BEAR XXXXXXX
BEAR. XXXXXXX SECURITIES CORP.
000 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
(000) 000-0000
Triad Financial, Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxx, XX 00000
RE: AGREEMENT FOR SECURITIES CLEARANCE SERVICES
Gentlemen:
This Agreement sets forth the terms and conditions under which Bear,
Xxxxxxx Securities Corp. ("Bear Xxxxxxx Securities") will act as your clearing
broker to clear and carry on a fully disclosed basis, your customer margin and
cash accounts, and your proprietary accounts, and you will become a
correspondent of Bear Xxxxxxx Securities.
1. (a) Bear Xxxxxxx Securities will carry such of your customer accounts as
will be mutually agreed by the parties hereto: These accounts are hereinafter
called the "Accounts" and the legal owners thereof are hereinafter called the
"Customers."
(b) For the purposes of the Securities Investor Protection Act and the
financial responsibility rules of the Securities and Exchange Commission
("SEC"), Customers shall be deemed to be Customers of Bear Xxxxxxx Securities,
as your clearing agent.
(c) You agree that Bear Xxxxxxx Securities will be your only clearing agent
and that all transactions, in any account serviced by your firm, will be cleared
exclusively through Bear Xxxxxxx Securities. This provision can be modified only
with the written -consent of the President of Bear Xxxxxxx Securities.
2. (a) You shall have sole discretion to determine the amount of commission
charged to your Customers' accounts cleared by Bear Xxxxxxx Securities. You
agree to pay Bear Xxxxxxx Securities for its services pursuant to this
Agreement, on each order executed on your behalf on a national stock exchange or
over-the-counter, such amounts as set forth in Schedule A hereto.
(b) Bear Xxxxxxx Securities agrees to pay to you monthly such commissions
received by Bear Xxxxxxx Securities less any amounts due to Bear Xxxxxxx
Securities under this Agreement or otherwise and any expenses or other sums to
third parties paid on your behalf by Bear Xxxxxxx Securities.
3. Bear Xxxxxxx Securities agrees to notify your Customers in writing
concerning the respective obligations of the parties hereto pursuant to
paragraphs 4-14 of this Agreement and any other Customer related
responsibilities of the parties to this Agreement.
4. (a) You agree to supply Bear Xxxxxxx Securities with copies of all
financial information and reports filed by you with the New York Stock Exchange,
Inc. (if a member), the National Association of Securities Dealers, Inc., the
SEC, and any other National Securities Exchange (where a member) (including but
not otherwise limited to monthly and quarterly Financial and Operational
Combined Uniform Single Reports i.e., "FOCUS" Reports) simultaneously with the
filing thereof. You shall submit to Bear Xxxxxxx Securities on a monthly basis
or, if so requested by Bear Xxxxxxx Securities, at more frequent intervals,
information and reports relating to your financial integrity, including but not
otherwise limited to information regarding your aggregate indebtedness ratio and
net capital.
(b) You agree to supply Bear Xxxxxxx Securities with copies of all
amendments, modifications and disclosures regarding your Form BD filed by you
with the National Association of Securities Dealers, Inc. simultaneously with
the filing thereof
5. You will be responsible to Bear Xxxxxxx Securities for: (a) all payments
required so that all Accounts, cash and margin, shall be at all times in
compliance with Regulation T, as amended, promulgated by the Board of Governors
of the Federal Reserve Board, (b) maintaining margin in each margin Account to
the satisfaction of Bear Xxxxxxx Securities, (c) the payment of any unsecured
debit balance in an Account, (d) until funds are credited to Bear Xxxxxxx
Securities, all payment to Bear Xxxxxxx Securities on checks received by it in
connection with your Accounts, (e) payment and delivery of "when issued"
transactions in the Accounts, and (f) the delivery by Customers of securities in
good delivery form under all applicable rules and practices. Bear Xxxxxxx
Securities has sole discretion to execute buy-ins or sell-outs in any cash or
margin Account whenever it determines such action appropriate regardless whether
the Account complies with applicable margin maintenance requirements or has
requested extension of time in which to make payment. Any request by you that
Bear Xxxxxxx Securities should waive either buying-in or selling-out an Account
must be in writing signed by an officer, partner or principal of your firm and
you agree that if Bear Xxxxxxx Securities accedes to your request that you will
indemnify and hold Bear Xxxxxxx Securities, its controlling persons, successors
and assigns (such persons being the "Indemnified Parties") harmless against any
loss, liability, damage, claim, cost or expense (including but not limited to
fees and expenses of legal counsel) arising therefrom. Bear Xxxxxxx Securities
shall have sole discretion as to any application for an extension of time for
any Account to make any payment required by Regulation T.
6. (a) Bear Xxxxxxx Securities may, at its discretion, either buy back in
the "cash" market or borrow the day you are notified of option assignments
affecting shares which have been tendered and cause short positions in your
Accounts as of either the proration or withdrawal date. Shares purchased for
cash or borrowed will not be considered part of an Account's tendered position
until such shares are in Bear Xxxxxxx Securities' actual possession. Bear
Xxxxxxx Securities will reduce the tender for your firm accounts and the
Accounts by the size of the short or unreceived shares.
(b) During a tender period in which there are competing and counter tender
offers for a security, Bear Xxxxxxx Securities will tender only on a trade date
basis the number of the shares net long in your firm account and the Accounts as
of either the proration or withdrawal date.
7. For each trade executed you agree to supply to Bear Xxxxxxx Securities
on trade date all the information necessary to complete an order ticket. You
further agree to comply with Bear Xxxxxxx Securities' procedures concerning your
obligation to provide timely notification of any omission of, or error in, any
detail of a trade or any discrepancy between the floor broker's ticket and your
order ticket as transmitted to us by you with regard to any detail of a trade
(collectively, "Trade Discrepancies"). For purposes of this paragraph, "timely
notification" shall mean notification provided on trade date, whenever possible,
but in any event by (and in no event later than) such time so as to afford Bear
Xxxxxxx Securities a reasonable opportunity to resolve such trade discrepancy on
your behalf prior to comparison of such trade. You hereby agree to indemnify and
hold Bear Xxxxxxx Securities and the Indemnified Parties harmless from and
against, and pay immediately upon demand, any loss, liability, damage, claim,
cost or expense (including but not limited to fees and expenses of legal
counsel) arising out of or in connection with such Trade Discrepancies or as a
result of any investigation conducted in connection with such Trade
Discrepancies or in the defense or settlement of any action or proceeding
brought by any regulatory or self-regulatory organization arising out of or in
connection with such Trade Discrepancies.
8. (a) For each account you agree to supply to Bear Xxxxxxx Securities a
new account report on such forms as Bear Xxxxxxx Securities will supply you and
to supply any other documentation and information which Bear Xxxxxxx Securities
may, in its sole discretion, request you to obtain from the Customer. Bear
Xxxxxxx Securities agrees to provide you with copies of its Customer Agreement
and such other agreements and forms necessary to enable you to document each
Account.
(b) Bear Xxxxxxx reserves the right to negotiate the terms of its Customer
Agreement and other agreements required to be executed by the Customers. All
changes reflected in writing on the Customer Agreement and other agreements
shall be deemed accepted by you if not objected to by you in writing promptly
upon your receipt of your copy thereof which should be provided to you by each
Customer.
(c) In the event requested documentation or information is not promptly
received by Bear Xxxxxxx Securities, Bear Xxxxxxx Securities has the right to
refuse to accept orders for such Account, to close the Account and to withhold
your commissions.
(d) You shall obtain the prior written consent of Bear Xxxxxxx Securities
if you desire to extend the clearing services provided to you hereunder to
another broker-dealer (a "Secondary IB") under a secondary clearing arrangement
with such Secondary IB.
9. Unless otherwise agreed to in writing by Bear Xxxxxxx Securities, Bear
Xxxxxxx Securities shall issue confirmations, statements and notices directly to
your Customers on Bear Xxxxxxx Securities' forms for such purpose which shall
bear the following: Transactions cleared through Bear, Xxxxxxx Securities Corp.,
a wholly owned guaranteed subsidiary of Bear, Xxxxxxx & Co. Inc. and will send
you duplicate confirmations, statements and notices.
10. You agree that before you commence any trading in options for any
Account you will have a Senior Registered Options Principal registered with
either the American Stock Exchange, Inc. or the National Association of
Securities Dealers, Inc.
11. (a) This Agreement and all transactions in the Accounts, will be
subject to the applicable Constitution, Rules, By-Laws, Regulations and customs
of any securities market, association, exchange or clearing house where such
transactions are effected or of which Bear Xxxxxxx Securities is a member, and
-also to all applicable U. S. Federal and state laws and regulations, including,
but not limited to, applicable anti-money laundering legal and regulatory rules
and reporting and record keeping requirements. All of the foregoing are
hereinafter called the "Applicable Rules."
(b) You are solely responsible for the conduct of the Accounts, and
ensuring that the transactions conducted therein are in compliance with the
Applicable Rules. Such responsibility includes, but is not limited to: (i) using
due diligence to learn and on a continuing basis to know the essential facts of
each Customer, including verifying the address changes of each Customer, knowing
all persons holding power of attorney over any Account, being familiar with each
order in any Account and at all times to fully comply with Rule 405 of the New
York Stock Exchange, Inc., and any interpretations thereof, and all similar
Applicable Rules; (ii) selecting, investigating, training, and supervising all
personnel who open, approve or authorize transactions in the Accounts; (iii)
establishing written procedures for the conduct of the Accounts and ongoing
review of all transactions in Accounts, and maintaining compliance and
supervisory personnel adequate to implement such procedures; (iv) determining
the suitability of all transactions, including option -transactions; (v)
ensuring that there is a reasonable basis for all recommendations made to
Customers; (vi) determining the appropriateness - of the frequency of trading in
Accounts; (vii) determining the authorization and legality of each transaction
in the Account; and (viii) obtaining and maintaining all documents necessary for
the performance of your responsibilities under this Agreement and retaining such
documents in accordance with all the Applicable Rules. You shall notify Bear
Xxxxxxx Securities promptly, in writing, of the specific reports offered to you
by Bear Xxxxxxx Securities as set forth in Schedule B hereto that you require to
fulfill your responsibilities hereunder in accordance with NYSE Rule 382 (e)(1)
and NASD Rule 3230.
(c) You will be responsible for responding to all your Customer inquiries
and complaints and you agree to promptly notify Bear Xxxxxxx Securities in
writing of complaints concerning Bear Xxxxxxx Securities.
(d) You hereby agree to indemnify and hold Bear Xxxxxxx Securities and the
Indemnified Parties harmless against any loss, liability, damage, claim, cost or
expense (including but not limited to fees and expenses of legal counsel) caused
by you directly or indirectly as a result of your breach of any of the terms
hereof You hereby agree and warrant that you will maintain appropriate brokers
blanket bond insurance policies covering any and all acts of your employees,
agents and partners adequate to fully protect and indemnify Bear Xxxxxxx
Securities and the Indemnified Parties against any loss, liability, damage,
claim, cost or expense (including but not limited to fees and expenses of legal
counsel) which Bear Xxxxxxx Securities and the Indemnified Parties may suffer or
incur, directly or indirectly, as a result of any act of your employees, agents
or partners. This policy shall be obtained by an insurance broker of Bear
Xxxxxxx Securities' choosing. Coverage shall be in an amount agreed by the
parties, but in no event shall it be less than $1,000,000 per occurrence.
Further this insurance shall remain in effect while Bear Xxxxxxx Securities acts
as your clearance agent and will include coverage for any claims discovered or
made within 90 days following the termination of any such clearing relationship.
You further agree that if such a 90 day discovery feature is exercisable at your
option you hereby agree, in advance, to exercise such option.
12. Bear Xxxxxxx Securities, in the performance of its role as creditor
pursuant to paragraph 14 of this Agreement, has the right, exercisable in its
sole discretion, to restrict trading in the Accounts or in your proprietary or
market making accounts to liquidating orders only or cash transactions only, or
to prohibit certain trading strategies or trading of certain types of
securities.
13. Bear Xxxxxxx Securities, unless otherwise agreed, will supply you on
each business day with copies of customer confirmations, margin status reports,
money line and a daily commission detail report. Unless you notify Bear Xxxxxxx
Securities within a reasonable time of all mistakes or discrepancies in the
above described reports and information, Bear Xxxxxxx Securities shall be
entitled to consider all the information supplied to you as correct.
14. Bear Xxxxxxx Securities agrees to:
(a) monitor and require your Customers to (i) make prompt payment for
purchases of securities, interest and other charges, (ii) deliver securities
sold and loaned, (iii) maintain money and securities in each Account as required
by the Applicable Rules, and to comply with any additional requirements as Bear
Xxxxxxx Securities as clearing broker, in its sole discretion, may require, upon
reasonable notice to you and your Customers;
(b) advise you of the necessity for buying in or selling out positions in
Accounts for failure to comply with payment or delivery requirements and Bear
Xxxxxxx Securities shall have the right in its discretion to execute buy-ins or
sell-outs if you decline or fail to act;
(c) arrange the extension of credit for margin purchases in Accounts in
accordance with the Applicable Rules, and with Bear Xxxxxxx Securities' own
additional requirements;
(d) transfer securities to and from accounts;
(e) provide custody, safekeeping and segregation of money and securities of
Customers carried by Bear Xxxxxxx Securities;
(f) arrange for the receipt and delivery of securities in exchange and
tender offers, rights and warrants offerings, redemptions and other similar type
transactions;
(g) maintain all books and records as are required by the Applicable Rules
governing brokers having custody of money and securities in the Accounts; and
(h) furnish promptly any written customer complaint received by Bear
Xxxxxxx Securities regarding you or any Secondary lB whose customer accounts are
introduced by you to Bear Xxxxxxx Securities or your or their associated persons
relating to functions and responsibilities allocated to you pursuant to this
Agreement, directly to: (1) you and (2) your Designated Examining Authority (or,
if none, to your appropriate regulatory agency or authority) and, by signing
below, you hereby direct and authorize Bear Xxxxxxx Securities to furnish any
such complaint to you and your Designated Examining Authority (or, if none, to
your appropriate regulatory agency or authority).
(i) at the commencement of this Agreement and annually thereafter, furnish
you with a list of all reports (i.e., exception and other types of reports)
offered to you by Bear Xxxxxxx Securities as set forth in Schedule B hereto, and
provide you with such reports which you have advised Bear Xxxxxxx Securities in
writing are required by you to fulfill your responsibilities hereunder in
accordance with NYSE Rule 382 (e)(l) and NASD Rule 3230.
15. Errors, misunderstandings or controversies, except those specifically
otherwise covered in this Agreement, between the Accounts and you or any of your
employees which shall arise out of your acts or omissions (including, without
limiting the foregoing, your failure to deliver promptly to Bear Xxxxxxx
Securities any instructions received by you from an Account with respect to the
voting, tender or exchange of shares held in such Account) shall be your sole
and exclusive responsibility. In the event that, by reason of such error,
misunderstanding or controversy, you in your discretion deem it advisable to
commence an action or proceeding against an Account, you shall indemnify and
hold Bear Xxxxxxx Securities and the Indemnified Parties harmless from any loss,
liability, damage, claim, cost or expense (including but not limited to fees and
expenses of legal counsel) which Bear Xxxxxxx Securities or the Indemnified
Parties may incur or sustain directly or indirectly in connection therewith or
under any settlement thereof If such error, misunderstanding or controversy
shall result in the bringing of any action or proceeding against Bear Xxxxxxx
Securities or the Indemnified Parties, you shall indemnify and hold Bear Xxxxxxx
Securities and the Indemnified Parties harmless from any loss, liability,
damage, claim, cost or expense (including but not limited to fees and expenses
of legal counsel) which Bear Xxxxxxx Securities or the Indemnified Parties may
incur or sustain directly or indirectly in connection therewith or under any
settlement thereof.
16. Bear Xxxxxxx Securities agrees to indemnify and hold you harmless and
you agree to indemnify Bear Xxxxxxx Securities and the Indemnified Parties and
hold them harmless from and against any loss, liability, damage, claim, cost or
expense (including but not limited to fees and expenses of legal counsel)
arising out of or resulting from any failure by the indemnifying party or any of
its employees to carry out fully the duties and responsibilities assigned to
such herein or any breach of any representation, warranty or covenant herein by
such party under this Agreement. You hereby agree to indemnify and hold Bear
Xxxxxxx Securities and the Indemnified Parties harmless from and against any
loss, liability, damage, claim, cost or expense (including but not limited to
fees and expenses of legal counsel) sustained or incurred in connection herewith
in the event any Account fails to meet any initial margin call or maintenance
call.
17. You represent, warrant and covenant to Bear Xxxxxxx Securities as
follows:
(a) You will maintain at all times while this agreement is in full force
and effect net capital equal to the greater of the amount required by the SEC
net capital rules applicable to a correspondent introducing broker or $150,000
unless Bear Xxxxxxx Securities has otherwise agreed in writing. You will
immediately notify Bear Xxxxxxx Securities when (1) your ratio of aggregate
indebtedness to net capital reaches or exceeds 10 to 1 or (2) if you have
elected to operate under paragraph (a)(1)(ii) of Rule 15c3-l of the Securities
Exchange Act of 1934, as amended, when your net capital is less than the greater
of $150,000 or 5% of aggregate debit items computed in accordance with Rule
l5c3-3.
(b) You are a member in good standing of the National Association of
Securities Dealers, Inc., or if you have applied for membership of the National
Association of Securities Dealers, Inc. you agree to furnish Bear Xxxxxxx
Securities upon your receipt thereof, with the National Association of
Securities Dealers, Inc.'s notification to you concerning the result of your
membership application and if your membership application is refused for any
reason whatsoever, Bear Xxxxxxx- Securities has the right to forthwith terminate
this agreement. You are a member in good standing of every national securities
exchange or other securities association of which you are a member and you agree
to promptly notify Bear Xxxxxxx Securities of any additional exchange
memberships or affiliations. You shall also comply with whatever non-member
access rules have been promulgated by any national securities exchange or any
other securities exchange of which you are not a member.
(c) You are and during the term of this Agreement will remain duly
registered or licensed and in good standing as a broker/dealer under the
Applicable Rules.
(d) You have all the requisite authority in conformity with all Applicable
Rules to enter into this Agreement and to retain the services of Bear Xxxxxxx
Securities in accordance with the terms hereof and you have taken all necessary
action to authorize the execution of this Agreement and the performance of the
obligations hereunder.
(e) You are in compliance, and during the term of this Agreement will
remain in compliance with (1) the capital and financial reporting requirements
of every national securities exchange or other securities exchange and/or
securities association of which you are a member, (2) the capital requirements
of the SEC, and (3) the capital requirements of every state in which you are
licensed as a broker/dealer.
(f) Unless otherwise agreed to in writing by Bear Xxxxxxx Securities, you
shall not generate any statements, xxxxxxxx or confirmations representing any
Account.
(g) You shall keep confidential any information you may acquire as a result
of this Agreement regarding the business and affairs of Bear Xxxxxxx Securities,
which requirements shall survive the term of this Agreement.
(h) You shall have entered into a dealer agreement with each and every
mutual fund or other investment company whose shares are sold to Customer
Accounts.
(i) You hereby agree and acknowledge that you are obligated to comply with
the anti-money laundering legal and regulatory rules and reporting and record
keeping requirements, including, but not limited to, the following:
(i) The Bank Secrecy Act, which now requires, or which may in the future
require among other things:
(A) reports of any transaction over $10,000 in currency, including multiple
transactions occurring during the course of the same day, on a Currency
Transaction Report, Form 4789 ("CTR");
(B) reports of any transportation of more than $10,000 in currency or
monetary instruments into or outside of the United States, on a Report of
International Transportation of Currency or Monetary Instruments, Form 4790
("CMIR");
(C) reports of any suspicious activity, on a Suspicious Activity Report
("SAR");
(D) a system for monitoring and identifying suspicious activity including
procedures for determining the customer's identity and the source of the
customer's funds;
(E) record keeping, including, but not limited to, collection and
maintenance of records regarding funds transfers of $3,000 or more and the
transmission of certain information with such funds transfers; and
(F) any future regulations which may be imposed on an introducing broker
involving the obligation to know its customers and monitor for and identify
suspicious activity.
(ii) SEC Rule 1 7a-8 relating to "Financial record keeping and reporting of
currency and foreign transactions" (17 C.F.R. ss. 240.17a-8).
(iii) Rules of the self-regulatory organizations relating to currency
reporting, suspicious activity reporting and related record keeping
requirements.
(iv) Applicable state reporting and record keeping requirements with regard
to certain currency transactions, transportation of currency or monetary
instruments, or reports of suspicious activity.
(v) Federal, state, and international criminal and civil prohibitions
against money laundering.
(vi) The federal regulations and Executive orders imposed by the U.S
Treasury Department's Office of Foreign Assets Control ("OFAC") which prohibit,
among other things, the engagement in transactions with and the provision of
services to certain embargoed foreign countries and specially designated
nationals, specially designated narcotics traffickers and other blocked parties.
You further agree, to the extent permissible by Applicable Rules, at the
time of filing of such report or other communication, or at such time as
requested by Bear Xxxxxxx Securities, you will provide Bear Xxxxxxx Securities
with copies of all reports or other communications with regard to the Introduced
Accounts filed with the U.S. Treasury Department or any regulatory body or
organization relating to the reporting of currency transactions, the transfer of
currency or monetary instruments into or outside of the United States and
suspicious activity, including, but not limited to, CTRs, CMIRs and SARs.
Bear Xxxxxxx Securities reserves the right to make and file such reports
where it deems it -appropriate for its own protection; an the Correspondent
recognizes that when Bear Xxxxxxx Securities does so, Bear Xxxxxxx Securities
does not thereby assume any responsibility for such services and/or relieve you
of any responsibility for such services. Furthermore, to the extent that Bear
Xxxxxxx Securities is required to prepare or file any reports or records by any
entity that regulates it, you shall cooperate in providing Bear Xxxxxxx
Securities with any information needed in order to prepare such reports or
records.
18. Bear Xxxxxxx Securities represents, warrants and covenants to you as
follows:
(a) Bear Xxxxxxx Securities is a member in good standing of the National
Association of Securities Dealers, Inc., and principal exchanges.
(b) Bear Xxxxxxx Securities is and during the term of this Agreement will
remain duly licensed and in good standing as a broker/dealer under the
Applicable Rules.
(c) Bear Xxxxxxx Securities has all the requisite authority, in conformity
with all Applicable Rules to enter into and perform this Agreement and has taken
all necessary action to authorize the execution of this Agreement and the
performance of the obligations hereunder.
(d) Bear Xxxxxxx Securities is in compliance, and during the term of this
Agreement will remain in compliance with (1) the capital and financial reporting
requirements of every national securities exchange and/or other securities
exchange or association of which it is a member, (2) the capital requirements of
the SEC, and (3) the capital requirements of every state in which it is licensed
as a broker/dealer.
(e) Bear Xxxxxxx Securities represents and warrants that the names and
addresses of your customers which have or which 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 Bear Xxxxxxx Securities
except in connection with the functions performed by Bear Xxxxxxx Securities
pursuant to this Agreement. Notwithstanding the foregoing, should an Account
request, on an unsolicited basis, that Bear Xxxxxxx Securities become its
broker, acceptance of such Account by Bear Xxxxxxx Securities shall in no way
violate this representation and warranty, nor result in a breach of this
Agreement.
(f) Bear Xxxxxxx Securities shall keep confidential any information it may
acquire as a result of this Agreement regarding your business and affairs, which
requirement shall survive the life of this Agreement.
(g) Bear Xxxxxxx Securities shall, on an annual basis (within 30 days of
July 1 of each year) provide written notice to your chief executive and
compliance officers with a copy to your Designated Examining Authority (or, if
none, to your appropriate regulatory agency or authority), indicating as of the
date of such notice, the list of reports offered to you hereunder and pursuant
to NYSE Rule 382 (e) (1) and NASD Rule 3230, and specifying those reports which
have actually been requested by and/or supplied to you as of such date.
19. Notwithstanding any provision in this Agreement, the following events
or occurrences shall constitute an Event of Default under this Agreement:
(i) either party hereto shall fail to perform or observe any term, covenant
or condition to be performed hereunder and such failure shall continue to be
unremedied for a period of 30 days after written notice from the non-defaulting
party to the defaulting party specifying the failure and demanding that the same
be remedied; or
(ii) any representation or warranty made by either party shall prove to be
incorrect at any time in any material respect; or
(iii) a receiver, liquidator or trustee of either party hereto or of any
property held by either party, is appointed by court order and such order
remains in effect for more than 30 days; or either party is adjudicated bankrupt
or insolvent; or any property of either party is sequestered by court order and
such order remains in effect for more than 30 days; or a petition is filed
against either party under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not dismissed within 30
days after such filing; or
(iv) either party hereto files a petition in voluntary bankruptcy or seeks
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing of
any petition against it under any such law; or
(v) either party hereto makes an assignment for the benefit of its
creditors, or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee or liquidator
of either party, or of any property held by either party.
Upon the occurrence of any such Event of Default, the non-defaulting party
may, at its option, by notice to the defaulting party declare that this
Agreement shall be thereby terminated and such termination shall be effective as
of the date such notice has been communicated to the defaulting party. Upon the
occurrence by you of an Event of Default pursuant to paragraphs (iii), (iv), or
(v) above, Bear Xxxxxxx Securities shall be entitled to, upon the consent of the
Customer, to accept instructions directly from the Customer and to transfer the
Account directly to Bear Xxxxxxx Securities.
20. (a) In the event you execute your own orders and give Bear Xxxxxxx
Securities' name to the other broker for clearance and settlement, you agree
that you will only execute bona fide orders or request free delivery of cash or
securities where you have reasonable grounds to believe that the account and the
other broker have the financial capability to complete the transaction. Bear
Xxxxxxx Securities reserves the right at any time to place a limit (of either
dollars or number of securities) on the size of transactions that Bear Xxxxxxx
Securities in these circumstances will accept for clearance. If after you have
received notice of such limitation you execute an order in excess of the limit
established by Bear Xxxxxxx Securities, Bear Xxxxxxx Securities shall have the
right to notify the other party and other broker that it will not accept the
transaction for clearance and settlement. In the event any claim is asserted
against Bear Xxxxxxx Securities or the Indemnified Parties by the other broker
because of such action by Bear Xxxxxxx Securities, you agree to indemnify and
hold Bear Xxxxxxx Securities and the Indemnified Parties harmless from any loss,
liability, damage, cost or expense (including but not limited to fees and
expenses of legal counsel) arising directly or indirectly therefrom.
(b) In the event you execute orders away from Bear Xxxxxxx Securities, Bear
Xxxxxxx Securities will on a best efforts basis attempt to clear the transaction
within a reasonable period and utilize the same procedures it utilizes when
clearing transactions on behalf of other firms clearing through Bear Xxxxxxx
Securities. If either you or the other broker for any reason whatsoever fail to
settle the transaction, you will be solely liable to Bear Xxxxxxx Securities for
any and all loss, including expenses, caused thereby and Bear Xxxxxxx Securities
shall have no liability to you whatsoever in any such circumstance. You further
agree to take all appropriate capital charges on your books arising out of or
incurred in connection with your executing orders away from Bear Xxxxxxx
Securities.
21. In the event you request that Bear Xxxxxxx Securities provide prime
brokerage services to your Customers when you act as the executing broker, as
such term is defined in a certain no-action letter issued by the SEC on January
25, 1994 regarding prime brokerage, Bear Xxxxxxx Securities acts as your
clearing agent, and the prime broker settles such transactions and carries the
positions for the Customer:
(a) You hereby agree as follows:
(i) You will notify Bear Xxxxxxx Securities with respect to each Customer
Account for which you intend to act as an executing broker in a prime brokerage
arrangement.
(ii) You will be solely responsible for the conduct of the Customer's
Account, including but not limited to, the responsibilities to know your
Customer, determine the suitability of all transactions, obtain all proper
documentation (including all new account documents), and conduct your own credit
review of the Customer.
(iii) Prior to effecting a short sale, you shall be responsible for
verifying with Bear Xxxxxxx Securities to ensure that all orders effected by you
will comply with all applicable short sale provisions in the Applicable Rules,
including but not limited to SEC Rule 10a-1 and NYSE Rule 440A, and you will be
responsible for verifying that securities can be borrowed in order to effect a
timely delivery against each short sale.
(iv) In the event of any execution error or trade discrepancy between a
trade as executed and a trade as recorded in the Customer's Account with the
prime broker, you shall be responsible for correcting such error or resolving
such discrepancy with Bear Xxxxxxx Securities or your customer by such time as
Bear Xxxxxxx Securities deems appropriate on the next business day after trade
date. You shall be liable to Bear Xxxxxxx Securities for any and all losses,
including expenses caused thereby, and Bear Xxxxxxx Securities shall have no
liability to you whatsoever in any circumstance. You agree to indemnify and hold
Bear Xxxxxxx Securities harmless from and against and pay promptly on demand any
loss, liability, damage, claim, cost or expense (including but not limited to
fees and expenses of counsel) arising out of or incurred in connection with such
discrepancy or error.
(v) You shall retain in your possession copies of all agreements that are
necessary to enable you to execute prime brokerage trades and, except to the
extent undertaken by Bear Xxxxxxx Securities in this Agreement, you shall
preserve all records relating to such trades, as required of an executing broker
by the Applicable Rules and any SEC no-action letters pertaining to prime
brokerage arrangements (collectively, "Prime Brokerage No-Action Letters").
(b) Bear Xxxxxxx Securities hereby agrees as follows:
(i) Bear Xxxxxxx Securities will, on your behalf and pursuant to your
instructions, inform the prime broker of all trade data, including but not
limited to the contract amount, security involved, number of shares or number of
units, and whether the transaction was a long or short sale or a purchase, by
the morning of the next business day after trade date.
(ii) Bear Xxxxxxx Securities will treat the Customer as its own customer
and record the transactions in a cash or margin account at Bear Xxxxxxx
Securities. Bear Xxxxxxx Securities shall treat all disaffirmed and DK'd trades
as normal customer transactions. If the disaffirmed or DK'd trade is a short
sale, we shall treat the transaction as if it had been executed in a customer
margin account.
(iii) Bear Xxxxxxx Securities shall be responsible for issuing
confirmations directly to the Customer for each trade executed by you at Bear
Xxxxxxx Securities unless Bear Xxxxxxx Securities receives written instructions
from the Customer explicitly requesting that the confirmations be sent to the
Customer in care of its prime broker, in which case Bear Xxxxxxx Securities will
send the confirmations to such Customer in care of the prime broker. In the
event a trade is disaffirmed or DK'd, Bear Xxxxxxx Securities will promptly send
a confirmation of the transaction to the customer in the manner described above.
(iv) If a Customer Account introduced by you to Bear Xxxxxxx Securities is
managed by an investment advisor, each confirmation may cover a single bulk
trade representing transactions that have been combined with those of other
accounts of such investment advisor.
(c) You hereby represent and covenant that you have entered into all
agreements concerning the prime broker arrangement that are required by the
Applicable Rules and Prime Brokerage No-Action Letters to enable you to execute
prime brokerage trades.
(d) Bear Xxxxxxx Securities hereby represents and covenants that Bear
Xxxxxxx Securities has and at all times during the term of this Agreement shall
maintain the minimum net capital required by the Applicable Rules and Prime
Brokerage No-Action Letters.
(e) In the event of a conflict between this paragraph 21 and any other
provision of this Agreement, this paragraph shall supercede the conflicting
provision only in respect of the provision of prime brokerage services and only
to the extent of the conflict.
22. (a) In order to enable you to continue to treat the assets in your
proprietary account held at Bear Xxxxxxx Securities as allowable assets in your
net capital computation after June 1, 1999, pursuant to the SEC No-Action Letter
(the "PAIB No-Action Letter"), dated November 3, 1998, relating to the net
capital treatment of assets in proprietary accounts of introducing brokers
("PAIB"), Bear Xxxxxxx Securities hereby agrees to perform a computation for
PAIB assets for the proprietary accounts of all of its introducing brokers and
to maintain a separate special PAIB reserve account in accordance with the
customer reserve computation set forth in SEC Rule I 5c3-3 and the modifications
and exclusions thereto as set forth in the PAIB No-Action Letter.
(b) You hereby represent that you are neither a guaranteed subsidiary of a
clearing broker nor a guarantor of a clearing broker and you agree to notify
Bear Xxxxxxx Securities immediately in the event of any change as to the
accuracy of this representation.
(c) You hereby agree to notify your Designated Examining Authority in
writing within two days of the execution of this Agreement that you have entered
into a PAIB Agreement with Bear Xxxxxxx Securities.
23. (a) Bear Xxxxxxx Securities shall limit its services pursuant to the
terms of this Agreement to that of clearing functions and the related services
expressly set forth herein. Neither this Agreement nor any operation hereunder
shall create a general or limited partnership, association or joint venture or
agency relationship between you and Bear Xxxxxxx Securities.
(b) You shall not, without the prior written approval of Bear Xxxxxxx
Securities, place any advertisement in any newspaper, publication, periodical or
any other medium including, but not limited to, electronic communications media
such as, by way of example, the Internet, if such advertisement in any manner
makes reference to Bear Xxxxxxx Securities or to the clearing arrangements arid
the services embodied in this Agreement.
(c) Should you in any way hold yourself out as, advertise or represent that
you are the agent of Bear Xxxxxxx Securities, Bear Xxxxxxx Securities shall have
the power, at its option, to terminate this Agreement and you shall be liable
for any loss, liability, damage, claim, cost or expense (including but not
limited to fees and expenses of legal counsel) sustained or incurred by Bear
Xxxxxxx Securities as a result of such a representation of agency or apparent
authority to act as an agent of Bear Xxxxxxx Securities or agency by estoppel.
Notwithstanding the provisions of paragraph 28 below that any dispute or
controversy between the parties relating to or arising out of this Agreement
shall be referred to and settled by arbitration, in connection with any breach
by you of this paragraph 23, Bear Xxxxxxx Securities may, at any time prior to
the initial arbitration hearing pertaining to such dispute or controversy, seek
by application to the United States District Court for the Southern District of
New York or the Supreme Court of the State of New York for the County of New
York any such temporary or provisional relief or remedy ("provisional remedy")
provided for by the laws of the United States of America or the laws of the
State of New York as would be available in an action based upon such dispute or
controversy in the absence of an agreement to arbitrate. The parties acknowledge
and agree that it is their intention to have any such application for a
provisional remedy decided by the Court to which it is made and that such
application shall not be referred to or settled by arbitration. No such
application to either said Court for a provisional remedy, nor any act or
conduct by either party in furtherance of or in opposition to such application,
shall constitute a relinquishment or waiver of any right to have the underlying
dispute or controversy with paragraph 28 below.
24. You agree that Bear Xxxxxxx Securities shall have a lien upon and
security interest in all your property, including but not limited to securities,
commodity futures, contracts, commercial paper, monies and any after acquired
property held by it in your trading or commission accounts as security for the
repayment of your obligations and liabilities to Bear Xxxxxxx Securities. You
further agree that Bear Xxxxxxx Securities may debit any cash balance in your
account or accounts and/or liquidate any securities or commodities held in your
account and credit the proceeds to its account in an amount necessary to satisfy
such obligations. This provision shall survive the termination of this
Agreement, thereby extending the right to any lien and security interest for the
duration of any account conversion period and until such time as, in the sole
discretion of Bear Xxxxxxx Securities, security for the repayment of your
obligations is no longer required.
25. The enumeration herein of specific remedies shall not be exclusive of
any other remedies. Any delay or failure by any party to this Agreement to
exercise any right herein contained, now or hereafter existing under the
Applicable Rules shall not be construed to be a waiver of such right, or to
limit the exercise of such right. No single, partial or other exercise of any
such right shall preclude the further exercise thereof or the exercise of any
other right.
26. This Agreement shall be submitted to and approved by the New York Stock
Exchange, Inc., or other regulatory and self-regulatory bodies vested with the
authority to review and approve this Agreement or any amendment or modifications
hereto. In the event of disapproval, the parties hereto agree to bargain in good
faith to achieve the requisite approval.
27. (a) This Agreement supersedes all other agreements between the parties
with respect to the transactions contemplated herein. This Agreement may not be
amended except by a writing signed by both parties hereto and may be terminated
upon thirty (30) days written notice to the other party. Bear Xxxxxxx Securities
agrees that it will send to you copies of all written notices sent to customers.
Notices to you shall be sent to:
Triad Financial, Inc.
000 Xxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Notices to Bear Xxxxxxx Securities shall be sent to the President of Bear,
Xxxxxxx Securities Corp., 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000, with a copy to
the Chief Legal Officer of Bear Xxxxxxx Securities. Termination shall not affect
any of the rights and liabilities of the parties hereto incurred before the date
of receipt of such notice of termination.
(b) This Agreement shall be binding upon and inure to the benefit of the
respective successors of the parties. Neither party may assign any of its rights
or obligations hereunder without the prior written consent of the other party.
28. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(b) All disputes and controversies relating to or in any way arising out of
this Agreement shall be settled by arbitration before and under the rules and
auspices of the New York Stock Exchange, Inc., unless the transaction which
gives rise to such dispute or controversy is effected in another United States
market which provides arbitration facilities, in which case it shall be settled
by arbitration under such facilities.
29. Bear Xxxxxxx Securities shall not be liable for any losses caused
directly or indirectly by any inability of Bear Xxxxxxx Securities to perform
occasioned by suspension of trading, wars, civil disturbances, strikes, natural
calamities, labor or material shortages, government restrictions, acts or
omissions of exchanges, specialists, markets, clearance organizations or
information providers, delays in mails, delays or inaccuracies in the
transmission of orders or information, governmental, exchange or self-regulatory
organization laws, rules or actions, or any other causes beyond Bear Xxxxxxx
Securities' control, or for any consequential, incidental, punitive, special or
indirect damages, economic loss or lost profits, even if Bear Xxxxxxx Securities
-has been advised of the possibility of such damages or loss.
Please evidence your agreement to the foregoing by executing and delivering
to Bear Xxxxxxx Securities the enclosed copy hereof, whereupon you and Bear
Xxxxxxx Securities shall have entered into this Agreement.
Very truly yours,
BEAR XXXXXXX SECURITIES CORP.
By:/s/
--------------------------
Name:
Title:
Date: 7/11/01
-------
ACCEPTED AND AGREED TO:
/s/
---------------------
Name of Correspondent
By:/s/
-----------------------------------------
Name of Authorized Signatory
Title:
--------------------------------------
Supplement to Agreement for Securities Clearance Services
Options Procedures for Correspondents
It is each Correspondent's responsibility to have each account in which it
effects listed option transactions approved by its own ROP, and to ensure (1)
that each account carried on its books has received an appropriate Options Risk
Disclosure Document no later than the first day an option transaction is
effected in the account, (2) that it obtains a signed "Correspondent's Customer
Option Agreement" (Form No. 3000-96-350) within fifteen business days of the
first trade. Both Bear Xxxxxxx Securities and each Correspondent have
overlapping responsibilities concerning option trading.
In order for a Correspondent to meet its responsibilities, it must have
sufficient information in its files to comply with the rules of the option
exchanges concerning the opening of accounts and the suitability of the
recommended transaction. Each Correspondent is required to send to each of its
accounts the option risks disclosure document titled "Understanding the Risks
and Uses of Listed Options" and a combined Option Agreement/New Account Form for
the customer's signature. Where applicable, the Correspondent must also send the
appropriate supplementary risk disclosure documents and option agreements for
index, currency, or debt options.
In order that Bear Xxxxxxx Securities be assured that the foregoing has
been accomplished, you must provide Bear Xxxxxxx Securities with a copy of the
"Correspondent's Customer's Option Approval Form" (Form No. 2000-70-1782-4/83)
(or the form currently in effect at the time of the initial transaction) within
fifteen days of the first option trade. Bear Xxxxxxx Securities will withhold
from that Correspondent its share of the commissions generated on those option
accounts for which Bear Xxxxxxx Securities has not received the option approval
form within the required time. Bear Xxxxxxx Securities will only remit the
retained commissions upon timely receipt of the correct documentation and if the
necessary papers continue to be received late from that Correspondent, Bear
Xxxxxxx Securities will not recredit that Correspondent with retained
commissions.
January 17, 2001
SCHEDULE A / TRIAD FINANCIAL, INC.
AGENCY BUSINESS - EQUITIES
Bear Xxxxxxx will retain **[Confidential treatment requested for a portion of
this Schedule]**
BEAR XXXXXXX EXECUTIONS
Listed orders entered on our terminal will be billed as follows:
Market Orders (up to 30,099 shares): **[Confidential treatment
requested for a portion of this Schedule]**
Limit Orders (up to 99,099
shares):
Execution under 5 minutes = **[Confidential treatment requested for a
portion of this Schedule]**
Execution over 5 minutes =**[Confidential treatment requested for a
portion of this Schedule]**
Shorts = **[Confidential treatment requested for a portion of this
Schedule]**
All other executions on a listed exchange will be billed at **[Confidential
treatment requested for a portion of this Schedule]**.
OPTIONS
PRICE PER CONTRACT BEAR XXXXXXX RETENTION PER TICKET
**[Confidential treatment requested for a portion of this Schedule]**
**Contract rates may change as a result of an increase in OCC or Exchange fees.
PRINCIPAL CROSS TRADES IN YOUR TRADING ACCOUNT - (MARKET MAKING)
Equities (OTC) - **[Confidential treatment requested for a portion of this
Schedule]**
Bonds - **[Confidential treatment requested for a portion of this Schedule]**
If you intend to become a market maker, you must notify Bear Xxxxxxx before any
transactions are done.
No margin is permitted in your trading account unless approved in writing by
Bear Xxxxxxx.
**[Confidential treatment requested for a portion of this Schedule]**
FIRM INVESTMENT TRADES
Listed & OTC Equities - **[Confidential treatment requested for a portion of
this Schedule]**
Options - Same as your Option Matrix.
Bonds - **[Confidential treatment requested for a portion of this Schedule]**
BONDS ON AN EXCHANGE
**[Confidential treatment requested for a portion of this Schedule]**
OTC, MUNICIPAL AND GOVERNMENT BONDS - AGENCY BASIS
**[Confidential treatment requested for a portion of this Schedule]**
SYNDICATE
Where the introducing firm is a member of a selling group:
Stocks - **[Confidential treatment requested for a portion of this Schedule]**
Bonds - **[Confidential treatment requested for a portion of this Schedule]**
Where the introducing firm causes Bear Xxxxxxx to be designated, ____%
**[Confidential treatment requested for a portion of this Schedule]** of the
gross credit will be retained.
Where Bear Xxxxxxx is a member of a selling group or is an underwriter and you
participate through Bear Xxxxxxx, Bear Xxxxxxx shall retain ___% **[Confidential
treatment requested for a portion of this Schedule]** of the sales credit.
We will not clear any "Best Efforts" Syndicates.
You are required to advise the Clearance Department before entering into any
syndicate participation.
GROSS CREDITS - BEAR XXXXXXX (Trades Bought From Or Sold To A Bear Xxxxxxx
Trading Account)
Stocks - **[Confidential treatment requested for a portion of this Schedule]**
Convertible Bonds - Bear Xxxxxxx will retain ____% **[Confidential treatment
requested for a portion of this Schedule]** of the gross commissions with a
minimum ticket charge of $___ **[Confidential treatment requested for a portion
of this Schedule]**.
Mortgage Backed or Mortgage Related Transactions - Bear Xxxxxxx will retain
**[Confidential treatment requested for a portion of this Schedule]**
All Other Fixed Income Transactions (including Corporate Bonds, Municipal Bonds,
Government Bonds, Government Agency Bonds, and Preferred Stocks) - Bear Xxxxxxx
will retain **[Confidential treatment requested for a portion of this
Schedule]**
MUTUAL FUNDS
**[Confidential treatment requested for a portion of this Schedule]**
TENDER & SOLICITATION FEES
**[Confidential treatment requested for a portion of this Schedule]**
SUBSTITUTION TRANSACTIONS / PRIME BROKER
**[Confidential treatment requested for a portion of this Schedule]**
AVERAGE PRICE TRADES
**[Confidential treatment requested for a portion of this Schedule]**
INTEREST RATES
CUSTOMER
Debit Interest
Customer accounts will be charged interest at a rate of ____%
**[Confidential treatment requested for a portion of this Schedule]**
above the prevailing Bear Xxxxxxx brokers call rate. (Rate reductions,
for qualified accounts, may be made by writing to Correspondent
Clearing).
Bear Xxxxxxx shall have the right to charge interest on unpaid balances
in cash accounts at ____% **[Confidential treatment requested for a
portion of this Schedule]** over the prevailing Bear Xxxxxxx brokers
call rate until such time as the customer settles the transaction.
**[Confidential treatment requested for a portion of this Schedule]**
Credit Interest
Customer accounts will receive interest at the Bear Xxxxxxx credit
interest rate **[Confidential treatment requested for a portion of this
Schedule]**.
The cost of financing settled cash account debits will be applied to
your portion of interest sharing.
FIRM
Debits - **[Confidential treatment requested for a portion of this
Schedule]** Credits - **[Confidential treatment requested for a portion
of this Schedule]**
MONEY MARKET REBATES
A rebate will be given to your firm based upon your Money Market
balances as follows: **[Confidential treatment requested for a portion
of this Schedule]**
TRANSACTION VALUE FEES - REGIONALS
If your firm executes a regional transaction (i.e. Midwest, Phila, Etc.) away
from Bear Xxxxxxx, you will be billed the appropriate transaction fees.
EUROCLEAR AND OTHER OVERSEAS SETTLING TRANSACTIONS*
Agency Basis:
Customer transaction: **[Confidential treatment requested for a
portion of this Schedule]**
Institutional DVP transaction: **[Confidential treatment requested for
a portion of this Schedule]**
Principal Cross Trades into and out of your Trading Account:
Dealer transaction: **[Confidential treatment requested for a portion
of this Schedule]** Retail transaction: **[Confidential treatment
requested for a portion of this Schedule]** Institutional DVP
transaction: **[Confidential treatment requested for a portion of this
Schedule]**
Gross Credits - Bear Xxxxxxx (Trades Bought from or Sold to a Bear
Xxxxxxx Trading Account):
Customer transaction: **[Confidential treatment requested for a
portion of this Schedule]** Institutional DVP transaction:
**[Confidential treatment requested for a portion of this Schedule]**
DVP TRANSACTIONS - DK INTEREST
Bear Xxxxxxx shall have the right to charge interest on delivery versus payment
transactions which are DK'd because the client or its agent does not have proper
instructions.
U.S. TREASURY FEES
Subscriptions - **[Confidential treatment requested for a portion of this
Schedule]**
Your firm is responsible for assuring compliance with all Treasury requirements
when submitting competitive and non-competitive tenders for Treasury auctions.
PROCESSING FEE
On non COD transactions, there is a $______ **[Confidential treatment requested
for a portion of this Schedule]** per order service fee that will be deducted on
your customer confirmation. You may elect to impose a higher charge with any
excess over our $_______ **[Confidential treatment requested for a portion of
this Schedule]** going to your firm.
CUSTOMER EXTENSIONS
Bear Xxxxxxx retains the right, exercisable in its sole discretion, to charge
for customer extensions if in the opinion of Bear Xxxxxxx we feel these requests
for extensions are excessive. In the event that Bear Xxxxxxx determines to
impose an extension charge upon you, you will be notified accordingly.
MINIMUM MONTHLY CLEARANCE CHARGES
**[Confidential treatment requested for a portion of this Schedule]**
The fee schedule and all other business and financial terms set forth in this
Schedule A, and as it may be amended or modified from time to time, to the
Agreement for Securities Clearance Services (the "Clearance Agreement") are, and
shall remain, confidential. Such modification may be required in consideration
of the particular risk or complexity of certain specific transactions. By
signing the Clearance Agreement, you hereby agree not to divulge any such terms
set forth in Schedule A.
Approved: /s/
-------------------
Bear Xxxxxxx Securities Corp.
Approved: /s/
-------------------
Triad Financial, Inc.
Dated:
---------------------
