FULLY DISCLOSED CLEARING AGREEMENT
This Fully Disclosed Clearing Agreement (the "Agreement") is executed
and entered into by and between Southwest Securities, Inc. ("Southwest"), a
Delaware corporation, and All-Tech Investment Group, Inc. ("Correspondent"), New
York corporation.
WHEREAS, Correspondent is in the process of registering or is registered
with the Securities Exchange Commission ("SEC") as a broker-dealer of securities
in accordance with Section 15(b) of the Securities and Exchange Act of 1934 (the
"Act") and is applying for membership or is a member of the National Association
of Securities Dealers, Inc. ("NASD"), and desires to enter into an agreement
with Southwest for Southwest to clear and maintain customer accounts on behalf
of Correspondent; and
WHEREAS, Southwest meets all requirements of the SEC to function as a
clearing broker or dealer, and desires to enter into an agreement to clear and
maintain cash, margin or other accounts ("Accounts") for Correspondent or
customers of Correspondent ("Customers"), (such Accounts of Correspondent and
Customers being hereinafter referred to as "Correspondent Accounts" and
"Customer Accounts," respectively).
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and of guarantee of this Agreement by any guarantor(s), and for other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES; AGENCY RELATIONSHIP
(a) Representations and Warranties of Correspondent. Correspondent
represents and warrants to Southwest that:
(i) Correspondent is a corporation duly organized, validly existing
and in good standing under the laws of the state of its
incorporation, and authorized to conduct business in each state
where such authorization is required.
(ii) Correspondent has all the requisite authority in conformity with
all applicable laws and regulations to enter into this Agreement
and to retain the services of Southwest in accordance with the
terms hereof.
(iii) Correspondent shall not conduct any securities business in
accordance with the terms of this Agreement unless or until it
is accepted as a member in good standing of the NASD, its
registration with the SEC is effective, and it is duly licensed
in accordance with the provisions of any applicable state
securities laws.
(iv) Correspondent shall not conduct any business in securities
unless it has all requisite authority, whether arising under
applicable federal or state laws, rules and regulations, or
under the bylaws and rules of any securities exchange or
securities association to which Correspondent is subject.
(v) Correspondent has no arrangement with any other firm for the
provision by such other firm of clearing services for any
Customer Accounts or Correspondent Accounts, or if any such
arrangement exists Correspondent has fully disclosed the nature
of such arrangement to Southwest in writing.
(b) Representations and Warranties of Southwest. Southwest represents and
warrants to Correspondent that:
(i) Southwest is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware and
authorized to do business in each state where such authorization
is required.
(ii) Southwest is registered as a broker-dealer with the SEC and is
in compliance with the rules and regulations thereof.
(iii) Southwest is a member corporation in good standing of the NASD
and is in compliance with the rules and regulations thereof.
(iv) Southwest is in compliance with the rules and regulations of
each national securities exchange of which it is a member.
2. CUSTOMER AND CORRESPONDENT ACCOUNTS
Responsibility for compliance with the provisions of the NASD Rules of Fair
Practice regarding opening, approving and monitoring Customer Accounts shall be
allocated between Southwest and Correspondent as set forth in this Section 2.
(a) Account Documentation. Correspondent will be responsible for obtaining
and verifying all required information and the identity of each
potential Customer. Correspondent will be responsible for obtaining and
furnishing to Southwest all customary and necessary documents related to
Customer Accounts and Correspondent Accounts, and such other
documentation as Southwest may reasonably require from time to time, all
in such form as shall be reasonably acceptable to Southwest.
Correspondent also will be responsible for the transmissions of all
required documents to Southwest on a timely basis, but in any event
within seven (7) days after a request to open an account is made to
Southwest. Correspondent acknowledges its obligations to retain all
documents in an easily accessible place in accordance with any
applicable rules and regulations of regulatory or self-regulatory
agencies or bodies, and Correspondent agrees to provide original
documents by overnight delivery or a legible copy by facsimile
transmission of such documents within twenty-four (24) hours of a
request from Southwest. Correspondent will be responsible for complying
with the requirement of SEC Rule 15c2-5, if applicable.
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(b) Knowledge of Customer and Customer's Investment Objectives.
Correspondent will be responsible for learning and documenting all the
facts relative to every Customer necessary to insure compliance by
Correspondent with applicable rules and regulations, including the
information and instructions submitted to Southwest pursuant to Section
2(a), any additional facts relative to the Customer's investment
objectives, and to the nature of every Customer Account, every order and
every person holding power of attorney over any Customer Account.
Correspondent shall be solely responsible for any issues regarding the
suitability of any investments for its Customers.
(c) Acceptance of Accounts. An authorized officer of Correspondent shall
accept and approve each Customer and Customer Account. Each Customer and
Customer Account approved by Correspondent and opened with Southwest
shall be subject to Southwest's acceptance. Southwest reserves the right
to withhold acceptance of, or to reject, for any reason, any Customer,
Customer Account, Correspondent Account or any transaction for any
Account and to terminate any Account previously accepted by Southwest.
Acceptance of each Account shall be conditioned upon Southwest's receipt
of all required completed forms as required by Section 2(a).
Correspondent shall not submit such forms with respect to any Customer
Account unless Correspondent has in its possession the documentation of
all information required pursuant to Section 2(b). Southwest shall be
under, no obligation to accept any Account as to which any documentation
required to be submitted to Southwest or maintained by Correspondent
pursuant to Sections 2(a) and (b) is incomplete. Prior to acceptance of
any Account, no action taken by Southwest or any of its employees,
including, without being limited to, clearing a trade in any Account,
shall be deemed to be or shall constitute acceptance of such Account.
(d) Supervision of Transactions and Accounts. Correspondent will be
responsible for the review and supervision of, and the suitability of,
investments made by each and every one of its Customers and for the
supervision and monitoring of all discretionary Accounts maintained by
Correspondent, and Southwest shall have no responsibility for such. An
authorized officer of Correspondent shall approve each transaction in
each Customer Account accepted by Southwest. Correspondent shall be
responsible for insuring that all transactions in and activities related
to all Accounts opened by it with Southwest, including discretionary
Accounts, will be in compliance with all applicable laws, rules and
regulations of the United States, the states thereof, and regulatory and
self-regulatory agencies and bodies, including any laws relating to
Correspondent's fiduciary responsibilities to Customers, either under
the Employee Retirement Income Security Act of 1974 or otherwise; and in
this connection, Correspondent shall diligently supervise the activities
of its officers, employees and representatives with respect to such
Accounts. Southwest will perform clearing services provided for in this
Agreement for Accounts accepted by it in accordance with the terms of
this Agreement, as it may be amended from time to time, and otherwise in
accordance with its reasonable business judgment. To the extent, if any,
that Southwest accepts from Correspondent orders for execution in
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accordance with Section 7(a). Correspondent shall be responsible for
informing Southwest of the location of the securities that are the
subject of the order so that Southwest may comply with the provisions
of 3110 of the NASD Conduct Rules.
(e) Accounts of Associated Persons. In each case in which a Customer is an
employee or otherwise associated with an NASD member, Correspondent
shall be responsible for notifying such member in accordance with the
provisions of Article III, Section 28 of the NASD Rules of Fair
Practice.
(f) Account Responsibility for Certain Purposes. Notwithstanding anything
herein to the contrary, for purposes of the Securities Investment
Protection Act of 1970 and the financial responsibility rules of the
Securities and Exchange Commission only, the Customer Accounts are the
responsibility of Southwest. Nothing in this Section 2(f) will otherwise
change or affect the provisions of this Agreement or any information
provided to Customers (including the Customer Information Brochure
provided to Correspondent by Southwest), which provide that each
Customer remains a Customer of Correspondent for all other purposes,
including but not limited to sales practices, supervision, suitability,
etc, Further, it is understood that Correspondent is not Southwest's
agent for sales purposes and neither Correspondent nor any of its
employees or agents can bind Southwest or make representations on
Southwest's behalf to any Customers regarding any transaction cleared by
Southwest on Correspondent's behalf.
3. EXTENSION OF CREDIT
Responsibility for compliance with the provisions of Regulation T
issued by the Board of Governors of the Federal Reserve System pursuant to the
Securities Exchange Act of 1934 ("Regulation T") and all other applicable rules,
regulations and requirements of any exchange or regulatory agency affecting the
extension of credit shall be allocated between Southwest and Correspondent as
set forth in this Section 3.
(a) Margin Agreements. At the time of opening of each margin account,
Correspondent will furnish Southwest with a Southwest Margin and Short
Account Customer Agreement, executed by Customer, on the form furnished
to Correspondent by Southwest.
(b) Margin and Margin Maintenance. Correspondent is responsible for assuring
Customer's payment of Customer's initial margin requirements and of all
amounts necessary to meet subsequent maintenance calls in each Customer
Account, to insure compliance with Regulation T and the house rules of
Southwest. Correspondent is responsible for the payment of initial
margin requirements and of all amounts necessary to meet subsequent
margin calls in each Correspondent Account.
Southwest shall have the unlimited right to buy in or sell out
positions in Accounts whenever Southwest in its sole discretion deems
such action appropriate, and without regard to whether, if the Account
is a Margin Account, any such Account is then in
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compliance with applicable margin maintenance requirement or has
requested an extension of time for any Account to make any payment
required by Regulation T. Correspondent acknowledges that Southwest
has the right to demand payment on any debit balance and that
Correspondent is responsible to Southwest for any unsecured debit
balance resulting from any failure of a Customer to make any such
payments upon demand.
(c) Margin Requirements. Southwest will be responsible for setting minimum
margin requirements and advising Correspondent when calls are issued.
Southwest may change the margin requirements applicable to any Account
or class of accounts, as described in its house rules; Correspondent
shall be responsible for advising its Customer of the changed
requirements and for the payment by Customer of any additional margin
necessary to insure compliance with such increased requirements.
Correspondent may establish for any of its Customer Accounts higher
minimum margin requirements than those requirements established by
Southwest; however Southwest will not be responsible for monitoring the
higher minimum on behalf of Correspondent, unless the higher standard is
one that can be accommodated by the Southwest computer system.
(d) Extensions. Correspondent will be responsible for advising Southwest to
obtain extensions under appropriate federal regulations. Only Southwest
shall perform the clerical function of obtaining requested extensions
from the applicable regulatory authorities.
(e) Losses. In addition to, and not in limitation of, Correspondent's
agreement to indemnify Southwest pursuant to the provisions of Section
10, Correspondent indemnifies and holds harmless Southwest from and
against any and all loss, cost, expense and liability (including legal
and accounting fees and expenses) sustained by Southwest arising out of
any of the following events:
any failure by any Customer to comply with the terms of its Customer
Margin and Short Account Agreement with Southwest;
Southwest's re-booking of margin transactions as cash transactions;
Southwest's broker's execution of a transaction for the account of a
Customer;
the failure of Correspondent or any Customer, in a margin transaction,
to comply with Regulation T;
the failure of Correspondent to satisfy its obligations under this
Section 3; or
in a cash transaction, the failure of delivery of securities sold or
failure of payment for securities purchased in accordance with the
provisions of Regulation T; the return to Southwest unpaid of any
check given to Southwest by Correspondent or any Customer; or the
payment for and/or delivery of all "when issued" transactions which
Southwest may accept or execute for the Accounts.
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4. MAINTENANCE OF BOOKS AND RECORDS
(a) Southwest's Books and Records. Southwest will maintain stock records and
other records on a basis consistent with generally accepted practices in
the securities industry and will maintain copies of such records as are
produced by Southwest, in accordance with all applicable rules and
regulations of regulatory and self-regulatory agencies and bodies,
including the NASD and SEC guidelines for record retention in effect
from time to time. In connection with Customer Accounts, Southwest will
maintain and preserve such books and records pertaining thereto,
pursuant to the requirements of SEC Rule 17a-3, as are customarily made
and kept by Southwest.
(b) Correspondent's Books and Records. Notwithstanding the provisions of
Section 4(a), Correspondent shall maintain ledgers (or other records)
reflecting all assets and liabilities, income and expenses and capital
accounts; monies borrowed and monies loaned (together with a record of
the collateral therefor and any substitution in such collateral); a
record of the computation of aggregate indebtedness and net capital
pursuant to SEC Rule 15c3-1; and personnel files including applications
for employment executed by each "associated person". Correspondent also
shall maintain a memorandum of each brokerage order, and of any other
instruction, given or received for the purchase or sale of securities,
whether executed or unexecuted. Such memorandum shall show the terms and
conditions of the order or instructions and of any modification or
cancellation thereof, the account for which entered, the time of entry,
the price at which executed and, to the extent feasible, the time of
execution or cancellation.
(c) Books and Records of Both Parties. Southwest and Correspondent shall
each be responsible for preparing and filing the reports required by the
regulatory and self-regulatory agencies and bodies that have
jurisdiction over each, and Southwest and Correspondent will each
provide the other with such information, if any, which is in the control
of one party but is required by the other to prepare any such report.
5. RECEIPT, DELIVERY AND SAFEGUARDING OF FUNDS AND SECURITIES
(a) Receipt and Delivery in the Ordinary Course of Business. As between
Southwest and Correspondent, the party having possession of Customer
funds or securities shall be responsible for safeguarding such funds and
securities. Correspondent shall promptly transmit securities and/or
funds to Southwest when securities and/or funds are to be delivered to
Southwest. However, Southwest will not be responsible for any funds or
securities delivered by a Customer or Correspondent, its agents or
employees, until such funds or securities are physically delivered to
Southwest's premises and accepted by an authorized representative of
Southwest or deposited in bank accounts maintained in Southwest's name.
Correspondent shall be responsible for the prompt payment to Southwest
for securities purchased and prompt delivery of securities sold in
Customer
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Accounts. Correspondent shall be responsible for the authenticity of
all certificates and delivery of certificates in good form by Customers
to Southwest.
With respect to all payments made or to be made to Southwest, by or for
a Customer of Correspondent, Correspondent shall immediately forward
all such funds to Southwest, either by U. S. Mail or mutually
acceptable courier service or by deposit to local depositary bank, and
an officer of Correspondent shall verify and warrant that said funds
are credited to the proper Southwest Customer Account, and further
shall notify Southwest to enter on Southwest's books and records said
deposit of Customer funds.
With respect to any securities certificates delivered to Southwest for
a Customer of Correspondent, an officer of Correspondent shall verify
and warrant (i) that any securities not bearing a restricted legend are
fully paid for and freely tradable; (ii) that Correspondent has no
reason to suspect any defect or irregularity with respect to any
securities and any endorsements thereon; (iii) that the securities are
free of any liens and adverse claims, (iv) that the party transferring
the securities has legal title to them or the authority to effect the
proposed transfer; and (v) that the regulatory requirements restricting
the sale or transfer of securities that bear a restrictive legend
(pursuant to SEC Rules 144 or 145 or otherwise) have been satisfied or
will be satisfied within the appropriate time frames.
Correspondent acknowledges that it is solely responsible for satisfying
any loss or shortfall of a Customer Account, or for any other event
which causes the assets in a Customer Account to be insufficient in
amount or otherwise unavailable to timely meet the obligations of
Customer to Southwest.
(b) Custody Services. Whenever Southwest has been instructed to act as
custodian of the securities in any Correspondent or Customer Account, or
to hold such securities in "safekeeping," Southwest may hold the
securities in the Customer's name or may cause such securities to be
registered in the name of Southwest or its nominee or in the names of
nominees of any depository used by Southwest. Southwest will perform the
services required in connection with acting as custodian for securities
in Correspondent and Customer accounts, such as (i) collection and
payment of dividends; (ii) transmittal and handling (through
Correspondent) of tenders or exchanges pursuant to tender offers and
exchange offers; (iii) transmittal of proxy materials and other
shareholder communications; and (iv) handling of exercises or
expirations of rights and warrants, and of redemptions of securities.
(c) Receipt and Delivery Pursuant to Special Instruction. Upon instruction
from Correspondent and/or a Customer, Southwest will make such transfers
of securities or Accounts as may be requested. Correspondent shall be
responsible for determining if any securities held in Correspondent or
Customer Accounts are "restricted securities" or "control stock" as
defined by the rules of the SEC and that orders executed for such
securities are in compliance with the applicable laws, rules and
regulations.
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(d) Draft-Issuing Authority. At its discretion Southwest may authorize
certain of Correspondent's employees to sign drafts, with Correspondent
as the drawer, payable to Correspondent's Customers in amounts and
pursuant to conditions as may be determined by Southwest from time to
time. Correspondent agrees that it will not request Southwest to
authorize someone to sign drafts who is not an employee of
Correspondent. With respect to any drafts so issued by Correspondent, an
officer of Correspondent shall verify and warrant before causing the
draft to be issued (i) that the funds to be transmitted are due payee
and that payee has the authority to receive those funds; (ii) that the
funds are free of any liens or adverse claims at the time of payment,
and are not expected to become subject to any such liens or claims
within the foreseeable future; and (iii) that the funds are not needed
at the time of payment to satisfy margin or other collateral
requirements of the Customer.
Correspondent agrees to fully indemnify Southwest from the negligence,
fraud or mistakes of Correspondent, Correspondent's employees,
independent agents and contractors and Customers in connection with any
draft issuing authority granted hereunder. Southwest may in its
discretion require Correspondent to post a performance bond in such
amount and with such deductible as Southwest may determine in order to
protect Southwest against any such losses. Furthermore, Correspondent
authorizes Southwest to charge any Correspondent Account or other assets
of Correspondent held by Southwest with the amount of any such losses.
Notwithstanding Section 5(a), Southwest will not be responsible for the
safeguarding of funds withdrawn by Correspondent or Correspondent's
employees pursuant to such draft issuing authority. Southwest may
withdraw this draft issuing privilege without notice at any time during
the term of this Agreement. Notwithstanding anything herein to the
contrary, Southwest may at any time, at its sole discretion, despite any
prior authorization, refuse payment on any draft for which Correspondent
is drawer and Southwest is drawee.
6. CONFIRMATIONS AND STATEMENTS
(a) Preparation and Transmissions. Southwest will prepare and send to
Customers monthly statements of account (or quarterly statements if no
activity occurs in an account during the calendar quarter covered by
such statement), which statements shall meet Southwest's requirements as
to format and quality and will indicate that Correspondent introduced
the Account. Unless otherwise agreed, Southwest will be responsible for
preparing and transmitting confirmations; provided, however, that
Correspondent may elect to prepare and transmit confirmations, subject
to prior approval by Southwest and compliance by Correspondent with the
provisions of 2230 NASD Conduct Rules. Correspondent shall not generate
and/or prepare any statements, billings or confirmations respecting any
Account except as provided in this Agreement or pursuant to an agreement
executed between Southwest and Correspondent that authorizes
Correspondent to print and mail statements to Accounts on behalf of
Southwest. If such an agreement has been executed, Correspondent
covenants that it shall comply with all requirements for
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statements imposed upon Southwest of which Correspondent has notice or
has been advised of by Southwest under all applicable laws, rules and
regulations, including, but not limited to, the SEC, NASD, Federal
Reserve Board and all other regulatory and self-regulatory agencies and
bodies. Correspondent further covenants that it shall not modify or
amend the agreed upon statement form provided without the prior written
consent of Southwest.
(b) Examination and Notification of Errors. Correspondent shall examine
promptly all monthly statements of account, monthly statements of
clearing services and other reports provided to Correspondent by
Southwest. Correspondent shall notify Southwest of any error claimed by
Correspondent in any Account in connection with (i) any transaction
prior to the settlement date of such transaction, (ii) information
appearing on daily reports within seven (7) calendar days of such
report, and (iii) information appearing on monthly statements or reports
within thirty (30) calendar days of Correspondent's receipt of any
monthly statement or report. Any notice of error shall be accompanied by
such documentation as may be necessary to substantiate Correspondent's
claim. Correspondent shall provide promptly upon Southwest's request any
additional documentation which Southwest reasonably believes is
necessary or desirable to determine and correct any such error.
7. ACCEPTANCE OF ORDERS, EXECUTION OF TRANSACTIONS, OTHER SERVICES
(a) Customers' Orders. Orders received by Correspondent can be executed by
Correspondent or forwarded to Southwest for execution. The party
executing the order shall be responsible for errors in execution.
Acceptance of orders from Customers shall be the responsibility of
Correspondent, and Correspondent shall be responsible for the
authenticity of all orders. Correspondent shall promptly transmit all
orders to Southwest, and Southwest shall have no responsibility for
orders not promptly transmitted. Correspondent shall advise each of its
Customers that its relationship with Southwest is solely that of an
introducing broker to a clearing broker and that, except as set forth in
Section 2(f) above, Correspondent bears all responsibility for the
Customer's Account. Southwest reserves the right to reject any Customer
order transmitted to Southwest for execution or any order executed by
Correspondent and reported to Southwest for clearance. Correspondent
assumes the risk of failure by any dealer with which Correspondent
executes an order in the event such dealer fails to perform, and will
reimburse Southwest for any loss and/or costs incurred by it in the
transaction.
(b) Transaction Clearing. During the term of this Agreement, Southwest will
clear transactions on a fully disclosed basis for Accounts of
Correspondent and the Customers that Correspondent introduces and
Southwest accepts as provided in Section 2-(c); provided that Southwest
reserves the right not to clear any particular transactions for
Correspondent or Correspondent's Customers.
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(c) Other Services. Southwest will perform such other services, upon such
terms and at such prices, as Southwest and Correspondent shall agree
from time to time.
8. FEES AND SETTLEMENTS FOR SECURITIES TRANSACTIONS
(a) Commissions; Fees for Clearing Services
(i) Correspondent has provided to Southwest its basic commission
schedule and Southwest will charge each Customer the commission
shown on such schedule or which Correspondent otherwise directs
Southwest to charge on each transaction. Correspondent's basic
commission schedule may be amended from time to time by written
instructions to Southwest from Correspondent; provided, however,
that Southwest shall be required to implement such changes only to
the extent they are within the usual capabilities of Southwest's
data processing and operations systems and only over such
reasonable time as Southwest may deem necessary or desirable to
avoid disruption of Southwest's normal operational capabilities.
Southwest may charge Correspondent for changes in the basic
commission schedule. Correspondent's basic commission schedule
shall be within the format of Southwest's computer system.
(ii) Southwest will charge Correspondent for clearing services
according to the fee schedule set forth in Schedule A attached
hereto and, if applicable, Schedule B.
(iii) Southwest may charge Correspondent expenses incurred by Southwest
on behalf of Correspondent pursuant to this Agreement. Expenses
incurred by Southwest on behalf of Correspondent that may be
deducted from any payments due to Correspondent from Southwest
include, but are not limited to, overlay of forms, system
equipment expenses, special programming, changes to commissions
schedules and financial report information related thereto,
installation of data communication lines and brokerage related
credit inquiries, legal transfers, Regulation T extensions,
Mailgrams (buy-in or sellout), microfiche of records, insurance
protection for Accounts in excess of the amounts provided by the
Security Investors Protection Corporation, third party vendor fees
and costs incurred in failure of Correspondent or Customers to
provide correct social security or tax identification numbers.
(b) Settlements. Southwest will collect commissions from Customers on behalf
of Correspondent and through Correspondent. As soon as practicable after
the end of each month, Southwest will forward to the Correspondent a
statement showing the amount of commission and other amounts collected
by Southwest on Correspondent's behalf, and all amounts due to Southwest
from Correspondent (including, without being limited to, clearing
charges, other charges, other fees and each Customer's unsecured debit
items, however arising), together with the amount by which the total
owed Correspondent exceeds the total owed Southwest. If such statement
indicates that Correspondent owes
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monies to Southwest, Correspondent shall promptly pay Southwest the
amount by which the total owed Southwest exceeds the total owed
Correspondent. If Correspondent fails to make such payment within the
time period indicated on such statement, or in any event within thirty
(30) calendar days, Southwest shall have the right to charge any other
Account maintained by Southwest for Correspondent or any other assets of
Correspondent held by Southwest (including the deposit required pursuant
to Section 9 and positions and balances in Correspondent Accounts) for
the net amount due Southwest. Any failure by Southwest to charge any
Account or assets of Correspondent held by Southwest shall not act as a
waiver of Southwest's right to demand payment of, or to charge
Correspondent's Accounts for, the full amount due at any time.
9. DEPOSIT
(a) Required Clearing Deposit. Contemporaneously with the signing of this
Agreement, Correspondent will deliver cash to Southwest, as specified in
Schedule A attached, for deposit in an account maintained by Southwest.
If at any subsequent time Southwest, in its sole discretion, requires an
additional deposit, Correspondent will deposit additional cash in an
amount specified by Southwest. Any failure by Southwest to demand
compliance with the requirement that Correspondent deposit additional
amounts shall not act as a waiver of Southwest's right to demand
compliance with such requirements at any time. If the deposit is not
adequately funded as required by Southwest, Southwest may, in addition
to all other rights under this Agreement, transfer cash or securities of
Correspondent held by Southwest to the deposit account. Southwest shall
be entitled to set-off against any deposit in addition to any and all
other rights or remedies Southwest may have under this Agreement or
otherwise.
(b) Return of Required Clearing Deposit. When this Agreement has been
terminated in accordance with the provisions hereof, and Southwest has
received payment in full of any and all amounts owing to Southwest
hereunder and Correspondent has satisfied each and every of
Correspondent's outstanding obligations to Southwest hereunder,
Southwest shall return the required clearing deposit to Correspondent
within thirty (30) calendar days of the date on which all of said
payments have been received and obligations satisfied. These obligations
include, but are not limited to, any open and unsettled litigation
matters between Correspondent or Customers and Southwest, any unresolved
unsecured Correspondent Account or Customer Account debit balances, any
open fails as a result of trades executed on behalf of Correspondent
Accounts or Customer Accounts, and any failures to transfer to another
broker any Customer Accounts introduced by Correspondent.
10. INDEMNIFICATION
(a) Indemnity. Correspondent agrees to indemnify and hold harmless
Southwest, each person who controls Southwest within the meaning of the
Securities Exchange Act of
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1934 and any directors, officers, employees, agents and attorneys of
Southwest ("Southwest Indemnified Persons") for and against all claims,
demands, proceedings, suits and actions and all liabilities, losses,
expenses and costs (including any legal and accounting fees and
expenses) relating to Southwest's defense of any failure, for any
reason, fraudulent or otherwise, by Correspondent, Correspondent's
employees, independent agents or contractors, or Customers to comply
with any obligation under this Agreement or any other agreement executed
and delivered to Southwest in connection with Southwest's performance of
services hereunder and any act or failure to act by Southwest
Indemnified Persons, except any act or failure to act which is the
result of gross negligence or willful misconduct on the part of any such
Southwest Indemnified Person. Without limiting the generality of the
foregoing, such failure is explicitly intended by the parties to include
failure resulting from (i) suspension of trading or bankruptcy or
insolvency of any company, securities of which are held in Customer's
Accounts; (ii) failure by any Customer to maintain adequate margin; or
(iii) breach of any obligation existing between Correspondent and a
customer of Correspondent or any law, rule or regulation of the United
States, a state or territory thereof, or any regulatory or
self-regulatory agency or body, applicable to any transaction
contemplated by this Agreement.
Southwest shall indemnify and hold Correspondent harmless against any
losses, claims, damages, liabilities or expenses including without
limitation those asserted by Customers (which shall include, but not be
limited to, all costs of defense and investigation and all attorney's
fees) to which Correspondent may become subject, insofar as such losses,
claims, damages, liabilities or expenses arise out of, or are based upon
the gross negligence or willful misconduct of Southwest or its employees
in providing the services contemplated hereunder.
Promptly after receipt by any indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the
commencement thereof, but the emission so to notify the indemnifying
party will not relieve it from any liability that it may have to any
indemnified party otherwise than under this Section.
In case any such action is brought against any indemnified party, and it
notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent
that it may wish, to assume the defense thereof, subject to the
provisions herein stated, with counsel satisfactory to such indemnified
party. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to the indemnified party under this Section for
any legal or other expense subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs
of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed
the defense of the action with counsel satisfactory to the indemnified
party.
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(b) Security Interest and Authorization to Charge. Correspondent grants to
Southwest a first lien and security interest in any Correspondent
Account maintained by Southwest and any other assets of Correspondent
now or hereafter held by Southwest and authorizes Southwest to discharge
such lien by charging such Account and assets with all amounts owing to
Southwest including, but not limited to, (i) any cost or expense
resulting from failures to deliver or failures to receive, (ii) any
losses resulting from unsecured debit balances in any Customer or
Correspondent Account, (iii) any losses resulting from the failure by a
Customer or Correspondent to promptly satisfy upon demand by Southwest
any indebtedness of Customer or Correspondent to Southwest, including
but not limited to any debit balances in any Customer Account or
Correspondent Account and (iv) any amounts to which Southwest is
otherwise entitled pursuant to the provisions of Section 10(a).
Southwest shall have discretion to liquidate or sell any securities
without notice to Correspondent, and to determine which securities to
sell. Such charge may be made against Correspondent Accounts or assets
at any time and in such amount as Southwest deems appropriate. No delay
in charging any Correspondent Account or asset shall operate as a waiver
of Southwest's right to do so at any time as and when Southwest deems
appropriate. Southwest shall have the unlimited right to set-off any
indebtedness or other obligations of Correspondent under this Agreement
or otherwise (absolute or contingent, matured or unmatured) against any
obligations of Southwest to Correspondent, including from the required
clearing deposit (as described in Section 9) and/or, any other money,
securities, or other property of Correspondent in Southwest's
possession.
(c) Reserves. In connection with any claim that does or could give rise to a
claim for indemnification under this Section for Southwest or a
Southwest Indemnified Person, Southwest may, in its discretion, in
addition to any and all other rights and remedies under this Agreement,
reserve and retain any money, securities or other property of
Correspondent pending a determination of such claim. The money,
securities or other property of Correspondent set aside in such a
reserve shall be subject to Southwest's standard lien and security
interest described in Section 10(b) above.
11. UNDERTAKINGS OF CORRESPONDENT
(a) Financial Statements and Other Reports. Correspondent will furnish to
Southwest promptly upon request copies of Correspondent's balance sheet
and statement of earnings for the current fiscal year and for each of
Correspondent's previous fiscal years. Each such balance sheet and
statement of earnings shall be certified by independent public
accountants. Correspondent also shall furnish to Southwest promptly upon
request copies of Correspondent's monthly and quarterly Focus filing,
and the results and/or reports of all exams from self-regulatory bodies,
federal or state securities agencies.
(b) Exclusive Agreement. It is intended by the parties that Southwest will
be the exclusive provider of clearing services to Correspondent and its
Customers during the term of this Agreement. Correspondent will not,
without the express written consent of Southwest, retain any other
broker or other entity to provide clearing services during the term of
this Agreement.
13
(c) Disciplinary Action. In the event that Correspondent or any employee of
Correspondent shall become subject to any disciplinary action, including
but not limited to expulsion, suspension or restriction by any
regulatory or self-regulatory agency or body having jurisdiction over
Correspondent and Correspondent's securities business, Correspondent
will notify Southwest immediately and Correspondent authorizes Southwest
to take such steps as may be necessary for Southwest to maintain
compliance with the rules and regulations to which Southwest is subject.
Correspondent further authorizes Southwest, in any event, to comply with
directives or demands made upon Southwest by any regulatory or
self-regulatory agency or body relative to Correspondent and Customers.
In connection with such directives or demands, Southwest may seek advice
or legal counsel and Correspondent will reimburse Southwest for
reasonable fees and expenses of such counsel. Correspondent shall,
during the term of this Agreement, notify Southwest if Correspondent
fails to remain in compliance with the net capital and financial
reporting and record keeping requirements of the SEC, any state which
has jurisdiction over Correspondent, or any regulatory or
self-regulatory body which has jurisdiction over Correspondent,
(d) Fixed Price Offerings. Correspondent agrees that in making sales of
securities, as part of a fixed price offering, it will comply with all
applicable rules of the NASD, including, without limitation, the NASD's
Interpretations with respect to Free-Riding and Withholding and under
2740 of NASD Conduct Rules.
(e) Customer Transactions. Correspondent represents that all orders and
other transactions received by Southwest will be in accordance with
their Customers' instruction. The parties hereto expressly agree that
Southwest shall not be bound to any investigation into the facts
surrounding any transaction that Correspondent may have with its
Customers or other persons, nor shall Southwest be under any
responsibility for compliance by Correspondent with any laws or
regulations which may be applicable to Correspondent.
(f) Inquiries on Certificates. Southwest agrees to act as Correspondent's
direct inquirer under the Lost and Stolen Securities Program under SEC
Rule 17f-1. (17 CFR 240.17f-1).
(g) Compliance with Rules and Regulations. Correspondent shall comply with,
and shall be responsible for complying with, all laws, rules and
regulations to which it is subject, including but not limited to those
promulgated by the SEC, the NASD and securities exchanges of which
Correspondent is a member.
(h) Certain Expenses. Correspondent will not hold Southwest responsible for
any of Correspondent's office expenses or operating costs. Correspondent
will reimburse Southwest for any costs or expenses Southwest may incur
in complying with any request by a court, or regulatory or
self-regulatory agency or body for any documents, papers or data in any
form pertaining to any matters relating to this Agreement. If Southwest
deems it necessary to retain legal counsel to advise Southwest in
connection with any matter governed by this Agreement, including but
not limited to Southwest's manner of handling any transaction on behalf
of Correspondent or a Customer, Correspondent will reimburse Southwest
for the fees of such counsel.
14
(i) Option Transactions. Correspondent shall appoint a Registered Option
Principal before handling option transactions. Correspondent shall
comply with all requirements of the NASD and other regulatory bodies
regarding the handling of option transactions.
(j) Correspondent Accounts. Correspondent shall be required to pay for
securities purchased for its own Accounts on the settlement date.
Notwithstanding the foregoing, Correspondent may finance any portion of
the debit balance in a Correspondent Account under applicable stock
exchange and Federal Reserve regulations. If such financing is extended
by Southwest, Correspondent agrees to satisfy the debit balance of such
Account upon demand by Southwest. Southwest shall charge interest on
such debit balances at a rate set at the discretion of Southwest.
Interest will be calculated by multiplying the average daily debit
balance by the average interest rate (1/360 of the annual interest rate)
times the number of days in the interest period. The rate of interest
and method of calculation may be changed by Southwest automatically and
without notice from time to time.
Correspondent agrees to maintain in any Account which has a debit
balance such positions and margins as may be required by applicable
statutes, rules, regulations, procedures and customs, or as may be
requested by Southwest from time to time. Any financing described in
this Section 11(j) shall be subject to all other terms and provisions of
this Agreement relating to obligations of the Correspondent to
Southwest, including but not limited to being secured by the lien and
security interest granted by Correspondent pursuant to Section 10(b) of
this Agreement.
In the case of an Event of Default, as defined below, all debit balances
in any Correspondent Account, and interest thereon, shall bear interest
at the highest lawful rate. An Event of Default shall be deemed to have
occurred if (i) Correspondent fails to meet any call by Southwest for
additional collateral to be deposited in a Correspondent Account; (ii)
Correspondent fails to make payment of any debit balance in a
Correspondent Account upon demand by Southwest; (iii) Correspondent
becomes insolvent, makes an assignment for the benefit of creditors,
applies for or consents to the appointment of a receiver, or institutes
or has instituted against it any insolvency, reorganization,
liquidation, dissolution or similar proceeding; (iv) a petition naming
Correspondent as debtor shall be filed under the United States
Bankruptcy Code; or (v) an attachment is levied against any
Correspondent Account or Account in which Correspondent has an interest.
Regardless of any provision of this Section 11(j), any other section
of this Agreement or any other agreement between Southwest and
Correspondent, all agreements between
15
Southwest and Correspondent, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand being made
in respect of an amount due from Correspondent to Southwest, shall the
amount paid, or agreed to be paid, for the use, forbearance or detention
of money loaned by Southwest to Correspondent exceed the maximum
nonusurious rate of interest permitted to be charged under applicable
law (the "Highest Lawful Rate"). If, as a result of any circumstance
whatsoever, fulfillment of or compliance with any provision hereof or of
any of such other agreements at the time performance of such provisions
shall be due or at any other time shall involve exceeding the amount
permitted to contracted for, taken, reserved, charged or received by
Southwest under applicable usury law, then ipso facto, the obligation to
be fulfilled or complied with shall be reduced to the limit prescribed
by such applicable usury law, and if, from any such circumstance,
Southwest shall ever receive interest or anything that might be deemed
interest under applicable law which would exceed the Highest Lawful
Rate, such amount which would be excess interest shall be applied to the
reduction of the principal amount owing on the Correspondent Account in
question or the amounts owing on other obligations of Correspondent to
Southwest, or if such excessive interest exceeds the unpaid principal
balance of any amount owing on other obligations of Correspondent to
Southwest, such excess shall be refunded to Correspondent. All sums paid
or agreed to be paid to Southwest shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout
the full term of such indebtedness until payment in full of the
principal (including the period of any renewal or extension thereof) so
that the interest on account of such indebtedness shall not exceed the
Highest Lawful Rate. Notwithstanding anything to the contrary contained
in any agreement between Correspondent and Southwest, it is understood
and agreed that if at any time the rate of interest which accrues on the
outstanding balance of any indebtedness of Correspondent to Southwest
shall exceed the Highest Lawful Rate, the rate of interest which accrues
on the outstanding principal balance of any such indebtedness shall be
limited to the Highest Lawful Rate, but any subsequent reductions in the
rate of interest which accrued on the outstanding principal balance of
any indebtedness shall not reduce the rate of interest which accrues on
the outstanding principal balance of any indebtedness below the Highest
Lawful Rate until the total amount of interest accrued on the
outstanding principal of any indebtedness equals the amount of interest
that would have accrued if such interest rate had been in effect at all
times.
In consideration for Southwest opening or maintaining one or more
inventory Accounts for Correspondent, Correspondent agrees to allow
Southwest at any time within the limitations imposed by applicable laws,
rules and regulations, to pledge, hypothecate, and/or make deliveries
with any and all securities in such Accounts, including fully paid and
excess margin securities, without notice to Correspondent. Such
securities will be segregated from other bona fide customers of
Southwest in the event that they are pledged as collateral for bank
loans. Without abrogating any of Southwest's rights under this Agreement
and subject to any indebtedness of Correspondent to Southwest,
Correspondent is entitled, upon demand, to receive delivery of fully
paid for securities in Correspondent's inventory Accounts.
16
The provisions of this Section 11(j) shall be construed in conjunction
with the express terms and conditions of any separate applicable Account
agreement(s) between Southwest and Correspondent.
(k) Forms BD and U4. Within thirty (30) days after the execution of this
Agreement, Correspondent shall provide to Southwest a copy of
Correspondent's Form BD, and copies of the Forms U4 for the principals
and all registered employees of Correspondent, and copies of any other
documents relating to Correspondent, its principals or employees that
are available on the Central Registration Depository ("CRD").
Thereafter, within thirty (30) days after the hiring of any new
employee, Correspondent shall provide to Southwest a copy of such new
employee's Form U4 and other documents available on the CRD.
Additionally, throughout the term of this Agreement, Correspondent shall
promptly provide copies of any subsequent amendments of all Forms and
other documents described in this Section 11(k).
(1) Advertising. Correspondent shall obtain Southwest's prior written
consent before using Southwest's name or logo, or the name or logo of
any affiliate of Southwest, in any advertising in print, broadcast,
electronic or any other media. Without the express written consent of
Southwest, Correspondent also shall not display the name or logo of
Southwest or any of its affiliates on any Internet web page or other
electronic advertising; nor shall Correspondent display on any such web
page or electronic advertising, a hyperlink to or the Internet address
of any web page or electronic advertising of Southwest or any of its
affiliates
12. TERMINATION OF AGREEMENT; TRANSFER OF ACCOUNTS
(a) Effectiveness. This Agreement shall commence to be effective on the date
set forth on the signature page hereof, subject to any required approval
by the NASD and other regulatory or self-regulatory agencies or bodies,
and shall remain in effect as more fully described in Schedule A.
(b) Automatic Termination. In addition to any other provision for
termination herein, this Agreement shall terminate immediately in the
event that either Correspondent or Southwest ceases to conduct its
business or that Southwest:
(i) is no longer registered as a broker/dealer with the SEC; or
(ii) is no longer a member in good standing of the NASD; or
(iii) is suspended by any national securities exchange of which
Southwest is a member for failure to comply with the rules and
regulations thereof.
17
(c) Survival. Termination of this Agreement shall not affect Southwest's
rights or liabilities relating to business transacted prior to the
effective date of such termination. From the date of termination until
transfer or delivery of all Customer and Correspondent Accounts,
Southwest's rights and liabilities relating to business transacted
after such termination shall be governed by the same terms as those set
forth in this Agreement.
(d) No Obligation to Release. Southwest shall not be required to release to
Correspondent any securities or cash held by Southwest for Correspondent
in one or more Correspondent Accounts until any and all amounts owing to
Southwest pursuant to the provisions of this Agreement are paid; and
Correspondent's outstanding obligations hereunder to Southwest are
determined, including determination of any disputed amounts, and
satisfied, and any property of Southwest in the possession of
Correspondent is returned to Southwest.
(e) Conversion of Accounts Upon Termination. In the event that this
Agreement is terminated for any reason, it shall be Correspondent's
responsibility to arrange for the conversion of Correspondent and
Customer Accounts to another clearing broker. Correspondent will give
Southwest notice (the "Conversion Notice") of.
(i) the name of the broker that will assume responsibility for
clearing services for Customers and Correspondent;
(ii) the date on which such broker will commence providing such
services;
(iii) Correspondent's undertaking, in form and substance satisfactory
to Southwest, that Correspondent's agreement with such broker
provides that such broker will accept on conversion all
Correspondent and Customer Accounts, then maintained by
Southwest, and all positions of such Accounts; and
(iv) the name of an individual within that organization who Southwest
can contact to coordinate the conversion. The Conversion Notice
shall accompany Correspondent's notice of termination or within
thirty (30) days of the occurrence of an event specified in
Section 12(b).
If Correspondent fails to give the Conversion Notice to Southwest,
Southwest may give to Customer such notice as Southwest deems
appropriate of the termination of this Agreement and may make such
arrangements as Southwest deems appropriate for transfer or delivery of
Customer and Correspondent Accounts. In addition, Correspondent shall
pay any costs incurred by Southwest as billed by any third party vendors
such as transfer agents, etc.
(f) Other Transfers of Accounts. When Southwest receives a properly executed
authorization to transfer a Customer Account from the receiving
broker/dealer, Southwest shall promptly transfer the Customer Account to
such receiving broker/dealer. Correspondent shall discontinue doing
business in any Customer Account scheduled for transfer.
18
13. CONFIDENTIALITY.
(a) Documents and Business Information. All agreements, documents, papers
and data in any form, supplied by either party hereto concerning the
disclosing party's business or any Customers shall be treated by the
receiving party as confidential. To the extent such documents or data
are retained by the receiving party, they shall be kept in a safe place
and shall be made available to third parties only as authorized by the
disclosing party in writing or pursuant to any order or request of a
court or regulatory body having appropriate jurisdiction. The receiving
party shall give the disclosing party prompt notice of the receipt by
the receiving party of any such order or subpoena, unless prohibited
from doing so by the issuing authority, which notice shall be given
prior to the receiving party's compliance therewith. Such documents
shall be made available by the receiving party for inspection and
examination by the disclosing party's auditors, by properly authorized
agents or employees of any regulatory bodies or commissions or by such
other persons as the disclosing party may authorize in writing.
Notwithstanding anything herein to the contrary, the disclosing party
expressly authorizes the receiving party to supply any information
requested relating to the disclosing party, its business, or Customers
to any regulatory body having appropriate authority.
(b) Terms of Agreement. Correspondent agrees that it shall not disclose to
any third party the terms and conditions of this Agreement, including
but not limited to pricing information, except to the extent
Correspondent is required to do so by the provisions of any law, rule or
regulation, or in response to the order or request of a court or
regulatory body having appropriate jurisdiction.
14. EMPLOYEES
Neither party will solicit, engage in negotiations to employ, or
employ any person who is, or within the preceding twelve (12) months has
been, employed by the other party, without first obtaining such other
party's express written consent.
15. NOTICE TO CUSTOMERS
Subject to the requirements of the NASD Rules of Fair Practice,
Correspondent shall provide to each Customer upon the opening of a
Customer Account, in a manner which is reasonably acceptable to
Southwest, a written notice which shall be furnished by Southwest
describing the general nature of the services being performed by
Southwest in accordance with this Agreement.
16. CUSTOMER COMPLAINT PROCEDURES
Correspondent will be responsible for the initial handling of all
Customer complaints. Any Customer who initiates a complaint with
Southwest will be referred by Southwest to Correspondent. If any such
complaint is based upon an alleged act or failure to act by Southwest,
Correspondent will notify Southwest promptly of such complaint and the
basis therefor; and will consult with Southwest. And the parties will
cooperate in determining the validity of such complaint and the
appropriate action to be taken.
19
17. REMEDIES CUMULATIVE
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, power, remedy or privilege herein contained, or
now or hereafter existing under any applicable statute or law, shall not
be construed to be a waiver of such right, power, remedy or privilege,
nor to limit the exercise of such right, power, remedy or privilege, nor
shall it preclude the further exercise thereof or the exercise of any
other right, power, remedy or privilege.
18. GUARANTEE
The corporation or indiviual(s) who guarantee the obligations of
Correspondent under this Agreement by executing the signature lines
designated for such purpose at the end of the Agreement (the
"Guarantor(s)"), in consideration of Southwest's entering into the
Agreement do(es) hereby personally guarantee(s) (jointly and severally,
if more than one) the performance by Correspondent of the provisions of
this Agreement (including without limitation the indemnification
provisions of Section 10) and shall promptly pay any amount that is not
paid by Correspondent to Southwest under this Agreement. This is an
absolute, unconditional and unlimited guarantee of payment and may be
proceeded upon by Southwest or a Southwest Indemnified Person before
filing any action against Correspondent or after any action against
Correspondent has been commenced. Guarantor(s) grant(s) to Southwest a
first lien and security interest in any and all money and securities
of Guarantor(s) held by Southwest. Southwest shall have the unlimited
right to set-off any amounts owed to it by Correspondent or a
Guarantor(s) against any obligation of Southwest to any Guarantor(s).
Southwest also shall have the absolute and unlimited right to sell,
transfer, or liquidate any of the assets in any of Guarantor(s)'
accounts with Southwest for any amounts owed to it by Correspondent or a
Guarantor(s). The obligations of Guarantor(s) shall not be discharged or
impaired or otherwise affected by the failure of Southwest or a
Southwest Indemnified Person to assert, claim, demand or enforce any
remedy under this Agreement, nor by waiver, modification or amendment of
this Agreement or any compromise, settlement or discharge of obligations
of Correspondent under this Agreement, or any release or impairment of
any collateral by Southwest or a Southwest Indemnified Person.
20
19. LIMIT ON LIABILITY; NO CONSEQUENTIAL DAMAGES
In any action by Correspondent against Southwest for any claim arising
out of the relationship created by this Agreement, Southwest shall only
be liable to Correspondent in cases of negligence or willful misconduct,
and in such cases Southwest shall only be liable for the amount or
actual monetary losses suffered by Correspondent. Correspondent shall
not, in any such action or proceeding or otherwise, assert any claim
against Southwest for consequential damages on account of any loss,
cost, damage or expense which Correspondent may suffer or incur related
to transactions in connection with this Agreement or otherwise.
20. MISCELLANEOUS
(a) Modification. Except as otherwise expressly provided herein, this
Agreement may be modified only by a writing signed by both parties to
this Agreement. Such modification shall not be deemed as a cancellation
of this Agreement. Subject to the NASD Rules of Fair Practice and other
applicable rules and regulations, this Agreement and all modifications
may be required to be submitted to the NASD and other regulatory or
self-regulatory agencies or bodies prior to effectiveness. It is
expressly understood that services cannot be provided under this
Agreement until such approval, if required, is received.
(b) Assignment. This Agreement shall be binding upon all successors, assigns
or transferees of both parties hereto irrespective of any change with
regard to the name or of the personnel of Correspondent or Southwest.
Any assignment of this Agreement shall be subject to the requisite
review and/or approval of any regulatory or self-regulatory agency or
body whose review and/or approval must be obtained prior to the
effectiveness and validity of such assignment. No assignment of this
Agreement shall be valid unless the non-assigning party, in its sole
discretion, consents to such an assignment in writing. Notwithstanding
the foregoing, Southwest, upon giving written notice to Correspondent,
may assign it rights and obligations under this Agreement to any entity
that purchases a majority of the stock or assets of Southwest or of any
of Southwest's subsidiaries or affiliates, to any majority-owned
subsidiary that Southwest may create or to any entity directly or
indirectly controlled by, controlling or under common control with
Southwest, and an assignment by Southwest to any such party will be
deemed valid and enforceable in the absence of any consent from
Correspondent. Neither this Agreement nor any operation hereunder is
intended to be, shall not be deemed to be, and shall not be treated as a
general or limited partnership, association, or joint venture or agency
relationship between Correspondent and Southwest.
(c) Choice of Law. The construction and effect of every provision of this
Agreement, the rights of the parties hereunder and any questions arising
out of the Agreement, shall be subject to the statutory and common law
of the State of Texas, without regard to the choice of law provisions
thereof.
21
(d) Severability. If any provision or condition of this Agreement shall be
held to be invalid or unenforceable by any court, or regulatory or
self-regulatory agency or body with appropriate jurisdiction, such
invalidity or unenforceability shall attach only to such provision or
condition. The validity of the remaining provisions and conditions
shall not be affected thereby and this Agreement shall be carried out
as if any such invalid or unenforceable provision or condition were
not contained herein.
(e) Notice. For the purposes of any and all notices, consents, directions,
approvals, restrictions, requests or other communications required or
permitted to be delivered hereunder, Southwest's address shall be:
Southwest Securities, Inc.
1201 Elm Street
Suite 3500
Dallas, Texas 75270
Attention: William D. Felder, Senior Executive Vice President
And Correspondent's address shall be:
All-Tech Investment Group, Inc.
-------------------------------
160 Summit Ave.
-------------------------------
Montvale, NJ 07645
-------------------------------
Attention: Mark Shefts
--------------------
Either party may provide notice or change its address for notice
purposes by giving written notice pursuant to registered or certified
mail, return receipt requested, addressed to the other party at its
address for notice.
22
(f) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute a single
agreement. When each party has executed and delivered to the other a
counterpart, this Agreement will become binding on both parties, subject
only to any required approval by the NASD.
MADE AND EXECUTED THIS 15th DAY OF July, 1997.
SOUTHWEST SECURITIES, INC.
By:/s/ William D. Felder
----------------------
William D. Felder
Senior Executive Vice President
All-Tech Investment Group,Inc.
- ------------------------------
CORRESPONDENT:
By: /s/ Mark Shefts
------------------
Name: Mark Shefts
----------------
Title: President
---------------
23
[letterhead] August 4, 1997
Mr. William Felder
Southwest Securities, Inc.
1201 Elm St., Suite 3500
Dallas, TX 75270
Dear Bill:
We have agreed that Paragraph 7(b) of that certain Fully Disclosed
Clearing Agreement between Southwest Securities, Inc. and All-Tech Investment
Group, Inc. executed July 15, 1997 shall be amended to insert the word
"particular" between the words "any" and "transaction" appearing in the
penultimate line thereof.
Please indicate the agreement of Southwest that the foregoing
accurately sets forth our understanding by signing the duplicate copy of this
letter enclosed herewith and returning it to me.
Very truly yours,
ALL-TECH INVESTMENT GROUP, INC.
By/s/Mark Shefts
-----------------
Mark Shefts, President
Accepted and Agreed:
SOUTHWEST SECURITIES, INC.
By/s/William D. Felder
------------------
William Felder
SCHEDULE A -- Schedule of Commissions and Charges
SCHEDULE B -- Schedule of Clearing Charges for Exchange and Nasdaq Listed
Securities
* The Company has filed a request with the Securities & Exchange Commission for
confidential treatment of the fee Schedules. Accordingly, the schedules have
been ommitted, however, they have been separately filed with the Commission
pursuant to the Company's confidentiality request.