undersigned's prime broker. This instrument
shall not be deemed to either incorporated in or made a part of the
Agreement.
The undersigned acknowledges that it its accounts managed on a
discretionary basis by an investment advisor or money manager, each
confirmation may cover a single bulk trade representing truncations that
have been commingled with those of other accounts of the undersigned's
advisor.
By accepting these instructions, CB hereby acknowledges that this
instrument is not a condition for entering into the Agreement of the
prime brokerage arrangement. CB further agrees that it shall not charge
differential fees based on whether an instruction such as this is
provided nor shall CB otherwise create incentives for the undersigned to
execute this instrument.
____________________________________
(Typed or Printed Name & Title)
____________________________________ Account No.:__________________________
(Signature)
____________________________________ Social Security # Or Tax ID:__________
(Typed or Printed Name & Title)
____________________________________
(Signature)
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