EXHIBIT 10.14
December 11, 1998
ConSors Discount-Broker AG
Xxxxxxxxxxxxx 00
00000 Xxxxxxxx
Xxxxxxx
Re: Establishment of Joint Brokerage Arrangement
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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
joint arrangement whereby Web Street will be the exclusive on-line broker for
ConSors Customers trading U.S. equities or options, and ConSors will be the
exclusive broker for all customers trading through Web Street from the Territory
(as defined in (P)1(a)) below as follows.
1. Establishment of ConSors Customer Accounts; Exclusive Arrangement.
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(a) On or after the Effective Date, ConSors 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. ConSors 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 customer. It
is understood that ConSors 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, "ConSors Customers" is
understood to include all individuals opening Web Street accounts who
are residents of Germany, Switzerland, Austria, Italy or Luxembourg
(all of which countries are referred to collectively as the
"Territory"). The parties will negotiate in good faith with respect to
adding other countries to the "Territory" as defined herein.
(b) ConSors and Web Street have agreed that, for the term hereof, the
arrangement established by this Agreement will be "mutually
exclusive"; viz., ConSors will direct all of its customers desiring to
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trade U.S. equities or options to Web Street, and, in
turn, Web Street will consider all brokerage business conducted
through Web Street by individuals residing in the Territory to be
conducted by ConSors Customers, and Web Street will credit ConSors
accordingly.
2. Maintenance of ConSors Customer Accounts; Commission Allocation.
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ConSors Customer Accounts will be maintained according to the following
procedures and protocols:
(a) For ConSors Customers desiring to fund their accounts by depositing
German funds directly to ConSors, ConSors will maintain an internal
account with Web Street in U.S dollars solely for the purpose of
funding such ConSors customer accounts. For such ConSors customer
accounts, ConSors will notify Web Street by e-mail or fax to debit
ConSors' internal Web Street account and credit the ConSors Customer's
account.
(b) Orders for trades made by ConSors 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
market as is practicable the next business day.
(c) ConSors 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, 7days/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).
(d) All charges for ConSors 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 ConSors
of any changes to the commission schedule. (The commission schedule in
effect at the date hereof is attached as Exhibit B.)
(e) All ConSors Customers will have the benefit of the same insurance
coverage for loss due to broker-dealer or clearing corporation error
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.
(f) ConSors 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 only to 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
ConSors
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Customers shall be met within twenty-four (24) hours. Web Street and
ConSors agree that any uncollected customer debits ("Margin Loss")
will be ********* between the parties. With respect to ConSors'
share of any Margin Losses, Web Street will notify ConSors 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
ConSors internal account, and to charge ConSors, to satisfy ConSors'
share of the Margin Loss.
(g) All notices and other written materials required or permitted to be
prepared and submitted by ConSors or ConSors 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 German (including the Web Street web site) shall be made at the
******************** of ConSors and Web Street. ConSors shall be
responsible for all printing, advertising and other marketing costs
and expenses in the "Territory" (as defined in (P)1(a)); and ConSors
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.
(h) 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, ConSors, 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 ConSors customer.
(i) Web Street will promptly forward to ConSors weekly Clearing Firm
reports relating to transactions involving ConSors Customers.
(j) Web Street will promptly forward all confirmations to ConSors
Customers and will promptly forward to ConSors all monthly statements
for ConSors Customers accounts with activity and quarterly statements
for all such accounts.
(k) The Clearing Firm will be the "direct inquirer" for ConSors Customers
under Rule 17f-1 (Lost and Stolen Securities) as promulgated by the
SEC under the Act.
(l) Web Street will answer or seek diligently to obtain answers and to
comply with ConSors Customer complaints regarding activities for which
Web Street has responsibility.
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(m) The Clearing Firm shall be responsible for actions required in
connection with dividends, interest, redemptions, tenders, exchanges
or warrant offers for all ConSors Customer accounts.
(n) 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 ConSors or any ConSors Customer resulting from the
repatriation of funds to the Territory or for any other reason.
(o) Revenues on trades executed for ConSors Customers shall be divided in
the manner set forth in the attached Exhibit D.
(p) Web Street acknowledges and agrees that ConSors will have no
responsibility for any customer losses attributable to Web Street
system failures or outages.
3. Responsibilities of ConSors.
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(a) ConSors will work jointly with Web Street in establishing a unique
destination on ConSors' web site - XxxXxxx-XxxXxxxxx.xxx - which will
be a co-branded site including translations into German. The site
design will be completed by ConSors, 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.
(b) ConSors 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 ConSors or ConSors Customers.
(c) ConSors will provide Web Street copies of any complaints received by
ConSors that relate to the Clearing Firm or Web Street within twenty-
four hours after receipt.
(d) ConSors 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.
4. Joint Marketing.
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Web Street hereby grants a royalty-free license to ConSors 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.
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(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) 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.
(d) ConSors will provide and be responsible for all translations into
German of Web Street Materials. ConSors will provide Web Street with
copies of all Web Street Materials used by ConSors; and ConSors will
obtain Web Street's advance written approval of ConSors' uses of any
Web Street Mark and/or Web Street Materials. ConSors will indemnify,
defend and hold Web Street harmless for any violations of law
resulting from ConSors's use of Web Street Marks or Web Street
Materials in the Territory.
5. Miscellaneous.
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(a) Binding Effect: This Agreement shall be binding upon and inure to the
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benefit of the parties hereto, their legal representatives, successors
in interest and permitted assigns.
(b) Assignment. Because of the personal nature of the performance
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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.
(c) Notices. All notices required or permitted under this Agreement shall
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be in writing and personally delivered or sent by facsimile
transmission as follows:
If to Web Street c/o: X. Xxxxxxxx Xxxxxxxxx
at: Web Street Securities, Inc.
000 Xxxx Xxxx Xxxx - 0/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to ConSors c/o: Xxxxx Xxxxx
at: XxxXxxx
Xxxxxxxxxxxxx 00
00000 Xxxxxxxx
Xxxxxxx
Facsimile (00 00) 00 00 000
or such other address as either party may from time to time designate
to the other by notice duly given.
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(d) Survival. All covenants, representations, warranties and indemnities
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made or given under this Agreement shall survive the termination
hereof.
(e) Entire Agreement; Amendment. This Agreement contains the entire
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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
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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 Cook County,
Illinois.
(g) Partial Invalidity. In the event any part or parts of this Agreement
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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.
(h) Waivers. Any term or provision of this Agreement may be waived, or the
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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
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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
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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 ConSors shall have the
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authority to bind the other, other than as expressly provided for
herein.
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6. Term and Termination.
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The initial term of this Agreement 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 by either party upon ninety (90) days written notice. In the event of a
cancellation, ConSors 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.
If the foregoing accurately reflects the agreement and understanding of
ConSors, please so indicate by signing below.
Web Street Securities, Inc.
By: /s/Xxxxxx Xxx
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Xxxxxx Xxx, President
ACKNOWLEDGED AND AGREED:
ConSors Discount-Broker AG
By: /s/ Signature
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Its: Managing Director
Dated: 12/11/98
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EXHIBIT A
Web Street Securities, Inc.
Features
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. A real-time trading pit to monitor stocks, options an mutual funds and
check balances and positions;
. Instantaneous (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
. Optional Live Self Updating Real Time Quotes.
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October 15, 1998 EXHIBIT B
Web Street Securities, Inc.
Commission Schedule
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Trades Executed via the Internet
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Any listed stock trade, any size $14.95
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NASDAQ Stock Trade under 1,000 shares $14.95
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NASDAQ Stock Trades 1,000 shares or more* FREE
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Equity and Index Options $14.95 plus
$1.75 per contact
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Mutual Funds Transaction $25.00
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*On stocks trading over $2.00 per share. For stocks trading $2.00 and under per share, $14.95.
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Trades Executed via a Live Representative
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Any listed stock trade, any size $24.95
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NASDAQ Stock Trade under 1,000 shares** $24.95
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NASDAQ Stock Trades 1,000 shares** or more $24.95
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Equity and Index Options $24.95 plus
$1.75 per contact
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Mutual Funds Transaction $25.00
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Bonds -- government, municipals, corporate Contact a Web Street
Account Executive for
pricing
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**On stocks trading over $2.00 per share. For stocks trading $2.00 and under per share, $24.95 plus one
cent per share.
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Margin Rates
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0 - 4,999 2% above broker call
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5,000 - 9,999 1 3/4% above broker call
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10,000 - 14,999 1 1/2% above broker call
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15,000 - 19,999 1 1/4% above broker call
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20,000 - 24,999 1% above broker call
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25,000 and higher 3/4% above broker call*
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Broker call as quoted in Wall Street Journal
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*over $100,000 rate is negotiable
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EXHIBIT C
Web Street Securities, Inc.
Insurance Coverage
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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 Aetna Casualty & Life, up to $100
million.
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EXHIBIT D
Web Street Securities, Inc.
Transaction Costs and Fee Structure
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Ticket Charges -- Web Street currently pays to U.S. Clearing a charge of $8.50
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 ConSors will ******** gross profits *****. For
these purposes, Gross profit will be agreed to consist of:
Total Transaction Revenues plus Order Flow Rebates less Ticket Charges.
ConSors' share of gross profits will be paid, to an account identified by
ConSors, no later than the 15/th/ calendar day following the close of the
"trading month." The "trading month" ends on the Tuesday preceding the last
Friday of each calendar month.
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