FULLY DISCLOSED CORRESPONDENT AGREEMENT
THIS ACREEMENT made this 4th day of Dec. 1997 between JB Oxford & Company
(herein called "JBOC") a Utah corporation and Bernard, Lee & Edwards
Securities. Inc.(herein called the "Correspondent") a Delaware corporation.
WHEREAS, JBOC is in the business of providing Correspondents with clearing
and other services in connection with transactions relating to certain
securities, and Correspondent is a securities broker/dealer desirous of
engaging the services of JBOC,
NOW THEREFORE, in consideration of the premises, undertakings, and covenants
herein contained, the parties agree as follows:
1. NATURE OF RELATIONSHIP. Thee terms of this Agreement, which includes the
JBOC Procedure of Operations which is referred to as Exhibit 'A" and has
been provided to Correspondent, and which is incorporated herein by this
reference, define the business relationship between and obligations of the
parties hereto. All Customers of the Correspondent will be notified by JBOC,
in writing, of the existence of this clearing agreement. This Agreement shall
not be construed as creating a partnership, joint venture or principal/agency
relationship. The Correspondent shall not represent to the public that it is
an employee, partner, or agent of JBOC either orally or in writing. It is the
Correspondent's responsibility to inform its customers of the services to be
performed by JBOC in the JBOC Procedure of Operations also called Exhibit "A",
which may be revised at any time at the sole discretion of JBOC and/or to
maintain compliance with the laws and regulations currently in effect at the
time said revision. If the Correspondent violates any provision of
Exhibit "A" then the Correspondent has violated the provisions of this
Agreement. JBOC has the right to refuse to clear any transaction by the
Correspondent that at JBOC's sole discretion and determination may be
detrimental to the well being of this relationship and/or to JBOC. The
Correspondent will have no recourse against JBOC, its principals, employees
or agents as a result of this refusal, should it occur.
2. SERVICES PROVIDED BY JBOC.
2.1 JBOC will prepare and mail the Correspondent's account statements and
confirmations, with the statement "trade clearance through
JB OXFORD & COMPANY'', on trades originated by the Correspondent
2.2 JBOC will have prepared and mailed either monthly, if there is activity,
or quarterly, if there is not activity, statements to Correspondent's customers.
Account statements will indicate that customer funds and securities received
by JBOC sill be held at JB0C and will contain the telephone number of a contact
area at JBOC.
2.3 JBOC will settle transactions in securities between the Correspondent and
other broker/dealers; the Correspondent and its Customers; and the Correspondent
and third parties.
2.4 JBOC will perform all cashiering functions for customer accounts including,
but not ,limited to, the receipt, delivery and depository or on-site safekeeping
of securities bought, sold, borrowed/loaned, legals, rights offerings,
dividends, exchanges, and tender offers, the receipt, payment and custody of
customer funds from purchase, sales or margin accounts, dividends, rights
offerings, exchanges, and tender offers.
2.5 JBOC will construct and maintain prescribed books and records of all
transactions cleared through it.
2.6 JBOC shall provide the above services to Correspondent and Correspondent's
customers as set forth on JBOC's Fee Schedule in effect from time-to-time a copy
of which has been provided Correspondent as Exhibit "A". It is hereby understood
and agreed that the Fee Schedule, which is included in Exhibit "A" may be
modified by JBOC in the future as JBOC, deems necessary. Services not set forth
in the Fee Schedule may be provided by mutual agreement at additional cost
(See also Section 12 of this Agreement.)
2.7 For purposes of the Securities Investor Protection Act of 1970, as amended,
and the financial responsibility rules of the Securities and Exchange Commission
the Correspondent's customers will be customers of JBOC.
3. FUNCTIONS T0 BE PERFORMED BY AND RESPONSIBILITIES OF CORRESPONDENT
3.1 The following functions and obligations shall be the exclusive
responsibility of the Correspondent and unless otherwise agreed to
in writing and executed by the parties hereto, JBOC will not engage
in or be liable for the same. The functions to be performed
exclusively by the Correspondent shall be:
i. Execution and clearance of any commodity transaction.
ii. The preparation of the Correspondent's general accounting. payroll records,
financial statentents and any regulatory reports.
ill. The payment of the Correspondent's general business expenses, except as
incurred on the Correspondent's behalf under this Agreement.
iv. The payment of commissions to the Correspondent's registered
representatives.
V. The Compliance supervision of the Correspondent or ihe Conrespondent's
registered representatives, employees and/or agents.
vi. Verification, of the Correspondent's customer account information as to
accuracy.
vii. Sending prospectuses to the Correspondent's customers who are
participating in an underwriting or registered secondary being sold by the
Correspondent.
viii. PROMPT (within 2 business days) review of all reports supplied by JBOC,
especially trading inventories, confirmations, customer requirement reports,W-9
deficiencies, and such similar reports.
3.2 In any underwriting which the Correspondent undertakes or participates,
it is solely the Correspondent's responsibility to secure adequate financing.
Unless the Correspondent obtains prior written agreement, on an issue by issue
basis. JBOC will not assume any responsibility or liability for financing the
Correspondent's underwriting(s).
3.3 The Correspondent will maintain retention of records in relation to the
Correspondent's customer accounts by JBOC except where required by applicable
rules and/or regulations.
3.4 It will be the Correspondent's responsibility to monitor and supervise the
compliance with the laws, rules and/or regulations by the Agencies mentioned
in 3.5 below, as to the opening, approving and monitoring of customer and
broker/dealer accounts and suitability as to the type of transaction placed
into an account, recommendations and investment advise given by anyone
associated with the Correspondent, maintenance of a current BD with all
agencies, registration of all registered representatives and employees
with applicable State, SEC, NASD and any other agency requiring same.
The Correspondent is exclusive, responsible for the supervision and
approval of all officer and employee accounts whether such person is an
employee of the Correspondent or another broker/dealer, due diligence
requirements as to the issues traded or recommended, proper handling of
information documentation of restricted legend or control stock and any
advertising done by the Correspondent.
3.5 It will be the Correspondent s responsibility to "KNOW THE CUSTOMER."
The correspondent shall take full responsibility for learning all essential
facts relative to every customer, every order, every cash or margin account
accepted by the Correspondent and this will be considered as a continuing
obligation of the Correspondent. The Correspondent accepts full responsibility
for all trades it places on behalf of its customers as the agent. Correspondent
provides the continuing representation to JBOC that all transactions placed on
behalf of its customers are with the consent of the customers.
3.6 Correspondent acknowledges that JBOC will not be bound to make any
investigation into the facts surrounding any transaction that it may have
with the Correspondent on a principal or agency basis or that the Correspondent
may have with its customers or any other person to ensure that the Correspondent
is in compliance with the laws, rule, and/or regulations of the SEC, securities
exchange, NASD, Federal Government and various state agencies.
3.7 Correspondent acknowledges that JBOC will not execute documents of
customers. It shall be the sole responsibility of Correspondent to secure the
signature of the customer (beneficial owner) and deliver the required documents
to JBOC in a timely manner on any tender offer of similar transaction.
3.7 It will be the Correspondent's responsibility to notify the customer of
certain charges for customer-requested services, e.g. security transfers,
account transfers, etc.
4. INFORMATION/DOCUMENTS TO BE PROVIDED BY CORRESPONDET.
4.1 The Correspondent will PROMPTLY (within 72 hours) provide JBOC with the
appropriate account information upon opening a new account. Such new account
information will be provided upon a form prepared or authorized by JBOC. An
authorized officer of the Correspondent will approve each customer account in
writing and will assure by such execution that the customer signed the same.
4.2 Correspondent will maintain copies of all trade tickets for trades
entered into JBOC's operational system by Correspondent's staff at
Correspondent's office(s) and will promptly provide a copy of the same, upon
request, to
JBOC.
4.3 Option agreements are the sole responsibility of the Correspondent. If
the option trade is uncovered writing the option agreement must be reviewed
and approved by JBOC BEFORE any trade can occur.
4.4 All forms used by the Correspondent must be compatible with JBOC's
bookkeeping system.
4.5 It is the Correspondent's obligation to give JBOC IMMEDIATE notice of
any litigation and/or investigations that are initiated or pending. The
Correspondent shall also provide JBOC with summaries of pending litigation
on a quarterly basis.
4.6 The Correspondent is responsible for any mistakes in transmission of
data to JBOC.
5. POWER OF ATTORNEY. Correspondent appoints ]BOC its true and lawful agent
and attorney-in-fact to make, execute and deliver for, on behalf of, and in the
name of Correspondent, any and all documents and instruments, including stock
powers, bond powers, drafts, negotiable instruments, and powers of assignment,
to enable JBOC to render service under this Agreement, including to make a
security negotiable, transferable or in good delivery form, to transfer or
register the transfer of a security into the name of any entity, including
that of JBOC or its nominee, or to do any other acts JBOC deems necessary or
appropriate to effect the purposes of this Agreement, to include the provisions
as set forth under Section 13 hereof. Correspondent shall at any time and from
time-to-time execute and deliver such further agreements or powers conferred it
this Paragraph.
6. CORRESPONDENT RECEIPT OF MONEY OR SECURITIES. The Correspondent will
IMMEDIATELY remit to JBOC on the JBOC Transmittal Record form any funds and/or
securities received directly by the Correspondent, or deposit the same, in a
bank account designated by JBOC and at the instruction of JBOC. The
Correspondent will not carry any customer or broker or dealer accounts and will
not receive or hold funds under Rule 15c3-1 for those persons.
INFORMATION ACCESS
7.1 JBOC will allow access to the books and records of the Correspondent to
the following individuals and/or entities for inspection or copying: any officer
or designee of the Correspondent; a representative of any governmental agency,
exchange or association which may have regulatory jurisdiction over the affairs
of the Correspondent; and, upon receiving written authorization, any independent
accounting firm doing an audit of the Correspondent.
7.2 The books and records of the Correspondent shall be made available to JBOC
for inspection by a duly authorized representative is JBOC at any time.
7.3 JBOC will exercise reasonable care to prevent access by unauthorized
persons to information regarding the Correspondent, and will hold confidential,
except as noted above, any such information it has concerning the business or
affairs of the Correspondent.
7.4 JBOC will not release customer account information to any third party
without proper written authorization by an authorized person on that account
with the exception of 7.1, above.
8. FINANCIAL INFORMATION
8.1 JBOC and the Correspondent will promptly provide each other with the
results of the annual audit performed each year by their respective accounting
Firms.
8.2 JBOC and the Correspondent will, upon request by the other, supply such
requesting party with all relevant Financial material submitted to any Federal
or regulatory agency.
8.3 The Correspondent will provide to JBOC monthly Focus Reports by the 12th
business day of each month, or within 2 days of any interim filing, as may be
required by any regulatory agency.
9. PROCEDURE OF OPERATIONS. As this Agreement cannot cover every situation
or new ruling that might occur, it is the intent of JBOC and the Correspondent
to defer to the Procedure of Operations (Exhibit "A") and/or to be governed by
applicable rules and regulations of the Federal Government, SEC, Exchanges,
NASD and various State agencies, JBOC has the right to change the Procedure of
Operations at its sole discretion or as a result of a change in the rules or
regulations that are applicable to its provisions put forth by any regulatory
association or governmental agency having jurisdiction over the securities
industry. Any changes to the Procedure of Operations, with the exception of
the Fee Schedule, shall be effective upon not less than 72 hours notice, unless
otherwise required by the promulgating authority.
I0. TRADING INVENTORIES AND DEPOSIT,
10.1 The Correspondent shall maintain its own inventory to be used for
principal Transactions. The required deposit shall be $15,000.00 plus 100% of
the Correspondent's trade date long inventory value plus 120% of the
Correspondent's trade date short inventory value. This amount may he increased
at any time at JBOC's sole discretion and without prior notice. At no time will
the pre-payment deposit be less than the initial deposit.
10.2 It is the responsibility of the Correspondent to ensure that the contra
broker/dealer of all trades performs according to the Uniform Practice Code of
the NASD or the rules of a clearing or depository corporation as set forth in
Section 16.5 of this Agreement. Should JBOC settle any contract according to
the Uniform Practice Code or applicable rules of the clearing or depository
corporation and the contra broker/dealer fails to comply with the applicable
rules, then JBOC will be released of any liability relating to the contract
and will require the Correspondent to settle or fulfill the contract.
10.3 On trades comparing through the National Securities Clearing Corporation
(NSCC) system that do not compare. JBOC will notify the Correspondent by the
3rd business day, or as soon thereafter as practicable, following JBOC's
receipt of notification of said problem, and it will be the responsibility of
the Correspondent to see that the trades are compared. Any trade that is not
compared, for any reason, by the 7th business day following the trade, will
be booked to the Correspondent's inventory position.
10.4 On trades comparing directly with the contra broker/dealer (ex-clearing)
that do not compare JBOC will notify the Correspondent by the 5th business day,
or as soon thereafter as practical, following JBOC's receipt of notification of
said problem, and it will be the responsibility of the Correspondent to see
that the trades are compared. Any trade that is not compared, for any reason,
by the 9th business day following the trade, will be booked to the
Correspondent's inventory position.
10.5 The Correspondent may be requested to mark-to-market on some unique or
smaller issues in its inventory at least weekly for input into the service
bureau.
10.6 The profit or loss arising from inventory trading will be remitted or
deducted on the monthly net settlement check JBOC will pay the Correspondent.
If the inventory loss exceeds the commission generated at any time during the
month, the Correspondent agrees to immediately remit a check, upon notification,
to reimburse JBOC this difference.
10.7 By signing this agreement, the Correspondent agrees that it will not
execute a trade with a customer where the gross dollar amount of the trade
will exceed the amount of the deposit the Correspondent has placed with JBOC
UNLESS THE CORRESPONDENT CAN PROVIDE THAT THE CUSTOMER HAS A HISTORY OF
SIMILAR SIZE TRADES WITH PROMPT PAYMENT ON THEM or a deposit in "good funds"
is made with JBOC BEFORE an execution takes place. Notwithstanding, JBOC
still reserves the right to reject any trade or order it deems may be
detrimental or result in exposure to JBOC.
II. START-UP COST. JBOC and the Correspondent hereby agree that any
additional charges that are incurred as a result of transferring the
Correspondent's accounts and customer positions to the books and records
of JBOC shall he the liability of the Correspondent.
12. COMPENSATION TO JBOC.
12.1 The Correspondent shall pay to JBOC appropriate fees for transactions,
as the same are outlined in the fee schedule(see Exhibit "A"). JBOC will
collect commissions for and distribute them to the Correspondent less fees,
once a month by the 6th day of the following month.
12.2 JBOC's Fee Schedule is set forth in the Procedure of Operations,
Exhibit "A", previously incorporated herein. The Fee Schedule may be amended
from time to time at JBOC's sole discretion. The Correspondent will have at
least 30-day notice of any changes to the Fee Schedule.
13. GRANT OF SECURITY INTEREST, LEIN AND RIGHT OF SET-OFF
13.1 To secure timely discharge of all costs, expenses, commissions, brokerage
fees, charges and other Correspondent obligations to JBOC, the Correspondent
hereby grants to JBOC a security interest in, lien upon and right of set-off
as to and which automatically attaches to all securities, accounts and deposits,
and rights with respect to those accounts, securities and deposits, money and
other property of the Correspondent and all proceeds therefrom and
accommodations thereto, including monies due Correspondent which are in the
possession of JBOC, now or thereafter held by, deposited with or otherwise
within the possession or control of JBOC, or held by or for the Correspondent
by a financial intermediary and identified to JBOC or known by JBOC to he so
held ("Collateral").
13.2 The Correspondent agrees to fully pay for all inventory no later than
one (I) day after the trade date. In the event full payment is not timely
received at JBOC, JBOC reserves the right to set-off and, at its option or as
may be required by any regulatory authorities, segregate funds from the
commissions, deposits or other accounts of the Correspondent, in such amounts
as necessary to fully pay for any unpaid inventory.
13.3 In the event that any balance due JBOC remains unpaid for ten (I0)
calendar days from said billing date or in the event of termination of this
Agreement, JBOC shall have the right to dispose of Collateral in any manner
set forth in the Uniform Commercial Code or permitted by other applicable law,
including but not limited to the right to private sale of any Collateral in
JBOC's possession pursuant to this Security Agreement. The private sale shall
be deemed "reasonable" upon sale of inventory at the current market value
less applicable "haircuts", as defined at 17 CFR 240.15c3-l, at the time of
the sale.
13.4 Regarding Collateral in JBOC's possession or control, JBOC shall use
reasonable care in the custody and preservation of such Collateral, but need
not take any steps necessary to preserve rights against prior parties, unless
instructed by Correspondent and then at Correspondent's expense.
13.5
JBOC may grant a security interest in, pledge, re-pledge, hypothecate,
rehypothecate, enter into and perform repurchase and reverse repurchase
agreements and securities loan and securities borrow agreements with the
Collateral, separate or together with Collateral of other clients, without
retaining possession or control of a like amount of Collateral and without
notice to Correspondent. JBOC may use and deal with the Collateral and bear
the risk and benefit thereof; JBOC's only obligation being to return the
Collateral upon Correspondent's satisfaction in full if its obligations to
JBOC or the deposit with JBOC of Collateral satisfactory to JBOC in
substitution for the Collateral being returned or a combination of the
foregoing.
14. ADDITIONAL COLLATERAL.
14.1 At such time as JBOC deems itself under-secured with respect to
Correspondent's ability' to perform its obligations, JBOC may request and
Correspondent shall promptly (i) reduce the amount of credit extended to or
for Correspondent by JBOC, or (ii) deliver additional Collateral to JBOC in
an amount satisfactory to JBOC. As to the additional Collateral, JBOC shall
have all the same rights granted it in Section 13, above.
14.2 Correspondent specifically agrees as follows:
i. demands for payment of funds be honored (a) within two (2) hours of the
demand or not later than 10:00 a.m. Pacific Standard time, on the next day
that banks are open for business in Los Angeles, California, and (b) in
immediately available funds;
ii. securities deposited by Correspondent as Collateral in which Correspondent
makes a market or has a significant position be valued at a discount (which
may
be significant):
iii. requests by JBOC for the deposit of additional Collateral, reduction in
amount or payment in full of credit extended for or arranged for Correspondent
or a combination thereof be fulfilled not later than two hours after such
request or one hour after JBOC's opening for business on the business day
succeeding such demand.
All demands and elections hereunder shall he at 'JBOC's sole discretion.
15. PLEDGE, SALE OR ASSIGNMENT OF OBLIGATIONS. Correspondent authorizes
JBOC, at any time and at JBOC's sole discretion, to pledge, re-pledge,
hypothecate, re-hypoehecate, sell or assign, in whole or in part, to one or
more parties, all or part of any one or more obligations of Correspondent to
JBHOC including liabilities arising out of credit extended to or arranged for
Correspondent, without notice to Correspondent. Each pledgee or purchaser of
such obligation shall have the same rights in and to an allocated position
or percentage of the Collateral as JBOC. Notwithstanding any pledge,
sale or assignment, Correspondent shall pay all of its obligations to JBOC
unless and until JBOC gives Correspondent notice of a pledge or assignment
and identifies the person to which the obligation was pledged or assigned, the
amount of the obligation pledged or assigned and the Collateral with respect
thereto, at which time such obligation shall be paid by the Correspondent to
that third person.
16. LIMITATIONS ON LIABILITY AND INDEMNIFICATION
16.1 JBOC shall not be liable for any expense, claim, loss or damage suffered
by Correspondent or any third person arising out of or caused by any delay in,
or failure of, performance by JBOC, in whole or in part, arising out of or
caused by circumstances beyond JBOC's direct and reasonable control, including
without limitation acts of God; interruption, delay in, or loss (partial or
complete) of electrical power or of computer (hardware or software) or
communication services, acts of civil or military authority; sabotage, war or
government action, civil disturbance or riot: strike or other labor
disturbance; national emergency; epidemic; flood, earthquake, fire or other
catastrophe: government, judicial or self-regulatory organization order, rule
or regulation; energy or natural resource difficulty or shortage; and inability
to obtain or timely to obtain materials, equipment or transportation.
16.2 With respect to all securities delivered hereunder, JBOC shall be deemed
an "intermediary" as defined in the California Uniform Commercial Code and the
only warranty given by JBOC shall be the warranty provided in the Code.
16.3 JBOC shall not be liable for any expense, claim, loss or damage
Correspondent or any third person may suffer by any reason of any delay
Correspondent or JBOC may experience in obtaining securities from any clearing
agent, transfer agent, Federal Reserve book entry system, issuer, broker,
dealer, customer of Correspondent, or third person, or in obtaining monies
from any customer of Correspondent, bank, clearing agent, the Federal Reserve
wire transfer system or third person. JBOC shall not be liable for any
expense, claim, loss or damage suffered by Correspondent or any third person
due to JBOC's failure to follow any special terms or conditions on receipts
from or deliveries to one or more persons, if JBOC, in its sole discretion,
determines from time to time that following such instructions would be
detrimental to JBOC or JBOC's interests.
16.4 JBOC shall not be liable for any expense, claim, lose or damage
Correspondent or any third person may suffer because any security, received or
delivered by JBOC shall be invalid or fraudulent or by reason of any failure of
signature by an unauthorized person on, or forgery or wrongful alteration of, a
written instrument or inaccuracy, incompleteness, or falsity of data transmitted
by computer tape, terminal or other computer facilities or in a written
instrument. JBOC may act on oral instructions from a person JBOC reasonably
believes to be authorized to give such instructions, and Correspondent will
be so bound except as to instructions given after the opening of business on
the 2nd day after receipt by JBOC of a signed written notice from the
Correspondent that such person is not so authorized. JBOC shall not be liable
for any expense, claim, loss or damage Correspondent or any third person may
suffer by reason of JBOC acting upon any instructions (whether written or oral
or via computer facilities) or any notice, request, waiver, consent, receipt or
other document which JBOC reasonably believes to be genuine or transmitted by
authorized persons designated in Correspondent's certified list. Correspondent
will provide and keep current a certified list of authorized persons to conduct
transactions on behalf of Correspondent.
16.5 In performing its obligations pursuant to this Agreement, JBOC may use
such agents, clearing agents, correspondents, custodians and securities
depositories as JBOC in its discretion, deems necessary, appropriate or
desirable, including but not limited to, Depository Trust Company, Midwest
Securities Trust Corporation, National Securities Clearing Corporation,
Options Clearing Corporation and Midwest Clearing Corporation. JBOC shall not
be liable for any expense, claim, loss or damage Correspondent or any third
person may suffer by reason of any action or omission to act on the part of
such agents clearing agents, correspondents, custodians or securities
depositories with respect to such action or omission to act.
16.6 JBOC shall provide Correspondent with periodic statements and advises
concerning transactions effected for Correspondent's account(s) and securities
positions held on Correspondent's account(s). Correspondent shall promptly,
within 2 business days, review all such statements and advises and shall
promptly, within 2 business days, advise JBOC of any error, omission or
inaccuracy in the transactions or positions reported. JBOC shall not be
liable under any circumstances for any errors, failures or omissions that
shall have been reported by JBOC in statements and advises to Correspondent
and that Correspondent shall not have promptly advised JBOC to remedy or
correct.
16.7 Correspondent is aware and acknowledges that stock price quotations and
other market data provided to Correspondent by JBOC or its affiliated companies
is obtained from independent pricing services JBOC believes to be reliable.
However, JBOC cannot and does not guarantee the accuracy of such data and
Correspondent acknowledges and agrees that JBOC will not be held liable for
any losses or errors incurred by Correspondent's reliance upon the same.
16.8 Correspondent agrees to release, indemnify and hold harmless JBOC, its
officers, directors, employees, agents and affiliated persons for any expense
(including attorneys' fees and accountants' fees), claim, loss or damage
suffered by Correspondent or any third person relating to those areas of
liability expressly disclaimed or restricted above. in addition, Correspondent
agrees to release, indemnify and hold harmless JBOC, its officers, directors,
employees, agents and affiliated persons for any expense (including attorneys'
fees and accountants' fees), loss, damage, claim, fine or penalty incurred by
or asserted against Correspondent, JBOC, or any third person, arising out of
JBOC's performance of services for Correspondent under this Agreement or any
actual or alleged breach by Correspondent or JBOC of any provisions of the
Agreement, or any failure in whole or in part or delay in performing any duty,
or obligation hereunder, other than by reasons of gross negligence or
intentional, willful malfeasance of JBOC. Specifically, Correspondent further
agrees to release, indemnify and hold harmless JBOC, its officers, directors,
employees, agents and affiliated persons for their costs and attorneys' fees
in connection with their defense of or participation in any action, claim,
investigation or administrative proceeding arising out of JBOC's performance
of services for Correspondent under this Agreement. All releases and
indemnification provided herein shall survive termination of this Agreement.
16.9 The Correspondent hereby agrees to indemnify, defend, protect and hold
JBOC harmless from and against all claims, demands, proceedings, suits and
actions, and all liabilities, expenses and costs in connection with or arising
out of the failure of the Correspondent to properly exercise its duties and
obligations as outlined in the Agreement, with respect to this Agreement or
arising out of or in connection with any action or proceeding brought against
the Correspondent or JBOC based upon a violation by the Correspondent of the
rules of any regulatory or self-regulatory organization; or in the event that:
i. Any customer of the Correspondent fails to make payment for securities
purchased or fails to deliver any securities sold: or
ii. any customer fails to meet any initial federal margin call or maintenance
call; or
iii. the Correspondent fails to properly exercise its duties and obligations
with respect to customer accounts as set forth in Sections 3 and 4 of this
Agreement; or
iv. there are any errors and/or omissions in confirmations.
17. Correspondent shall be liable for and shall promptly remit any and all
sums due JBOC which may come due an a result of the dishonor, non-payment or
return of any check or any instrument submitted as payment by any customer of
Correspondent. It is recognized and understood because of delays in processing
such items through the banks and the mail there may be significant delays in
notification of such dishonor to Correspondent. Said delay or delays shall not
affect JBOC's right to payment by Correspondent or thc security interest
granted JBOC in Correspondent's commissions or accounts pursuant to this
Agreement.
17.1 NOTICES
17.2 JBOC's address of record shall be In Oxford & Company,
9665 Wilshire Blvd. 3rd Floor, Beverly Hills, California 90212. The telephone
number is (310)777-8870. Should the address of either JBOC or the Correspondent
change, said notice of the same to the other.
17.3 Any written notification required herein which must be provided in less
than 5 business days shall be deemed properly given and received if transmitted
by facsimile or similar method to the party requiring notification.
18. TERMINATION.
18.1. The term of this Agreement shall run and be mutually binding for a period
of (6) months from the date of this Agreement, with subsequent 6 month
automatic renewals with no action on the part of SOC and/or the correspondent
necessary for renewal.
18.2. Beginning with the initial 6-month term, this Agreement may be terminated
by either party without cause upon thirty (30) days written notice delivered in
person or by registered or certified mail.
18.3 JBOC reserves the right to immediately terminate this Agreement upon
breach of any warranty covenant or condition hereof. JBOC's election to not
exercises a right of termination upon any breach of the terms, conditions,
covenants or warranties of this Agreement shall be construed an a waiver of
such right for any subsequent breach. In the event that this Agreement is
terminated for cause, JBOC at its discretion, reserves the right to limit,
restrict or refuse to run further transactions for or on behalf of
Correspondent, pending transfer.
18.4 Upon termination, the Correspondent agrees to make arrangements to
transfer its customer accounts to another clearing organization as promptly as
possible. The Correspondent agrees to reimburse JBOC for any additional expense
as a result of this transfer, in addition to JBOC's customary transfer charges.
JBOC will do its best to facilitate the transfer through use of tape-to-tape
transfer if both service bureaus are capable of interfacing.
18.5 In the event of termination of this Agreement, Correspondent shall have
thirty (3O) days in which to notify JBOC of transfer of accounts and make
arrangements for the same; said arrangements to include payment for costs and
fees of said transfer. If such arrangements are not made within this time
period, JBOC may contact the individual clientele of each account to arrange
said transfer or other disposition. In either event, Correspondent shall be
liable for all Costs and fees incurred in connection therewith.
18.6 Upon termination, the Correspondent grants JBOC the right to hold all
deposits, accounts and collateral as more fully specified in Sections 13 and
14, above, until such time as all potential claims between JBOC and the
Correspondent are settled and fully paid.
19. CORRESPONDENT REPRESENTATIONS AND WARRANTIES.
19.1 The Correspondent is, and during the term of this Agreement shall remain,
a member in good standing of the National Association of Securities Dealers,
Inc.
19.2 The Correspondent is, and during the term of this Agreement shall remain,
duly registered or licensed and in good standing as a broker/dealer under all
applicable Federal and State laws.
19.3 The Correspondent has all requisite authority, whether arising under
applicable Federal or State laws, rules and regulations, or the rules and
regulations of any securities exchange or securities association, to which
the Correspondent is subject, to retain the services of JBOC in accordance
with the terms hereof.
19.4 The Correspondent is now, and during the term of this Agreement shall
remain, in compliance with the capital and financial reporting requirements
of every securities exchange, securities association of which it is a member,
the Securities and Exchange Commission and in every state in which the
Correspondent is registered or licensed as a broker/dealer.
19.5 In executing this Agreement and as a specific inducement for JBOC to
open and establish an account in the name of Correspondent, the undersigned
represents and warrants that he/she has full authority to execute this
Agreement and bind Correspondent hereby. Additionally, as specific
consideration for opening the account, the undersigned executes this Agreement
in his/her individual capacity as a continuing guarantor and primary obligee.
20. JBOC REPRESENTATIONS AND WARRANTIES.
20.1 JBOC is, and during the term of the Agreement will remain, a member in
good standing of the National Association of Securities Dealers, Inc.
20.2 JBOC is and during the term of the Agreement will remain duly licensed
and in good standing as a broker/dealer under applicable Federal and State
securities laws.
20.3 JBOC has all the requisite authority, whether arising under applicable
Federal or State laws, rules or regulations, the rules and regulations of any
securities exchange or any securities association to which JBOC is subject,
to enter into this Agreement.
20.4 JBOC is in compliance with and during the terms of this Agreement will
remain in compliance with the capital and financial reporting requirements
of every securities exchange, securities association of which it is a member,
the Securities and Exchange Commission, and every state in which JBOC is
registered or licensed as a broker/dealer.
20.5 JBOC is, and will remain during the term of this Agreement a member of
a "nationally registered" clearing corporation depository.
21. LITIGATION/ARBITRATION. In the event that either party institutes
legal Proceedings/arbitration against the other for breach of or to enforce
any of the terms, conditions or covenants of this Agreement, the panty
against whom a judgement is entered shall pay all costs, charges and expenses
relative thereto, including reasonable attorneys' fees of the prevailing party.
22. GENERAL PROVISIONS.
22.1 This Agreement shall be construed in accordance with the laws of the
State in which JBOC principal offices are located, and it is recognized that
this Agreement will he performed out of the offices of JBOC in the city and
state in which JBOC's principal offices are located. Correspondent hereby
consents to venue and jurisdiction in the State in which JBOC's principal
offices are located at the time a dispute may arise should legal
action/arbitration become necessary and arising out of this Agreement.
22.2 The headings in this Agreement are not to be considered as a part of
this Agreement but are included solely for convenience and not intended to
be accurate descriptions of the covenants hereof.
22.3 This Agreement shall he binding upon and inure to the benefit of the
Parties hereto and their respective successors, assigns and transfers of
every kind. No assignment shall be valid unless the non-assigning party
consents in writing.
22.4 If any clause or provision of the Agreement is determined by a Court
to he illegal, invalid or unenforceable under present or future laws effective
during the term hereof, then and in that event, it is the intention of the
parties that the remainder of this Agreement shall not he affected thereby.
It is also the intentions of the parties that in lieu of each clause or
provision of this Agreement that is illegal, invalid or unenforceable, there
shall be added as a part of this Agreement, a clause as may be possible, such
that the added provision or clause will be deemed legal, valid and enforceable.
22.5 This Agreement embodies the entire Agreement between the parties
with respect to the transactions contemplated hereunder and contains all
the terms, conditions and provisions thereof. This Agreement supersedes all
prior Agreements and understanding by the parties with respect to such
transactions.
IN WITNESS HEREOF, the parties herein have each caused this Agreement
to be executed by their duly authorized offices (owners or partners) as of
the day and year set forth above.
JB Oxford Company Correspondent
By /s/ Rita H. Chalmers by /s/ Thomas E. La Rossa
Its Director of Corr. Svcs its President
(SEAL) (SEAL)
LS
Attest: Attest: Michael B. Mc Laughlin
Secretary Secretary /s/ Michael B. Mc Laughlin
SIGNERS ACKNOWLEDGE THE PERSONAL GUARANTEES ESTABLISHED HEREIN AT
SECTION 19.5 AND ACCEPT THE SAME BY SIGNING THIS DOCUMENT
CORPORATE RESOLUTION TO OBTAINING CREDIT
WITH OR WITHOUT SECURITY AND TO CONTACT FOR SERVICES
RESOLVED, that the officers whose names are set forth below are hereby
authorized, from time-to-time, its the name of this corporation to obtain
credit with or without security and to contract for services for
OXFORD & COMPANY, (JBOC) in such sums and upon such terms as may seem advisable
to such officers, to execute agreements of any type as evidence thereof, or in
connection therewith, and to grant security interest in, pledge, assign,
mortgage, hypothecate, or execute security agreements covering such property
of this corporation as may be agreed upon between them and JBOC as security
for any obligations of this corporation to JBOC now or hereafter existing,
any instruments executed hereunder to be in such form with such terms and
conditions as may be required by JBOC. The authority given hereunder shall
he deemed retroactive and any and all acts authorized hereunder performed prior
to the passage of this resolution are hereby ratified and affirmed. Any such
arrangements for credit, security for creditor services may be in writing. The
authority herein conferred shall continue in full force and effect until
written notice of its revocation shall be received by JBOC at its main office
at Beverly Hills, California.
1. Michael B. Mc Laughlin, secretary of Bernard, Lee & Edwards hereby certify
that the foregoing is a true copy of a resolution duly and legally adopted by
the Board of Directors of said corporation, at a meeting of the board held on
dec. 4, 1997 and that said resolution has not been amended or revoked.
I further certify that the officers referred to in the foregoing resolution are
the following, whose signatures appear after their respective names.
Name Office Signature
Thomas E. La Rossa President /s/ Thomas E. La Rossa
President Michael B. Mc Laughlin Secretary /s/ Michael B McLaughlin
Dated December 4. 1997
(SEAL)
/s/ Thomas E. La Rossa President /s/ Michael B. Laughlin Secretary
(When Secretary is among those authorized, President also should sign
Certification)
Revised October 1994
ADDENDUM
YB Oxford & Company ("JBOC") and Bernard, Lee & Edwards (Correspondent) agree
to the following amendments to the Fully Disclosed Agreement executed between
them (the "Agreement") to which this Addendum is attached and made a part
thereof.
1. Sections 18.1 and 18.2 are deleted in their entirety and are replaced by
the following Sections:
"Section 18.1. The term of this Agreement shall run and be mutually binding for
a period of two (2) years from the date of this Agreement, with subsequent one
(1) year automatic renewals with no action on the part of JBOC and/or the
correspondent necessary for renewal."
"Section 18.2. At the end of the initial or any subsequent term, this Agreement
may be terminated by either party without cause upon thirty (30) days written
notice delivered in person or by registered or certified
mail prior to the end of the term."
Section 18.3 of the Agreement is hereby amended by deleting the first sentence
of the sub-section and replacing it with the following:
"Section 18.3. JBOC reserves the right to immediately terminate this Agreement
upon breach of any warranty, covenant or condition hereof. JBOC's election to
nor exercise a right of termination upon any breach of the terms, conditions,
covenants or warranties of this Agreement shall not be construed as a
waiver of such right for any subsequent breach."
Section 18.5 of the Agreement is hereby amended by deleting the word "contract"
and replacing it with the word "contact," in the first sentence of the
sub-section.
TN WITNESS WHEREOF, JBOC and Correspondent have caused this Addendum to be
executed by their duly appointed representatives as of Dec 4, 1997.
JB Oxford & Company
/s/ Rita Chalmers Correspondent
/s/ Thomas E. La Rossa
Rita Chalmers Name: Thomas E. La Rossa
Manager of Correspondent Services Title: President