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Exhibit 10.8
Online Trading Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: AGREEMENT FOR SECURITIES CLEARANCE SERVICES
Gentlemen:
This Agreement sets forth the terms and conditions under which Bear,
▇▇▇▇▇▇▇ Securities Corp. ("Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities.
1. (a) Bear ▇▇▇▇▇▇▇ 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 and beneficial 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,
Customers shall be deemed to be Customers of Bear ▇▇▇▇▇▇▇ Securities, as your
clearing agent.
(c) You agree that Bear ▇▇▇▇▇▇▇ Securities will be your only
clearing agent and that all transactions, in any account serviced by your firm,
will be cleared exclusively through Bear ▇▇▇▇▇▇▇ Securities. This provision can
be modified only with the written consent of the President of Bear ▇▇▇▇▇▇▇
Securities.
2. (a) You shall have sole discretion to determine the amount of
commission charged to your Customers' accounts cleared by Bear ▇▇▇▇▇▇▇
Securities. You agree to pay Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities agrees to pay to you monthly such
commissions received by Bear ▇▇▇▇▇▇▇ Securities less any amounts due to Bear
▇▇▇▇▇▇▇ Securities under this Agreement or otherwise and any expenses or other
sums to third parties paid on your behalf by Bear ▇▇▇▇▇▇▇ Securities.
3. Bear ▇▇▇▇▇▇▇ 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. You agree to supply Bear ▇▇▇▇▇▇▇ 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
Securities and Exchange Commission, 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.,
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"FOCUS" Reports) simultaneously with the filing thereof. You shall submit to
Bear ▇▇▇▇▇▇▇ Securities on a monthly basis or, if so requested by Bear ▇▇▇▇▇▇▇
Securities, at more frequent intervals, information and resorts relating to your
financial integrity, including but not otherwise limited to information
regarding your aggregate indebtedness ratio and net capital.
5. You will be responsible to Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities, (c) the payment of any
unsecured debit balance in an Account, (d) until funds are credited to Bear
▇▇▇▇▇▇▇ Securities, all payment to Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities accedes to your request that you will
indemnify and hold Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities' actual possession. Bear
▇▇▇▇▇▇▇ Securities will reduce the tender for your firm accounts and the
Accounts by the size of the short or unrelieved shares.
(b) During a tender period in which there are competing and counter
tender offers for a security, Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
Securities on trade date all the information necessary to complete an order
ticket. You further agree to comply with Bear ▇▇▇▇▇▇▇ 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"). You hereby agree to
indemnify and hold Bear ▇▇▇▇▇▇▇ 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
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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. For each account you agree to supply to Bear ▇▇▇▇▇▇▇ Securities a
new account report on such forms as Bear ▇▇▇▇▇▇▇ Securities will supply you and
to supply any other documentation and information which Bear ▇▇▇▇▇▇▇ Securities
may, in its sole discretion, request you to obtain from the Customer. Bear
▇▇▇▇▇▇▇ Securities agrees to provide you with copies of its Customer Agreement
and such other forms necessary to enable you to document each Account. In the
event requested documentation or information is not promptly received by Bear
▇▇▇▇▇▇▇ Securities, Bear ▇▇▇▇▇▇▇ Securities has the right to refuse to accept
orders for such Account, to close the Account and to withhold your commissions
and assess upon you any other penalties it sees fit.
9. Unless otherwise agreed to in writing by Bear ▇▇▇▇▇▇▇ Securities,
Bear ▇▇▇▇▇▇▇ Securities shall issue confirmations, statements and notices
directly to your Customers on Bear ▇▇▇▇▇▇▇ Securities' forms for such purpose
which shall bear the following: Transactions cleared through Bear, ▇▇▇▇▇▇▇
Securities Corp., a wholly owned, guaranteed subsidiary of Bear ▇▇▇▇▇▇▇ & 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 ▇▇▇▇▇▇▇ Securities is a member, and
also to all applicable U. S. Federal and state laws and regulations. All of the
foregoing are hereinafter called the "Applicable Rules".
(b) Except as otherwise specified in this Agreement you are solely
responsible for the conduct of the Accounts, and ensuring that the transactions
conducted response 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.
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(c) You will be responsible for responding to all your Customer
inquiries and complaints and you agree to promptly notify Bear ▇▇▇▇▇▇▇
Securities in writing of complaints concerning Bear ▇▇▇▇▇▇▇ Securities.
(d) You hereby agree to indemnify and hold Bear ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ Securities within a reasonable time of all mistakes or discrepancies in
the above described reports and information, Bear ▇▇▇▇▇▇▇ Securities shall be
entitled to consider all the information supplied to you as correct.
14. Bear ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities shall have the right in its discretion
to execute buy-ins or sell-outs if you decline or fall to act;
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(c) arrange the extension of credit for margin purchases in
Accounts in accordance with the Applicable Rules, and with Bear ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ 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) notify you promptly in writing of complaints concerning you,
your employees or your agents.
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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
Securities or the Indemnified Parties, you shall indemnify and hold Bear ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ Securities or the Indemnified Parties may
incur or sustain directly or indirectly in connection therewith or under any
settlement thereof.
16. Bear ▇▇▇▇▇▇▇ Securities agrees to indemnify and hold you harmless
and you agree to indemnify Bear ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ 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.
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17. You represent, warrant and covenant to Bear ▇▇▇▇▇▇▇ Securities as
follows:
(i) 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 ▇▇▇▇▇▇▇ Securities has otherwise agreed in writing. You
will immediately notify Bear ▇▇▇▇▇▇▇ Securities when (1) your Aggregate
Indebtedness Ratio reaches or exceeds 10 to 1 or (2) if you have elected to
operate under paragraph (a)(1)(ii) of Rule 15c3-1 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 15c3-3.
(ii) 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
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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.
(iii) 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.
(iv) You have all the requisite authority in conformity with all
Applicable Rules to enter into this Agreement and to retain the services of Bear
▇▇▇▇▇▇▇ 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.
(v) 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 Securities and Exchange Commission, and (3) the capital
requirements of every state in which you are licensed as a broker/dealer.
(vi) Unless otherwise agreed to in writing by Bear ▇▇▇▇▇▇▇
Securities, you shall not generate any statements, ▇▇▇▇▇▇▇▇ or confirmations
representing any Account.
(vii) You shall keep confidential any information you may acquire
as a result of this Agreement regarding the business and affairs of Bear ▇▇▇▇▇▇▇
Securities, which requirements shall survive the term of this Agreement.
18. Bear ▇▇▇▇▇▇▇ Securities represents, warrants and covenants to you
as follows:
(i) Bear ▇▇▇▇▇▇▇ Securities is a member in good standing of the
National Association of Securities Dealers, Inc., and principal exchanges.
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(ii) Bear ▇▇▇▇▇▇▇ 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.
(iii) Bear ▇▇▇▇▇▇▇ 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.
(iv) Bear ▇▇▇▇▇▇▇ 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 Securities and Exchange Commission, and (3) the capital
requirements of every state in which it is licensed as a broker/dealer.
(v) Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities
except in connection with the functions performed by Bear ▇▇▇▇▇▇▇ Securities
pursuant to this Agreement. Notwithstanding the foregoing, should an Account
request, on an unsolicited basis, that Bear ▇▇▇▇▇▇▇ Securities become its
broker, acceptance of such Account by Bear ▇▇▇▇▇▇▇ Securities shall in no way
violate this representation and warranty, nor result in a breach of this
Agreement.
(vi) Bear ▇▇▇▇▇▇▇ 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.
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
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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 nondefaulting
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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities.
20. (a) In the event you execute your own orders and give Bear ▇▇▇▇▇▇▇
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
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ Securities, Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities or the Indemnified Parties by the other broker
because of such action by Bear ▇▇▇▇▇▇▇ Securities, you agree to indemnify and
hold Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
Securities, Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities. If either you or the other broker for any reason
whatsoever fall to settle the transaction, you will be solely liable to Bear
▇▇▇▇▇▇▇ Securities for any and all loss, including expenses, caused thereby and
Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities.
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21. In the event you request that Bear ▇▇▇▇▇▇▇ 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 Securities and
Exchange Commission on January 25, 1994 regarding prime brokerage (the
"No-Action Letter"), Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities or your customer by such
time as Bear ▇▇▇▇▇▇▇ Securities deems appropriate on the next business day after
trade date. You shall be liable to Bear ▇▇▇▇▇▇▇ Securities for any and all
losses, including expenses caused thereby, and Bear ▇▇▇▇▇▇▇ Securities shall
have no liability to you whatsoever in any circumstance. You agree to indemnify
and hold Bear ▇▇▇▇▇▇▇ Securities harmless from and against and pay promptly on
demand any loss, liability, damage, claim, cost or expense (including reasonable
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 ▇▇▇▇▇▇▇ 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, "No-Action Letters").
(b) Bear ▇▇▇▇▇▇▇ Securities hereby agrees as follows:
(i) Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities will treat the Customer as its own
customer and record the transactions in a cash or margin account at Bear ▇▇▇▇▇▇▇
Securities. Bear ▇▇▇▇▇▇▇ 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.
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(iii) Bear ▇▇▇▇▇▇▇ Securities shall be responsible for issuing
confirmations directly to the Customer for each trade executed by you at Bear
▇▇▇▇▇▇▇ Securities unless Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇
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 No-Action Letters to enable you to execute prime brokerage
trades.
(d) Bear ▇▇▇▇▇▇▇ Securities hereby represents and covenants that
Bear ▇▇▇▇▇▇▇ Securities has and at all times during the term of this Addendum
shall maintain the minimum net capital required by the Applicable Rules and
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) Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities.
(b) You shall not, without the prior written approval of Bear
▇▇▇▇▇▇▇ Securities, place any advertisement in any newspaper, publication,
periodical or any other media if such advertisement in any manner makes
reference to Bear ▇▇▇▇▇▇▇ Securities or to the clearing arrangements and 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 ▇▇▇▇▇▇▇ Securities, Bear ▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇ Securities as a result of such a representation of
agency or apparent authority to act as an agent of Bear ▇▇▇▇▇▇▇ Securities or
agency by estoppel. Notwithstanding the provisions of paragraph 27 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 22, Bear ▇▇▇▇▇▇▇ 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
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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 respect to which such
application is made settled by arbitration in accordance with paragraph 27
below.
23. You agree that Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities. You
further agree that Bear ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Securities, security for the repayment of your
obligations is no longer required.
24. 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.
25. 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.
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 ▇▇▇▇▇▇▇ Securities
agrees that it will send to you copies of all written notices sent to customers.
Notices to you shall be sent to:
Notices to Bear ▇▇▇▇▇▇▇ Securities shall be sent to the President of Bear,
▇▇▇▇▇▇▇ Securities Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, with a copy
to the Chief Legal Officer of Bear ▇▇▇▇▇▇▇ 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.
26. (a) This Agreement supersedes all
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other agreements between the parties with respect to the transactions
contemplated herein. This Agreement may not be
27. (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.
28. Bear ▇▇▇▇▇▇▇ Securities shall not be liable for losses caused
directly or indirectly by government restrictions, exchange or market rulings,
suspension of trading, war, strikes or any equipment or systems failure or other
conditions or occurrences beyond its control.
Please evidence your agreement to the foregoing by executing and
delivering to Bear ▇▇▇▇▇▇▇ Securities the enclosed copy hereof, whereupon you
and Bear ▇▇▇▇▇▇▇ Securities shall have entered into this Agreement.
Very truly yours,
BEAR, ▇▇▇▇▇▇▇ SECURITIES CORP.
By:
-----------------------------------
President
ACCEPTED AND AGREED TO:
-----------------------------------
Online Trading Inc.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇/Chairman
Title:
-----------------------------
Date:
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