AGREEMENT
This Agreement ("Agreement") is entered into by and between
XXXXXXXX.XXX, a California corporation and NASD licensed broker-dealer, with
mailing address at 0000 Xxxxxxxx Xxxxxxx, Xxx. X000, Xxxxxx, Xxxxxxxxxx 00000
("NEX") and XxxxXxxxx.xxx, inc. a subsidiary of Rushmore Securities Corp, a
Texas corporation and an NASD licensed broker-dealer, with mailing address at:
Xxx Xxxxxxxx Xxxxx, 0xx Xxxxx 00000 Xxxx Xx. Xxxxxx, XX 00000 ("RSC"), with
reference to the following:
A. NEX will, on occasion, refer to RSC individuals who desire to
engage in trading activities, which individuals may or may not have received a
certificate of training from Online Trading Academy ("OTA").
B. RSC desires that NEX refer such individuals to RSC, for the
purpose of establishing trading accounts on behalf of the individuals, and
acting as the broker-dealer for those individuals.
C. In consideration of NEX referring qualified individuals to
RSC, RSC agrees to pay to NEX certain sums, in accordance with the formulas set
forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. The term of this Agreement shall be for a period of three (3)
years, beginning from the date this Agreement has been fully executed by all
parties hereto. After the initial three (3) year term, the Agreement shall be
deemed to continue on the same terms and conditions each and every year
thereafter. After the initial three (3) year term, either party may give twelve
(12) months notice to the other party of its intent to terminate the Agreement.
2. During the term of this Agreement, NEX will, on a
non-exclusive basis, refer to RSC individuals that have expressed an interest in
trading activities.
3. For each individual referred to RSC by NEX, if RSC chooses to
establish a trading account for that individual, RSC will pay to NEX the
following consideration:
a. Fifty percent (50%) of the "net commissions"
generated by the individual (determined on a monthly basis). For the purpose of
this Agreement, net commissions equals gross commissions earned less the actual
cost paid by RSC to a clearing house to clear the trades of that individual.
b. If the individual presents RSC with a certificate
provided by OTA showing that the individual has satisfactorily completed a
trading course offered by OTA, RSC agrees to reimburse the individual the earned
net commissions charged the individual by RSC for trading activities in an
amount equal to the face value shown on the certificate. Reimbursement will be
achieved by reducing trading charges that RSC charges to the individual by
twenty-five percent (25%) of its regularly published commission rate for each
trade, until such time as the individual has received cumulative discounts equal
to the certificate amount. Upon fully crediting earned net commissions in the
required sum (i.e. the face value shown on the certificate), RSC shall collect
earned commissions in the normal course of business.
c. RSC shall aggregate the earned net commissions for
each individual referred by NEX to RSC, thereby determining the total sum of
earned commissions to be shared with NEX. that amount divided in two, with
one-half paid to NEX within fifteen (15) days of the end of the month in which
the net commissions were earned.
d. Payment of the required amount shall be in good
funds, delivered to NEX by the time specified, at the address set forth above.
Each payment shall be accompanied by an accounting from RSC, showing the name of
each individual for whom payment is being made, the gross commissions generated
by that individual, the cost of clearing trades charged to that individual, and
reimbursement of earned commissions (if any). These reports shall provide the
required information in both a monthly and month to date format. All reports
shall be continuously updated and provided at least weekly, either
electronically or in format that is accessible to NEX online.
4. NEX shall have the right, no more frequently than quarterly,
to have its duly authorized representative audit, during regular business hours
at the offices of RSC, the reports provided with each payment, to determine the
accuracy thereof (this includes, but is not limited to, the right to determine
if an individual referred by NEX is a customer of RSC, the right to examine the
gross commissions earned on each trade, and the right to verify the costs of
clearing charged to the customer against the actual costs incurred by RSC). If,
after audit, NEX determines that there is a more than negative two percent (2%)
variance in the amounts due it from RSC, RSC, in addition to immediately paying
the additional sums due, shall also pay for the cost of the audit. If, after
audit, NEX determines that it has been overpaid by more than two percent (2%) of
the amount that it is due, it will remit the overpayment to RSC or have it
applied to future payments, as NEX shall, in its sole discretion, determine.
5. To assist RSC in its reporting requirements to NEX, NEX will,
no less frequently than monthly, provide RSC with the names all leads generated
by NEX who were referred by NEX to RSC in the prior month. All leads will be
compiled in a database to be maintained by NEX and to which RSC will have
reasonable access to leads referred to it.
6. As an inducement to enter into this Agreement, RSC represents
and warrants to NEX the following:
a. RSC is a Texas corporation, duly authorized and
lawfully conducting its business at the address indicated above.
b. RSC is a member in good standing with the NASD and
has no regulatory restrictions on trading or otherwise. Further, it is duly
licensed as a direct access Order Entry Firm (as defined in Rule 4710(f) of the
NASD Rules) and will maintain all such licenses throughout the term of this
Agreement.
c. RSC is duly registered as a broker/dealer with the
United States Securities Exchange Commission and with the securities
commissioners in all fifty (50) states or such states as it will identify to NEX
upon negotiation of this Agreement.
d. RSC has the legal right to enter into this Agreement
and to perform the transactions contemplated hereby. Further, this Agreement,
when executed by a duly authorized officer of RSC, will be a legal, valid and
binding obligation of RSC, enforceable against RSC in accordance with its terms.
e. RSC is not currently under investigation, nor is it
subject to memorandums of understanding or cease and desist orders from any
regulatory authority. Further, RSC has no reason to believe that during the term
of this Agreement, it will be in violation of any laws or regulations applicable
to the activities and payments of money contemplated herein.
7. As an inducement to enter into this Agreement, NEX represents
and warrants to RSC the following:
a. NEX is a California corporation, duly authorized and
lawfully conducting its business.
b. NEX is a member in good standing with the NASD and
has no regulatory restrictions on referring individuals to RSC and sharing
commissions with RSC or otherwise.
c. NEX is duly registered as a broker/dealer with the
United States Securities Exchange Commission.
d. NEX has the legal right to enter into this Agreement
and to perform the transactions contemplated hereby. Further, this Agreement,
when executed by a duly authorized officer of NEX, will be a legal, valid and
binding obligation of NEX, enforceable against NEX in accordance with its terms.
e. NEX is not currently under investigation, nor is it
subject to memorandums of understanding or cease and desist orders from any
regulatory authority. Further, NEX has no reason to believe that during the term
of this Agreement, it will be in violation of any laws or regulations applicable
to the activities and payments of money contemplated herein.
8. Each party hereto agrees to indemnify and hold the other party
(including its shareholders, directors, officers, employees, agents and
representatives) harmless from any and all claims for damages or liability,
costs or expense (including, but not limited to reasonable attorney's fees),
that may arise out of its conduct in the performance of the Agreement, except if
the claim is for matters not covered by errors and omissions insurance or is the
result of gross negligence or intentional wrongdoing on the part of the party
seeking indemnification. The term "conduct in the performance of the Agreement"
shall be deemed to include acts of commission or omission, and material breaches
of any warranty or representation made as a part of this Agreement. If either
party makes a claim against the other under this provision of the Agreement, it
shall fully cooperate and assist the other party in defending or compromising
the claims of third parties.
9. Each party hereto agrees that all information shared with the
other party, be it customer lists, financial information, or general knowledge
in the conduct of its affairs, shall be deemed confidential and a trade secret
of the party disclosing such information. Such information shall not be
disclosed to any third party without the prior written consent of the party to
whom the information belongs, subject to the right of regulatory authorities to
exercise subpoena powers.
10. Anything contained herein to the contrary notwithstanding,
this Agreement shall be terminated upon the occurrence of any of the following
events:
a. There is a breach of any representation or warranty
made herein which is not cured within ten (10) days after written notice of such
breach has been served on the breaching party by the non-breaching party.
b. Either party voluntarily or involuntarily commences a
case under Title 11 of the United States Code (i.e. bankruptcy).
c. RSC fails to make any payment in a timely manner. For
the purpose of this Agreement, the term "timely manner" means within 48 hours of
the date due.
d. Either party violates any regulation or rule of its
governing authority (including, but not limited to, the NASD and the SEC),
thereby exposing the other party to liability for such violations.
e. There is a material breach of any covenant set forth
herein.
11. In the event of early termination, to the extent that any
money is due NEX from RSC, and such money may be lawfully paid to NEX, RSC
shall, as promptly as reasonably possible, pay such sum to NEX.
12. This Agreement contains the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior oral
or written understandings. This Agreement may not be modified or amended except
in a writing executed by the parties hereto.
13. All notices and other communication hereunder shall be in
writing and shall be deemed given when delivered personally or when mailed by
registered or certified mail, return receipt requested, or by facsimile (if
there is a confirmation of such transmission) to the parties at their respective
addresses given above or their general facsimile numbers (or at such other
address for a party as shall be specified by notice).
14. RSC recognizes that the services to be rendered by it under
this Agreement are special, unique and of extraordinary character which gives
them a peculiar value. In the event of the breach by RSC of the terms and
conditions of this Agreement to be performed RSC, NEX shall be entitled to
institute and prosecute arbitration proceedings under the rules and auspices of
the NASD to obtain damages for any breach of this Agreement, or to enforce the
specific performance thereof by RSC or to enjoin RSC from any violation of the
terms of this Agreement or for or in connection with any dispute, questions or
controversies arising out of or under this Agreement. RSC acknowledges that NEX
will be irreparably damaged if RSC shall breach any of the terms of this
Agreement and that NEX cannot be reasonably or adequately compensated in damages
for any such breach. RSC agrees that an injunction may be issued in any
arbitration proceeding brought hereunder, restraining any such breach by RSC and
by a decree of specific performance, and that no bond or security shall be
requited in connection therewith. The remedies provided herein to NEX, however,
shall not be exclusive and shall be in addition to any other remedy (including,
damages) that NEX may have. In addition, RSC shall be entitled to institute and
prosecute arbitration proceedings against NEX under the rules and auspices of
the NASD for any dispute, questions or controversies arising out of or under
this Agreement.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to the
conflicts or choice of law provisions thereof.
16. In the event that any provision of this Agreement conflicts
with federal, state or local law, regulation or ordinance, the same shall not
affect the remainder of the provisions which shall be given full effect without
regard to the invalid portions.
17. Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement shall not invalidate,
make unenforceable or otherwise affect any other term of this Agreement which
shall remain in fall force and effect.
18. No waiver of any breach of any agreement provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
or of any other agreement or provision herein contained. No extension of time
for performance of any obligations or acts shall be deemed and extension of time
for performance of any other obligations or acts.
19. The captions, and titles of the individual sections, clauses,
or provisions are for convenience only and shall not be construed to affect this
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXX.XXX Rushmore curities Corp.
/s/ Xxxx Xxxxxxx 01/05/02 /s/ X.X. Xxxxx Xxxxx, Xx. 12/11/01
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Xxxx Xxxxxxx X.X. Xxxxx Xxxxx, Xx.
President President
Amendment I
This Amendment I ("Amendment") is entered into and will become a part of and
attached as an amendment to the Agreement between the parties dated Dexember 11,
2001 by and between XXXXXXXX.XXX, a California corporation and NASD licensed
broker-dealer, with mailing address at 0000 Xxxxxxxx Xxxxxxx, Xxx. X000, Xxxxxx,
Xxxxxxxxxx 00000 ("NEX") and XxxxXxxxx.xxx a division of Rushmore Securities
Corp, a Texas corporation and an NASD member broker-dealer and Rushmore
Financial group, Inc. (RFGI) both with mailing address at: Xxx Xxxxxxxx Xxxxx,
0xx Xxxxx 00000 Xxxx Xx. Xxxxxx, XX 00000 ("RSC"), wiht reference to the
following and as prescribed by Paragraph 12:
XxxxXxxxx.xxx, RFGI and NEX agree that for a period of Six (6) months from
signing this amendment, an alternative payment method will be in place that will
act in lieu of Paragraphs 3 and 3a of the Agreement dated December 11, 2001.
Paragraph 3, is to be amended as follows - For each individual referred to RSC
by NEX, if RFGI/RSC chooses to acquire and establish a trading account for that
individual, RFGI will pay to NEX for that acquisition the following
consideration:
a. $2000 value paid in RFGI restricted comon stock at a fixed price of
$0.25 per share or 8000 shares per customer. Stock will be issued to
NEX or it's assignee monthly in 80,000 shares blocks for each group of
10 Traders or acquired accounts. Any excess number of Traders over
round lot of Ten (10) Traders will be rolled over into the following
month.
b. This method of payment, controlled by this Amendment, will be in
affect for Six (6) months or until RFGI has acquired a complete block
of 150 Trader/accounts, whichever comes first. At that time, payment
for Traders will revert back to the original agreement (See Original
Agreement Paragraphs 3 and 3a for reference) before the execution of
this Amendment.
c. RFGI hereby gives NEX "piggyback" registration rights on the next
upcoming registration statement RFGI files with the SEC no later than
May 1, 2002. When the Six (6) months end, or RFGI has acquired a
complete block of 150 Trader/accounts, the parties will consider
Amendment II, the intention of the parties to again replace cash
payments with the acquisition of blocks of Traders by the tender of
RFGI restricted common stock to NEX at the then current stock
valuation at the average of the then closing price for the previous
Thirty (30) days. These restricted stock shares would also have
"piggyback" registration rights on the next upcoming registration
statement RFGI files with the SEC but no later than 30 days from the
consummation of amendment II.
d. The Trader accounts purchased is expected to produce an average of 50
tickets per month per trader at Rush Trade's standard commission rate.
Therefore the expected production for the block of 150 customers will
be 7,500 tickets per month. At the end of the 6-month term of
Amendment I, the trade volume production of that block of
Traders/customers will be monitored for the following 30 days. Any
underperformance to the minimum standard of 50 trades per month per
Trader will be augmented with additional Trader accounts (customers
from OTA) at no additional cost to RFGI. (Example 120 traders were
acquired and produced 5600 tickets on the 30 days following the
agreement end. In that event, the 400 tickets short will be replaced
with 8 customers generating 50 trades per month each.)
This Agreement contains the entire agreement of the parties hereto with respect
to the subject matter hereof and supersedes all prior oral or written
understandings. This Agreement may not be modified or amended except in a
writing executed by the parties hereto. This Amendment incorporates and is
considered part and parcel of the original Agreement as referenced throughout.
It is understood and agreed that this Amendment is subject to the approval and
ratification of the RFGI Board of Directors.
Except as otherwise specified herein, the invalidity or unenforceability of any
term or terms of this Agreement shall not invalidate, make unenforceable or
otherwise affect any other term of this Agreement which shall remain in
full force and effect.
The captions, and titles of the individual sections, clauses, or porvisions are
for convenience only and shall not be construed to affect this agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of:
This 14th Day of March 2002
XXXXXXXX.XXX Rushmore Financial Group, Inc.
/s/ Xxxx Xxxxxxx /s/ X.X. Xxxxx Xxxxx
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Xxxx Xxxxxxx X.X. Xxxxx Xxxxx
President CEO
