Exhibit 10.19
August 13, 1999
CB Corredores de Bolsa, S.A.
Xxxxxxxxx 0000
Xxxx 0
Xxx Xxxxxx, Xxxxxxxx
XXXXX
Re: Establishment of Brokerage Arrangement
--------------------------------------
Gentlemen:
This Agreement sets forth our agreement and understanding, entered into as
of the date shown above (the "Effective Date"), regarding the establishment of a
arrangement whereby Web Street Securities, Inc. ("Web Street") will be the
on-line broker for customers of CB Corredores de Bolsa, S.A. ("CB") trading U.S.
equities or options from Chile and CB will be the exclusive affiliate of Web
Street in Chile, as is more fully described below.
1. Establishment of CB Customer Accounts
-------------------------------------
(a) On or after the Effective Date, CB Customers will procure and submit
to Web Street Web Street's account application (with required
signature[s]) and standard arbitration agreement and other paperwork
customarily required of Web Street customers. CB Customers will
complete and submit to Web Street any other paperwork reasonably
required by Web Street including, without limitation I.R.S. Forms
W-8 and W-9 (where applicable), and other documentation which may be
incidental to the foreign national status of a Web Street customers.
It is understood that CB Customers will not have trading authority
until all documentation and paperwork required as set forth above
has been satisfactorily completed and received by Web Street, in its
sole discretion. For the purposes of this Agreement, "CB Customers"
is understood to include all individuals and corporations opening
Web Street accounts who are residents of Chile and entities
affiliated with Chilean residents or corporations (referred to
collectively as the "Territory"). The parties will negotiate in good
faith with respect to adding other countries to the "Territory" as
defined here.
(b) CB agrees that, for the term hereof, CB will direct all of its
customers desiring to trade U.S. equities or options to Web Street,
and Web Street agrees that it will enter into no other agreements
with Chilean broker firms making Web Street's site and facilities
available to customers wishing to trade equities or options.
2. Maintenance af CB Customer Accounts; Commission Allocation,
------------------------------------------------------------
CB Customer Accounts will be maintained according to the following
procedures and protocols:
(1) For CB Customers desiring to fund their accounts by depositing local
funds directly to CB, CB will maintain an internal account with Web
Street in U.S. dollars solely for the purpose of funding such CB
customer accounts. For such CB customer accounts, CB will notify Web
Street by e-mail or fax to debit CB's internal Web Street account
and credit the CB Customer's account. CB Customers may wire funds
and transfer securities directly to their Web Street account.
(2) Orders for trades made by CB Customers shall be placed in any
manner available to other Web Street customers, i.e., on-line (via
the Internet) or by telephone through a Web Street trader. Orders
received outside market hours (being 9:30 a.m. to 4.00 p.m. Eastern
U.S. time) will be placed at the opening or as near the opening of
the applicable marker as is practicable the next business day.
(3) CB will have access to all Web Street services (subject to any
technological limitations beyond Web Street's control), including
stock quotes, research, news and portfolio management capabilities,
as well as 24 hours/day, 7 days/week telephone access to customer
service representatives (see Exhibit A for a listing of Web Street
features and resources available as of the date hereof).
(4) All charges for CB Customers account activity shall be made
according to the Web Street commission schedule as in effect from
time to time. Web Street will provide reasonable advance notice to
CB of any changes to the commission schedule. (The commission
schedule in effect at the date hereof is attached as Exhibit B.)
(5) All CB Customers will have the benefit of the same insurance
coverage for loss due to broker-dealer or clearing corporation
insolvency or liquidation as other Web Street customers, including
SIPC insurance up to an aggregate of $500,000 ($100,000 cash and
$400,000 securities). Additional such coverage which applies to Web
Street customers as of the date hereof is set forth in the attached
Exhibit C.
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(6) CB Customers will have the ability to purchase options and to
purchase securities on margin according to the same terms and
conditions as other Web Street customers, subject to CB's and Web
Street's approval and Clearing Firm requirements. The Clearing Firm
will be responsible for the extension of credit under Regulation T
of the Federal Reserve and NASD Article III, Section 30, Appendix A.
All margin calls issued to CB Customers shall be met within twenty-
four (24) hours. Web Street and CB agree that any uncollected
customer debits ("Margin Loss") will be ************** between the
parties. With respect TO CB's share of any Margin Losses, Web Street
will notify CB of any such Margin Loss, and after three business
days following delivery of such notice, Web Street shall have
authority to transfer funds out of the CB internal account, and to
charge CB, to satisfy CB's share of the Margin Loss.
(7) As is customary in the United States, CB Customers' securities will
be held electronically by Web Street's Clearing Firm. CB Customers
may request the delivery of certificates.
(8) All notices and other written materials required or permitted to be
prepared and submitted by CB or CB Customers shall include complete
and accurate English language versions or translations, as
applicable and otherwise as required under U.S. Securities laws and
regulations. Translations of originally English language documents
into Spanish (including the Web Street web site) shall be made at
the ************* expense of CB and Web Street. CB shall be
responsible for all printing, advertising and other marketing costs
and expenses in the "Territory" (as defined in 1 (a)); and CB shall
be responsible for any errors in any such translation and shall
indemnify and defend Web Street for all losses, costs, damages, etc.
incurred by Web Street and arising from any such errors.
(9) All clearing functions, including order tickets, time stamps,
confirmations and statement generation shall be conducted by the
Clearing Firm or such other clearing operation (including Web
Street, should it become self-clearing) as Web Street may in its
sole discretion designate. Other than in the case of Web Street
becoming self-clearing, CB, for itself and its customers, waives any
claim it may have against Web Street, its officers, directors,
shareholders, employees, agents, successors in interest and legal
representatives for loss or damage resulting from any clearing
company errors or omissions; provided that Web Street agrees to
devote its best efforts to resolving all issues with the Clearing
Firm (including market makers) to the satisfaction of the CB
customer.
(10) Web Street will promptly forward to CB weekly Clearing Firm reports
relating to transactions involving CB Customers.
***** This information is omitted pursuant to a confidential treatment request
filed with the SEC.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 4
(11) Web Street will promptly forward all confirmations to CB Customers
and will promptly forward to CB all monthly statements for CB
Customer accounts with activity and quarterly statements for all
such accounts.
(12) The Clearing Firm will be the "direct inquirer" for CB Customers
under Rule 17f-1 (Lost and Stolen Securities) as promulgated by the
SEC under the Act.
(13) Web Street will answer or seek diligently to obtain answers and to
comply with CB Customer complaints regarding activities for which
Web Street has responsibility.
(14) The Clearing Firm shall be responsible for actions required in
connection with dividends, interest, redemptions, reorganizations,
tenders, exchanges or warrant offers for all CB Customer accounts.
(15) It is understood and agreed that all transactions conducted pursuant
to this Agreement will take place and be denominated in U.S.
currency. Web Street shall not have any responsibility for currency
losses incurred by CB or any CB Customer resulting from the
conversion of local currency into dollars, or the repatriation of
funds to the Territory or for any other reason.
(16) Revenues on trades executed for CB Customers shall be divided in the
manner set forth in the attached Exhibit D.
(17) Web Street acknowledges and agrees that CB will have no
responsibility for any customer losses attributable to Web Street
system failures or outages.
3. Responsibilities of CB.
-----------------------
(1) CB will work jointly with Web Street in establishing a unique
destination on CB's web site -- CB-Web Xxxxxx.xxx -- which will be a
co-branded site including translations into Spanish. The site design
will be completed by CB, at CB's expense with final approval by Web
Street; and the co-branded portion of the site will be housed with
Web Street utilizing Web Street's servers.
(2) CB will forward to Web Street all completed new account
documentation (including new account agreements, margin agreements,
option agreements, and Forms W-8 and W-9 [where applicable]) which
have been submitted to CB or CB Customers.
(3) CB will provide Web Street copies of any complaints received by CB
that relate to the Clearing Firm or Web Street within twenty-four
hours after receipt.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 5
(4) CB will furnish its customers with the required prospectus, when
applicable, including supplements, amendments, option prospectus and
disclosure documents, and when making sales of underwriting
securities shall comply with all NASD rules. Web Street, or its
Clearing Firm, will provide such documents to CB.
4. Joint Marketing.
---------------
Web Street hereby grants a royalty-free license to CB to use, reproduce and
display the name "Web Street" and variations thereof (hereinafter referred to as
the "Web Street Marks"), as follows:
(a) The grant of license shall be co-terminous with the term of this
Agreement.
(b) The grant of license shall be exclusive with respect to use of the
Web Street Marks in the Territory only. No use of the Web Street
Marks outside the Territory is contemplated or agreed to.
(c) CB will display a Web Street logo service xxxx (with "sm"
superscript) in a prominent position on the joint CB-Web Street
website.
(d) Included in the grant of license herein is the right to use Web
Street advertising and promotional materials (hereinafter referred
to as the "Web Street Materials") in the Territory.
(e) CB will provide and be responsible for all translations into Spanish
of Web Street Materials. CB will provide Web Street with copies of
all Web Street Materials used by CB; and CB will obtain Web Street's
advance written approval of CB's uses of any Web Street Xxxx and/or
Web Street Materials. CB will indemnify, defend and hold Web Street
harmless for any violations of law resulting from CB's use of Web
Street Marks or Web Street Materials in the Territory.
5. Miscellaneous.
-------------
(a) Binding Effect: This Agreement shall be binding upon and inure to
the benefit of the parties hereto, their legal representatives,
successors in interest and permitted assigns.
(b) Assignment. Because of the personal nature of the performance
hereunder, the parties agree that the rights, obligations, and
performances required hereunder shall not be transferred or assigned
without the express written consent of the parties hereto.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 6
(c) Notices. All notices required or permitted under this Agreement shall
be in writing and personally delivered or sent by facsimile
transmission as follows:
If to Web Street c/o: Xxxx X. Xxxxxxx
at: Web Xxxxxx.xxx, Inc.
000 Xxxx Xxxx Xxxx - 0xx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to CB c/o: Xxxxx Xxxxxxx Van xx Xxxxxxx
or Xxxxxxxx Xxxxx Xxxxxx
at: CB Corredores de Bolsa, S.A.
Xxxxxxxxx 0000
Xxxx 0
Xxx Xxxxxx, Xxxxxxxx
XXXXX
Facsimile 000 000 0000
or such other address as either party may from time to time designate
to the other by notice duly given.
(d) Survival. All covenants, representations, warranties and indemnities
made or given under this Agreement shall survive the termination
hereof.
(e) Entire Agreement: Amendment. This Agreement contains the entire
understanding of the parties, and supersedes any prior agreements or
understandings, with respect to the transactions contemplated by
this Agreement. This Agreement may be amended only with the express
written consent of the parties hereto.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to
contracts made and to be performed in that state, and the parties
agree that any dispute arising hereunder shall be decided either in
the Northern District of Illinois or the Circuit Court of Xxxx County,
Illinois.
(g) Partial Invalidity. In the event any part or parts of this Agreement
are found to be invalid, illegal or unenforceable in any respect, it
is the intent of the parties that a court so finding shall revise or
modify the provisions hereof found to be invalid, illegal or
unenforceable, and the remaining provisions hereof shall nevertheless
be valid and binding with the same force and effect as if the
invalid, illegal or unenforceable part or parts were originally
deleted.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 7
(h) Waivers. Any term or provision of this Agreement may be waived, or
the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. The failure of any party
hereto to enforce at any time any provision of this Agreement shall
not be construed to be a waiver of such provision, nor in any way to
affect the validity of this Agreement or any part hereof or the
right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held
to constitute a waiver of any other or subsequent breach.
(i) Expenses. Each party hereto will pay all of its own costs and
expenses incident to its negotiation and preparation of this
Agreement and to its performance and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its
counsel and accountants.
(j) Multiple Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original hereof, and
all of which taken together shall be considered one and the same
instrument.
(k) No Authority to Bind. Neither Web Street nor CB shall have the
authority to bind the other, other than as expressly provided for
herein.
6. Term and Termination.
---------------------
The initial term of this Agreememt shall be three (3) years ("Initial
Term"). This Agreement shall automatically renew on each anniversary of the
Effective Date; provided that, after the Initial Term, this Agreement may be
canceled at any time by either party upon ninety (90) days prior written notice.
In the event of a cancellation, CB will assist the Clearing Firm and Web Street
in making an orderly transition. Upon cancellation, the parties shall pay all
amounts owed to the other or to the Clearing Firm.
This agreement is subject to the condition and therefore will become
effective after the approval of the Superintendencia de Valores y Seguros de
Chile.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 8
If the foregoing accurately reflects the agreement and understanding of CB,
please so indicate by signing below.
Web Street, Inc.
By: /s/ Xxxxxx Xxx
-----------------
Xxxxxx Xxx
CEO
ACKNOWLEDGED AND AGREED;
CB Corredores de Bolsa, S.A.
By: /s/ Xxxxxxxx Xxxxx Xxxxxx /s/ Xxxx Xxxxxxxx Xxxxxx Xxxxxx
---------------------------- ---------------------------------
Xxxxxxxx Xxxxx Xxxxxx Xxxx Xxxxxxxx Xxxxxx Xxxxxx
General Manager Director
Dated: August 18, 1999
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 9
EXHIBIT A
Web Street Securities, Inc.
Features
--------
. A real-time trading pit to monitor stocks, options and mutual funds and
check balances and positions;
. 6 - 10 seconds executions on most market orders;
. Online "pop-up" and mailed confirmations;
. Flat $14.95 per online trade;
. Free online trades of 1,000 or more NASDAQ shares of more than $2 per
share;
. Free (not real-time) monitoring of 10 separate Watchlists of up to 10
positions each;
. FREE Baseline company profiles that include company histories, market
trends and individual stock movements;
. FREE Real Time balances and positions; and free real-time quotes;
. Optional Live Self Updating Real Time Quotes;
. Free charts and research; and
. Free news
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 10
EXHIBIT B
Web Street Securities, Inc.
Commission Schedule
-------------------
--------------------------------------------------------------------------------------------------------
Trades Executed Via the Internet
--------------------------------------------------------------------------------------------------------
Any listed stock trade, any size $14.95
--------------------------------------------------------------------------------------------------------
NASDAQ Stock Trade under 1,000 shares $14.95
--------------------------------------------------------------------------------------------------------
NASDAQ Stock Trades 1,000 shares or more* FREE
--------------------------------------------------------------------------------------------------------
Equity and Index Options $14.95 plus
$1.75 per contract
--------------------------------------------------------------------------------------------------------
*On stocks trading over $2.00 per share. For stocks trading $2.00
and under per share, $14.95.
--------------------------------------------------------------------------------------------------------
Trades Executed Via a Live Representative
--------------------------------------------------------------------------------------------------------
Any listed stock trade, any size $24.95
--------------------------------------------------------------------------------------------------------
NASDAQ Stock Trade under 1,000 shares** $24.95
--------------------------------------------------------------------------------------------------------
NASDAQ Stock Trades 1,000 shares** or more $24.95
--------------------------------------------------------------------------------------------------------
Equity and Index Options $24.95 plus
$1.75 per contract
--------------------------------------------------------------------------------------------------------
Bonds -- government, municipals, corporate Contact a Web Street
Account Executive
for pricing
--------------------------------------------------------------------------------------------------------
**On stocks trading over $2.00 per share. For stocks trading $2.00
and under per share, $24.95 plus one cent per share.
--------------------------------------------------------------------------------------------------------
Margin Rates
--------------------------------------------------------------------------------------------------------
0-4,999 2% above broker call
--------------------------------------------------------------------------------------------------------
5,000 - 9,999 1 3/4% above broker call
--------------------------------------------------------------------------------------------------------
10,000 - 14,999 1 1/2% above broker call
--------------------------------------------------------------------------------------------------------
15,000 - 19,999 1 1/4% above broker call
--------------------------------------------------------------------------------------------------------
20,000 - 24,999 1% above broker call
--------------------------------------------------------------------------------------------------------
25,000 and higher 3/4% above broker call*
--------------------------------------------------------------------------------------------------------
Broker call as quoted in Wall Street Journal
--------------------------------------------------------------------------------------------------------
*over $100,000 rate is negotiable
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 11
EXHIBIT C
Web Street Securities, Inc.
Insurance Coverage
------------------
Web Street is a member of SIPC (Securities Investor's Protection
Corporation). SIPC insures the first $500,000 of each customer account ($100,000
cash; $400,000 securities). Individual accounts are additionally protected by
Web Street Securities, through Asset Guaranty Insurance Company, up to $100
million.
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CB Corredores de Bolsa, S.A.
August 13, 1999
Page 12
EXHIBIT D
Web Street Securities, Inc.
Transaction Costs and Fee Structure
-----------------------------------
Ticket Charges -- Web Street currently pays to U.S. Clearing a charge of $8.00
U.S. for the clearing of any size equity transaction. This includes both market
and limit orders. Web Street currently pays to U.S. Clearing a charge of $8.50
U.S. plus an additional $1.25 per contract for all options transactions.
Transaction Revenues -- Web Street charges $14.95 commissions on all equity
transactions. Web Street charges no commissions on NASDAQ trades of 1,000 or
more if the stock is priced over $2.00. Both market and limit orders. Web Street
charges $14.95 plus $1.75 per contract on option trades.
Order Flow Rebates -- Street currently receives the following rebates on NASDAQ
stock trades:
$.025 per share on NASDAQ stock priced over $2.00.
$.01 per share on NASDAQ stock priced $1.01 to $2.00.
Revenue Sharing -- Web Street and CB will ***** gross profits *******. For these
purposes, Gross profit will be agreed to consist of:
Total Transaction Revenues plus Order Flow Rebates less Ticket Charges.
CB's share of gross profits will be paid, to an account identified by CB, no
later than the 15th calendar day following the close of the "trading month." The
"trading month" ends on the Tuesday preceding the last Friday of each calendar
month.
****** This information is omitted pursuant to a confidential treatment request
filed with the SEC.
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