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BROKERAGE SERVICE/LEASE AGREEMENT
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This Brokerage Service/Lease Agreement is made and entered into this 1st day
of June, 1998, by and between BankTEXAS N.A. a financial institution (FI) and
First Brokerage America L.L.C (FBAL) a Registered broker/dealer member of the
NASD and SIPC. Reference to The Providers may include reference to an
insurance agency that operates separately yet simultaneously with FBAL.
WITNESSETH:
WHEREAS, FBAL has developed a program to provide customers of affiliate banks
access to nondeposit investment products, the terms and conditions are set
forth herein: and
WHEREAS, FBAL is a registered broker/dealer in the business of providing
investment products and services at various banking locations of banks of
First Bank's Inc.; and
WHEREAS, the parties desire to establish a nondeposit investment product and
services program that complies with all applicable laws and regulations, all
in accordance with the terms of this agreement.
NOW THEREFORE, in consideration of the mutual convenants and agreements made
herein, and other good and valuable consideration, FBAL and FI hereby agree
as follows:
SECTION 1. LEASE AND SERVICE PROGRAM DESCRIPTION AND PRODUCTS
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(a) The FI will lease space (the exact nature, size, and location to be
agreed upon by parties) to FBAL at the offices listed on schedule A
attached hereto and made part of this agreement. The lease and service
shall include use of office space, desks and other office equipment and
furniture, copiers and fax machines, compliance training and support,
computer maintenance, software and hardware support, tracking services,
customer lists as provided by applicable law, sales training, E & O
insurance and all other services necessary to offer nondeposit
investment products and insurance at the financial institution
locations. The products offered will be through the respective entity
(broker/dealer or insurance agency) as required by law. FBAL will have
the right to sublease space to other providers subject to the approval
of FI.
(b) Customers of FI will be offered certain nondeposit investment products
through Providers at the branch office. FBAL will make available and
execute securities transactions on an agency or riskless principal basis
upon the order and for the account of customers as defined in and
required by the NASD Rules of Fair Practice, through Registered
Representatives (as defined in Section 2(e)) for the following
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products: equity securities, debt securities, open-end/closed end mutual
funds, variable insurance products and variable annuities. Insurance
Agency will provide insurance products such as fixed annuities, term
insurance, long term care and other products defined as insurance
products by the Insurance code of the specific state where offered. As
required, Insurance Agency will oversee insurance requirement and
supervision of variable insurance products that are defined as
securities. These include variable life and variable annuities.
(c) All products offered through the program are subject to the prior
approval of FI and The Providers.
(d) Any change in the agreement deemed necessary by changes in rules,
regulations and statutes shall be implemented promptly.
(e) From time to time Providers will have the right to xxxx the other for
special services as agreed to and for actual costs of travel and
training as it relates to personnel costs.
SECTION 2: BRANCH OFFICE DESIGNATION
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a) The program will operate at all mutually agreeable offices of FI.
Branches offices for purposes of securities regulations will be
established if the branch holds itself out as a place where securities
business is transacted and it meets the most conservative definition of
a branch office as defined by NASD Regulation. Branch office operations
must be operated in areas clearly identified and segregated from the areas
where depository functions are located when possible.
b) FI and Providers will mutual agree to a marketing plan and budget. It
will be mutually determined who will bear the cost of such marketing
plans.
c) Securities related activities shall be conducted only through properly
registered and/or licensed representatives. These individuals may also
be dual employees of financial institution and FBAL and may be
independent contractors of the insurance agency. Designated principals
of FBAL or management and compliance staff of Providers will exclusively
supervise the sales activities under NASD rules and will train,
supervise, control and assume responsibility for all the activities
contemplated herein. Registered Representatives shall provide all
securities services as directed by the FBAL Supervisory Procedures
Manual. No one who has been barred from membership in any self
Regulatory Organization shall be allowed to associate with the program.
d) FBAL and FI agree that all payments due under this agreement will be
paid directly to the FI, who will then distribute their proportional
share to sales force provided that all business was transacted properly
and the individual was properly licensed to conduct the line of
business. FI will be responsible for payment of all non-securities and
insurance related wages as well, including any withholding or other
taxes required by law.
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e) FI and Providers agree and acknowledge that no unregistered or non-
licensed employees will engage in any securities or insurance
activities, nor will they receive any compensation based on
transactions or sales. Unregistered employees shall be prohibited from
recommending any security or insurance product, and handling any
question that might require any familiarity with the securities or
insurance industry. The same employees may not handle or maintain
customer securities or funds other than providing clerical or
ministerial assistance. FI and Providers will monitor the activities of
its employees to ensure their compliance with the limitations as set
forth in this agreement. FI understands that joint employees must
exercise extreme caution when acting in a dual capacity as bank
employee and nondeposit product provider.
f) All marketing relating to the offering of nondeposit investment products
shall comply with all applicable rules and regulations. FI agrees and
understands that it may not advertise or communicate with the public in
any media or through any medium without prior written approval of the
Providers.
SECTION 3: CUSTOMER ACCOUNTS
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a) Each account opened by a Registered Representative will be approved in
writing by a designated principal of FBAL. The branch will promptly
forward all appropriate information regarding each new account to
Provider's Service Center, presently at 00000 Xxxxx Xxxx.,
Xxxxx Xxxxx, XX. 00000.
b) At the time the customer account is opened, the Registered
Representative shall disclose orally and in writing to each customer
that the nondeposit investment products are: (a) NOT FDIC insured; (b)
are neither obligations of FI or Providers nor deposits of FI or
Providers; (c) are not guaranteed by agency or FI or their parent
companies; (d) involves investment risk including the possible loss of
principal. Written acknowledgement will be obtained of such.
c) All general securities transactions shall be effected on a fully
disclosed basis through clearing brokers designated by FBAL. No customer
funds or securities shall be held by the branch office or Registered
Representative.
d) FI agrees to provide FBAL reasonable access to the names and addresses
of its customers, and those of its parent or affiliates to the extent
permissible under applicable law or regulation. Any information obtained
will be used only in conjunction with the marketing of FBAL services and
shall remain confidential and shall not be disclosed to third parties
without prior written permission of the other party or as may be
required by the Regulations. Any books and records relating to the sale
of securities and insurance securities shall remain the property of FBAL
which shall ensure that those books and records comply with all the
statutory and regulatory requirements of the SEC and SROs.
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SECTION 4. MUTUAL CONVENANT OF FBALLC AND FI
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FBAL and FI convenant to each other that it is the joint responsibility of
FBAL and FI to assure that the Registered Representatives shall make the
Required Disclosures (i) orally to each customer during any sales
presentation (including telemarketing contacts), (ii) orally whenever
investment advice regarding any non-deposit investment product is provided,
(iii) orally and in writing prior to or at the time an investment account is
opened; and (iv) at other such times as may be required by the Regulations.
SECTION 5. COMPLIANCE
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(a) FBAL and FI agree that they will actively promote, and all FBAL
employees and Registered Representatives shall abide by all applicable
Regulations, and the FBAL Supervisory Procedures and policies, as each
may change from time to time.
(b) All branch office operations shall be conducted under the joint
supervision of FBAL and FI in accordance with all applicable
Regulations.
(c) FBAL shall be responsible for compliance with SEC, NASD, state
securities rules and regulations, and other rules or regulations of
other governmental or self-regulating body as may be applicable to
securities brokerages, operations, or transactions.
SECTION 6. CONFIDENTIALITY AND ACCESS TO RECORDS
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(a) FBAL agrees that all customer account information obtained by FBAL from
FI is confidential and proprietary in nature and that said information
shall not be divulged by FBAL to any third party except for the normal
transaction of business.
(b) All information, materials, and any other documents or data associated
with the Program are confidential and proprietary in nature and shall
not be used by or disclosed to any person or entity by any of the
parties hereto or their employees except as necessary in operation of
the program or as required by applicable Regulations.
(c) Each party to this agreement shall permit officers or authorized
designees of the other parties, any governmental agency, exchange, or
association having regulatory jurisdiction over the affairs of that
party, or independent accountants retained for the purpose of conducting
an audit of the financial affairs of the requesting party, full and
complete access to inspect records and books, and monitor activities at
any Branch Office or other location of information during normal
business hours.
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SECTION 7 - ENTIRE AGREEMENT AND ATTACHMENTS
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This document including all its attachments, constitute the entire agreement
between said parties with respect to the offering of such products and
services contemplated herein. Any changes to this agreement shall be in
writing and agreed to by each party. The terms of this agreement are
continuous unless one party gives notice of its intention to terminate the
contract giving sixty days advance notice.
We agree to the terms and conditions discussed herein this 1st day of June,
1998.
For Financial Institution:
Xxxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx, Xx. 6-1-98
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Vice President Date
For First Brokerage America L.L.C.:
/s/ C. Xxxxx Xxxxxxxx 6-1-98
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Principal Date
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EXHIBIT "A"
FEE SCHEDULE
All service fees and rental connected with this Agreement are due and payable
on or about the 15th of each month following an initial 30 day set up period.
Such service fees are conditioned upon the volume of invested dollars
collected in the offices of the institution and, therefore, will vary from
month to month. Payments are based upon a percentage of commissions generated
and are outlined in Table "1" below.
TABLE "1"
PERCENT OF GROSS COMMISSIONS PAYABLE FOR LEASE AND SERVICES
FI will receive a percentage of gross revenues generated on products sold
through this agreement. Any chargeback or errors will reduce this amount
accordingly.
ADDENDUM
Travel costs and other fees generated solely for the benefit of FI will be
reimbursed by FI to FBAL. This shall include airfare, hotels and meals, but
shall not include printing of materials and other costs that are the
obligation of FBAL to provide so that business can be conducted.
