EXHIBIT 10.06
FULLY DISCLOSED CLEARING AGREEMENT
OF
PERSHING DIVISION
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
THIS AGREEMENT is made and entered into as of this October 22, 1992 by and
between the Pershing Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("Pershing"), a Delaware Corporation and Xxxxx, Xxxxxxxx & Xxxxx,
Inc. ("Broker"), a New York Corporation.
1. Subject to the approval of the New York Stock Exchange, from the
opening of business on or about February 19,1993, until the termination
of this Agreement as provided for in Paragraph 17 hereof, Pershing will
carry the cash and margin accounts of the customers introduced by
Broker to Pershing, and accepted by Pershing, 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.
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
is a member firm in good standing of the National Association
of Securities Dealers, Inc. ("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 Pershing 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) Pershing represents and warrants that:
Pershing 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 National Association
of Securities Dealers, Inc. ("NASD").
Pershing 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
Pershing is subject, to enter into this Agreement; and
Pershing 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 of every regulatory and
self-regulatory organization to whose jurisdiction Pershing is
subject.
3. SERVICES TO BE PERFORMED BY XXXXXXXX
Xxxxxxxx, 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 confirmations and prepare and mail 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 transactions 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 therefor,
provide custody and safekeeping of securities and cash; and
handle margin accounts dividends and exchanges, and rights and
tender offers with respect to such securities.
(e) Mail to each customer a copy of the Notice to Customers as
required by New York Stock Exchange Rule 382(c).
Notwithstanding subparagraph (a) through (d) above, Pershing may, in
its sole discretion, after giving reasonable notice and for reasonable
cause, 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
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customer introduced by Broker.
Broker acknowledges that in connection with the performance of the
above described services, Pershing may retain, at its option, one or
more independent data processing service bureaus to perform any of the
required functions, and agrees that Pershing 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. Pershing'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 reasonably practicable. In no event
shall Pershing be responsible for indirect or consequential damages.
Pershing 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 in the
aggregate without the prior written approval of Pershing. All expenses
incurred in connection with such authorization shall be charged to
Broker. Any lien on the customer's property granted by the customer to
Broker or Pershing 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 PERSHING IS NOT RESPONSIBLE
Unless otherwise expressly agreed in writing, Pershing will not provide
nor be responsible for providing any services specifically enumerated
in this Paragraph:
(a) Accounting, bookkeeping or record keeping, cashiering, or
other services in respect to commodity transactions, or any
other transaction not involving securities;
(b) Preparation of Broker's payroll records, financial statements
or any analysis thereof;
(c) Preparation or issuance of checks in payment of Broker's
expenses, other than expenses incurred by Pershing on behalf
of Broker pursuant to this Agreement;
(d) Payment of commissions to Broker's salesmen;
(e) 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 Pershing
will, at the request of Broker, furnish Broker with any
necessary information and data contained in records kept by
Pershing and not otherwise available to Broker for use in
making such reports by Broker; and
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(f) Verification of address changes of Broker's customers.
5. DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF BROKER
(a) Information to be supplied by Broker:
Broker will provide Pershing 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 Pershing to discharge its service obligations
hereunder. In all cases, such data and documents must be
compatible with the requirements of Pershing's bookkeeping
system. In addition, Broker will furnish Pershing such
information and signatures as are requested by Pershing for
the opening and carrying of customer accounts on forms which
have been approved by Pershing. All accounts shall be opened
in accordance with Pershing's requirements, and the acceptance
of an opening of an account without such requirements being
fulfilled shall not be deemed to be 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 Pershing may for all purposes rely on
such addresses as they are furnished by Broker.
(b) Receipt of money and securities:
In all cash accounts, Broker shall be responsible for
purchases for customers until actual and complete payment
therefor has been received by Pershing, and in the case of
checks representing such payment received by Pershing, Broker
shall be responsible until they shall have been paid and the
proceeds actually received and credited to Pershing by its
bank. Pershing agrees to use due diligence in depositing such
checks promptly.
Broker shall be responsible for sales until acceptable
deliveries to Pershing of the securities involved have been
made. Broker agrees to turn over promptly to Pershing funds or
securities received by Broker from its customers, together
with such information as may be relevant or necessary to
enable Pershing to promptly and properly to record such
remittances 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 a "delivery vs.
payment" or, "receive versus payment" basis without the prior
written approval of Pershing. Broker shall obtain each
customer's agreement to accept "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. Pershing may at its option
charge, for late payments or deliveries, interest at 1%, or
such other rate as may be agreed upon in writing, above the
broker's call rate.
Pershing reserves the right to give prior oral or written
notice to Broker and to any customer of failure to make timely
settlement and
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Pershing's intention to take remedial action. In the case of
the purchase or sale of securities "when issued" or where
distribution or delivery is otherwise delayed in an account
other than a margin account, Broker shall be responsible for
the transaction until necessary and satisfactory margin has
been received by Pershing and for checks representing such
margin until they shall have been paid and the proceeds
actually received and credited to Pershing by its bank.
With respect to any settlements which involve the drafting of
securities; draft charges, including interest expense, will be
borne by Broker. Interest costs on settling in locations not
herein specified will be borne as Pershing and Broker may
mutually agree in writing, with the general understanding that
Pershing will bear the interest costs 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 other location.
(c) Communication with customers:
Broker and Pershing each agree to forward to the other any
written complaint received from a customer.
(d) 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 practice and xxxxxxx xxxxxxx, and compliance with
all federal, state, securities exchange and association laws,
rules and regulations to which Broker and the customer are
subject.
Broker undertakes to comply with Rule 405(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.
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Broker must notify Pershing 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 Pershing 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 Pershing by Broker
shall not be minors and shall not be such as to come under any
prohibition 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 Pershing 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 will deliver to such customer a current
prospectus of the Options Clearing Corporation together with
any effective supplements thereto. 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 Pershing'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 Pershing. Pershing shall not be required to
endorse any put or call options for any account unless the
account is satisfactory to Pershing.
This agreement places the responsibility for "knowing the
customer" and "suitability" on the Broker. It permits Pershing
to satisfy itself, for its own benefit, that Broker has the
ability to comply itself, for its own benefit, and 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
Pershing on behalf of or for the use of Broker shall neither
obligate Pershing to review such material nor make Pershing
responsible to know its contents.
(e) Financial Data
Broker agrees to furnish Pershing a copy of all FOCUS Reports
at the same time Broker files such with its primary examining
authority.
(f) 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 rules and regulations promulgated pursuant thereto.
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6. BROKER INDEMNIFICATION
Broker hereby agrees to indemnify, defend and hold harmless Pershing
from and against all claims, demands, proceedings, suits and actions
made or brought against Pershing and to indemnify Pershing's
liabilities, losses, damages, expenses, attorneys' fees and costs
arising out of one or more of the following:
(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 Pershing shall be
responsible only for the portion of any such losses that are
directly attributable to Pershing's failure to give proper and
timely notification to the customer of any maintenance call;
(c) 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 Pershing in any transactions
referred to in Paragraph 5 shall not affect Broker's
indemnification obligations hereunder, unless such
participation by Pershing's employee was fraudulent or
negligent;
(d) Any dishonest, fraudulent, negligent or criminal act or
omission on the part of any of Broker's officers, partners,
employees, agents or customers;
(e) All claims or disputes between Broker and its customer with
respect to the matters set forth in Paragraph 5 (d), it being
understood: (i) that Broker guarantees the validity of
customer orders in the form such orders are transmitted to
Pershing by Broker and guarantees to Pershing that each
customer will promptly and fully perform his commitments and
obligations with respect to all transactions in all of his
accounts carried by Pershing hereunder and, (ii) that checks
received by Pershing from Broker's customer shall not
constitute payment until they have been paid and the proceeds
actually received and credited to Pershing by its bank;
(f) Any adverse claims with respect to any customer securities
delivered or cleared by Pershing it being understood that
Pershing 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 8-306(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 Pershing for
clearance;
(h) The default by any third-party broker with whom the Broker
rather than Pershing executes a transaction for itself or a
customer;
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(i) The negligence, malfeasance, or mistakes of any 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) Pershing'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 Pershing (whether or not such failure is
in the Broker's control).
If within 30 days or such lesser time as required by law after
receiving notice thereof in writing, Broker shall fail to properly
institute the defense of Pershing against any claim, demand, suit,
proceeding or action arising out of one or more of the above matters,
Pershing will have the right to defend against the same at Broker's
cost and expense, or in its sole discretion, to settle the same at
Broker's cost and expense.
7. COMMISSION PAYMENTS
(a) Pershing 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 Pershing to implement same, Pershing shall charge the
customer the commission prescribed in the basic commission
schedule delivered to Pershing by Broker. Such basic schedule
may be amended from time to time by Broker by written
instructions delivered to Pershing; provided, however, that
such changes shall be implemented only to the extent they are
within the usual capabilities of Pershing's data processing
and operations systems and only within such reasonable time
limitations as Pershing 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' account.
(b) Commissions charged Broker's customers shall be collected by
Pershing and credited to Broker daily, after deducting
Pershing's compensation referred to in Paragraph 9 (and any
other amount owed to Pershing pursuant to this Agreement).
Such commissions shall be remitted to Broker on a monthly
basis, approximately 10 days after the final settlement date
of each month. More frequent remittances may be made if the
estimated current activity in the accounts and remittance
experiences in the past justify such advances, and if agreed
to by both parties.
8. COMPENSATION
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As compensation for services provided hereunder by Pershing, there
shall be deducted from the commissions charged Broker's customers the
amounts set forth in the fully disclosed pricing schedule attached
hereto. Said compensation schedule may be changed by Pershing at any
time on thirty (30) days prior written notice to Broker or from time to
time as may be agreed to by both parties. However, during the period
from the effective date of this Agreement to the second anniversary
thereof, the pricing schedule may not be changed except by agreement of
the parties. Thereafter any charge imposed by Pershing shall not be
greater in its entirety than that charge generally made by Pershing for
all correspondents of a similar size and business mix.
9. MARGIN ACCOUNTS
(a) Any transaction for a customer will be considered a cash
transaction until such time as Broker has furnished Pershing
with an executed customer's margin agreement and consent to
loan of securities in a form acceptable to Pershing.
(b) All margin accounts introduced by Broker shall be subject to
Pershing's "house margin requirements." Pershing currently
imposes a 30% 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 Pershing in acceptable
form. Pershing 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 Pershing's
opinion, the past history or nature of such account or the
securities therein justifies such action. Pershing 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 Pershing, Pershing shall be at liberty to take
such actions as Pershing may in its judgment deem best. After
such initial margin has been received, subsequent margin calls
may be made by Pershing. Broker agrees to cooperate with
Pershing in complying with and obtaining margin on subsequent
calls.
(c) Interest charged with respect to debit balance in customers'
accounts shall be determined in accordance with the fully
disclosed pricing schedule attached 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 Pershing'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
Pershing) may request, to the extent permitted by the margin
rules, that Pershing withhold temporarily any contemplated
action to "Sell-out" or "Buy-in" accounts which have failed to
meet a margin call. Such requests shall
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be made in writing and shall clearly set forth the period of
time during which the contemplated action be withheld. Should
Pershing comply in whole or in part with such request, Broker
guarantees to reimburse Pershing immediately for the maximum
amount of loss or liability which Pershing may sustain or
incur by reason of any compliance with such request, by
depositing sufficient funds with Pershing in a reserve or
other appropriate account at a bank of Pershing's choosing
over which Pershing shall be a signatory, to reimburse
Pershing 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
Pershing of any of its rights hereunder, including but not
limited to, the right to close out a contract or position, if
in Pershing'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
Pershing a margin agreement, including a hypothecation
authority, in a form and substance acceptable to Pershing.
10. UNSECURED DEBITS OR UNSECURED SHORT POSITIONS
Unsecured debit or short position (on a "xxxx 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 Pershing to which Pershing 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
Deposit Account and be considered a claim against Broker pursuant to
paragraph 7 of this Agreement.
11. RESPONSIBILITIES AND RIGHTS OF XXXXXXXX
Xxxxxxxx will maintain prescribed books and records of all transactions
executed or cleared through it. Pershing 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 with Broker or that Broker may have with its customer or other
persons, nor shall Pershing be under any responsibility for 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
Pershing or any affiliate of Pershing to compete with Broker in any or
all respects of Broker's business.
12. PERSHING INDEMNIFICATION
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Pershing shall have no liability to any of Broker's customers for any
loss suffered by any customer. Pershing's liability will be only to
Broker and then only to the extent hereinafter expressly set forth.
Pershing 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 negligent, 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 Pershing under
this Agreement.
13. EMPLOYEES
Without the prior written consent of Pershing, Broker will not during
the period of this Agreement and for one year thereafter, hire or
attempt to hire any person who is employed by Pershing on the
termination of this Agreement or whose employment with Pershing
terminated within the one year period prior to the termination of this
Agreement.
14. CONSTRUCTION OF AGREEMENT
Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between
Pershing and Broker or between Broker and other brokers for whom
Pershing may perform the same or similar service. Neither Pershing 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
that of clearing broker and correspondent broker.
During the term of this Agreement, Broker will not enter into any other
similar Agreement or obtain the services contemplated by this Agreement
from any other party, without prior written notice to Pershing.
15. CONFIDENTIALITY
Broker agrees 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 on a
need-to-know basis. Any other publication or disclosure of the terms of
this Agreement may be made only with the prior written consent of
Pershing.
Pershing represents and warrants that the names and addresses of the
Broker's customers that have or may come to its attention in connection
with the clearing and related functions it has assumed under this
Agreement are confidential and shall not be utilized by Pershing except
in connection with the functions performed by Pershing pursuant to this
Agreement.
Pershing shall keep confidential any information it may acquire as a
result of this Agreement regarding the business and affairs of the
broker, which requirement shall survive the life of this Agreement.
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16. TERMINATION
This Agreement shall continue until terminated as hereinafter provided
(a) Upon any unilateral change of more than 5% per annum as per
Paragraph 8, by Pershing in the compensation schedule pursuant
to Paragraph 9 hereof, Broker may, upon fifteen (15) days
prior written notice to Pershing, terminate this Agreement on
the effective date of such unilateral change.
(b) This Agreement may be terminated by either party without cause
upon ninety (90) days written notice delivered in person or by
registered or certified mail.
If either party terminates the Agreement pursuant to this
subparagraph, Pershing shall have the right to impose
reasonable limitations upon Broker's activities during the
period between the giving of notice and the transfer of
Broker's accounts.
(c) In the event either party defaults in the performance of its
obligations under this Agreement, the nondefaulting 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
defaulting party that unless the default is cured within a
period of thirty (30) days from receipt of the notice, this
Agreement may be terminated without further proceedings by the
nondefaulting party.
(d) This Agreement may be terminated by Pershing 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 administrative or judicial proceeding or action by the
Securities and Exchange Commission, any state securities law
administrator or any self-regulatory organization having
jurisdiction.
(e) Termination of this Agreement however caused shall not release
Broker or Pershing from any liability or responsibility to the
other with respect to transactions effected prior to 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 prior to one year from the date set forth in Paragraph 1,
Broker terminates this Agreement pursuant to subparagraph (b)
above, or Pershing terminates this Agreement pursuant to
subparagraph (c) or (d) above, Broker will pay to Pershing
termination fee equal to the reasonable expenses incurred by
Pershing (i) in establishing systems procedures and capacity
for servicing Broker and its customers, and (ii) in
discontinuing the clearing arrangement; provided, however,
that in no event shall said termination fee be less than
$5,000. Said fee shall be paid within 10 days after receipt of
Pershing's statement setting forth in reasonable detail the
expenses incurred by Pershing.
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17. ACTION AGAINST CUSTOMERS
Pershing shall have the right upon written notice to Broker, in its
sole discretion (but shall not be obliged), and at its sole expense
to institute and prosecute in its name, any action or proceeding
against any of Broker's customers as to any controversy or claim
arising out of Pershing's transactions with Broker or with Broker's
customers, and nothing contained in this 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
relieve Broker of any liability or responsibility which Broker would
otherwise have had under this Agreement. Broker shall assign to
Pershing its rights against its customers to the extent requested by
Pershing and necessary to carry out the intent of this Paragraph.
18. 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: Xxxxx, Xxxxxxxx & Xxxxx, Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxx
Senior Vice President & CFO
or Xxxxx Xxxxxxx
Operations Manager
Pershing:
Pershing Division
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxx Xxxx, X.X. 00000
Attn: Xxxxx Xxxxxx, Senior Vice President
19. 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.
20. EXCHANGE REGULATION
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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 or may become a member, and of any governmental agencies to whose
jurisdiction either party may be subject.
21. ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of
the respective successors and assigns of Broker and Pershing.
22. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
23. ARBITRATION DISCLOSURE
o ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
o THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT,
INCLUDING THE RIGHT TO JURY TRIAL.
o PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND
DIFFERENT FROM COURT PROCEEDINGS.
o 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.
o THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
24. ARBITRATION AGREEMENT
ANY CONTROVERSY BETWEEN US ARISING OUT OF YOUR BUSINESS OR THIS
AGREEMENT SHALL BE SUBMITTED TO ARBITRATION CONDUCTED BEFORE THE NEW
YORK STOCK EXCHANGE, INC. OR THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. AS PERSHING MAY ELECT AND IN ACCORDANCE WITH THE RULES
OBTAINING OF THE SELECTED ORGANIZATION. ARBITRATION MUST BE COMMENCED
BY SERVICE UPON THE OTHER PARTY OF A WRITTEN DEMAND FOR ARBITRATION OR
A WRITTEN NOTICE OF INTENTION TO ARBITRATE, THEREIN ELECTING THE
ARBITRATION TRIBUNAL.
25. 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.
26. 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
14
such provision or condition. The validity of the remaining provisions
and conditions shall not be affected thereby and this Agreement shall
be carried out as if any such invalid or unenforceable provision or
condition were not contained herein.
27. This Agreement is between the parties and is not intended to confer any
benefits on third parties, including, but not limited to, customers of
Broker.
28. Addendum dated 11/9/93.
IN WITNESS WHEREOF the parties have hereto affixed their hands and seals on the
day and year first above written.
This Agreement contains a pre-dispute arbitration clause in paragraph 25 on page
15. I acknowledge receiving a copy of this Agreement.
BROKER: Xxxxx, Xxxxxxxx & Xxxxx, Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
/s/ Xxx Xxxxx
By: Xxx Xxxxx
Title: Senior Vice President & Treasurer
PERSHING DIVISION
XXXXXXXXX, XXXXXX & XXXXXXXX SECURITIES CORPORATION
/s/ Xxxxx Xxxxxx
By: Xxxxx Xxxxxx
Title: Senior Vice President
15
PERSHING
Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
Xxx Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000 o (000)000-0000
XXXXXX X. XXXXXX
Senior Vice President
(000) 000-0000
November 9, 1993
Xx. Xxx Xxxxx
Senior Vice President & Treasurer
Xxxxx Xxxxxxxx and Xxxxx Inc.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Re: Amendment to Fully Disclosed Clearing Agreement by and between Pershing
Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxx
Xxxxxxxx and Xxxxx Inc. (the "Agreement")
Dear Xx. Xxxxx:
This letter, as required by the New York Stock Exchange is intended as
an amendment to the Agreement. Except as modified herein, the Agreement
shall remain in full force and unmodified.
The agreement is modified by the addition of a new paragraph which
reads in full.
28. SEC Release 34-31511 Provision
Pursuant to the interpretation of Introducing Accounts on a Fully
Disclosed Basis contained in the above referenced release, it is hereby
agreed between us that, insofar as the "financial responsibility rules"
of the SEC and the Securities Investor Protection Act only are
applicable to our relationship, the accounts Broker introduces to
Pershing on a fully disclosed basis shall be considered to be accounts
of Pershing and not Broker's accounts. Nothing in this paragraph will
otherwise change or affect the provisions of the Agreement which
provides that the customer account remains Broker's customer account
for all other purposes, including, but not limited to, supervision,
suitability and indemnification.
If the foregoing is acceptable, please sign both copies of this letter and
return one copy for our files.
PERSHING
Xx. Xxx Xxxxx
November 9, 1993
Page 2
Very truly yours,
Pershing Division of Xxxxxxxxx, Xxxxxx
& Xxxxxxxx Securities Corporation
by: /s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Senior Vice President
Accepted and Agreed
--------------------------------
(Correspondent)
by: /s/
-------------------------------
(Name and Title)
/psj
Pershing Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
