EXHIBIT 10.7
REPRESENTATIVE AGREEMENT
THIS REPRESENTATIVE AGREEMENT ("Agreement") is made and entered into this 9th
day of April, 1994 by and between Rushmore Securities, Inc. (RSC), a Texas
Corporation, with its principal office located at 00000 Xxxxxx Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000 and the undersigned Xxxxx Xxxxxxxx (Hereinafter
referred to as "RR")
WHEREAS, RSC is a duly qualified broker-dealer, and
WHEREAS, Registers Representative "RR" desires to engage in the sale of
securities the parties hereto that the RR conduct such sales activities as an
independent securities salesperson and not as an employee, as provided by
paragraph 6 of Mimeograph 6656, published by the office of the Commissioner of
Internal Revenue in Cumulative Bulletin 1951-1, page 108, subject to such
supervisory restrictions as are required by the SEC, NASD, Securities Commission
of the State of Texas or other applicable states, and other Regulatory
Authorities and Associations as are necessary to properly qualify the RR.
NOW, THEREFORE, it is agreed:
1. DEFINITIONS
(a) The term "Registered Representative" shall have the meaning provided
by schedule C of Article II of the By-Laws of the NASD.
(b) The term SEC shall mean the Securities and Exchange Commission.
(c) The term "NASD" shall mean the National Association of Securities
Dealers, Inc.
(d) The term "Regulatory Authority" shall mean the SEC, NASD, Securities
Commission of the applicable state(s) and any other organization, association or
governmental authority having jurisdiction over securities engaged in by RSC or
the RR by reason of any statute, rule or regulation or by reason of membership
of RSC in such organization or association.
2. TERM
This agreement and the association between parties may be terminated at any
time, for any reason, by either party upon written notice to the other party.
Upon termination of this agreement and the association, regardless of how such
termination may be brought about, RR will promptly return to RSC all
instruments, documents and other materials which RSC may have provided to RR or
which may have been otherwise acquired by RR in connection with or as a result
of the association with RSC.
3. SERVICE OF REPRESENTATIVE
RR shall have the right to solicit, promote and encourage sales and
purchases of, securities approved by RSC for the general public, as a Registered
Representative in accordance with the rules and regulations published by
Regulatory Authorities and governed by the specific securities license held by
the RR. However, RSC reserves the right to refuse any application, subscription
agreement or sale obtained by the RR. The RR status will be that of independent
contractor of RSC and nothing herein shall be construed to create the
relationship of employer and employee between RSC and RR. Subject to RR's strict
compliance with the requirements, terms, and conditions of this Agreement, RR
shall be free to exercise his or her own judgement and discretion as to: the
persons from whom the RR will solicit applications and orders for the purchase
and sale of Securities Products; the time, method and place of solicitation; the
location of, and all arrangements for, and all employees of, and all other
aspects of, RR's business.
4. COMMISSIONS
Pursuant to paragraph 3 hereof, RSC agrees to pay RR commissions on the
sale of securities as provided for herein, such commission to be paid as set
forth in Exhibit "A" attached hereto, and incorporated herein by reference.
Commissions shall be considered earned only when commissions are received by RSC
from the issuer. RR specifically waives payment of any and all commissions due
them until such time as RSC is in receipt of the commission(s). All indebtedness
of RR to RSC shall be considered to be a prior lien against any commission due
RR and shall be deducted from proceeds payable to RR. If for Whatever reason, a
charge-back is levied against RSC by an issuer or another broker-dealer who has
paid a dealer re allowance or commission to RSC a proportionate charge-back does
not constitute grounds for refusal to pay RSC such amount on demand whether RR
is currently registered with RSC or not. RR will not receive any continuing
commissions (whether for business solicited by RR or for Override Commissions or
otherwise) after termination of this Agreement. After termination of this
Agreement, RR will receive only such commissions: as were actually earned prior
to termination; and such that would have been earned prior to termination but
had not been earned only because the had not been received by RSC; and as to the
latter, RR will receive those commissions only when they are received by RSC.
Any monies that may be paid by RSC to RR as an advance loan against RR's
commission or Override Commission, either or both of which are yet to be earned.
Any and all advance commissions are a loan to RR.
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5. EXPENSES
RR further agrees that any and all expenses which may be incurred by RR
shall be the sole and exclusive obligation of the RR, including but not limited
to, the payment of all fees, regulatory assessments, bonds, administrative
expenses of registration and license(s) maintenance incurred by RSC on behalf of
the RR; provided, however, that RSC will provide without charge standard
literature and other material relating to the securities being marketed at no
cost. It shall be the sole responsibility of the RR to pay overhead expenses
incident to his activities under the terms of this Agreement, including but not
limited to, secretarial, licensing, entertainment, education and transportation
expense, none of which shall be the responsibility of RSC. Neither shall RSC
provide to RR any other benefit or compensation other that the commissions
provided for in paragraph 4 above. As an independent contractor, RR shall be a
self employed-person and RSC shall not withhold or pay federal income or FICA
taxes, the payment of such taxes being the sole responsibility of RR.
6. OBLIGATIONS OF RSC
RSC agrees to maintain an effective and adequately capitalized broker-
dealership properly registered with all Regulatory Authorities. RSC further
agrees to furnish the RR facilities for execution and confirmation services. RSC
from time to time may choose to make reports or other services available, but it
is not obligated to do so. It may also agree from time to time to provide
additional services for an agreed upon fee to the RR.
7. OBSERVANCE OF REGULATORY REQUIREMENTS
RR agrees to maintain their operations in conformity with all applicable
laws, rules and regulations of Regulatory Authorities, including, but not
limited to those practices prescribed by the Manual of the NASD and the
currently effective RSC Supervisory Procedures Manual, the requirements of which
are incorporated herein by reference. RR will not conduct any business not
permitted under their license. They shall be responsible for adherence to all
applicable securities regulations. In the event that any liability is asserted
against his actions or omissions, RR agrees to reimburse, indemnify and hold
harmless RSC from any expense it may incur including attorney's fees by reason
of any breach of this
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paragraph 7 or paragraph 10 and of said laws, rules and regulations. The RR
shall observe such written procedures as are published by RSC.
RR is prohibited from, and agrees that RR shall not: (a) collect from
Customers, in payment of the purchase of securities, cash, or checks made
payable other than to RSC or to the appropriate custodian bank or transfer agent
relating to such purchases, all as designated by RSC; (b) offer or sell any
security unless it is a Securities Product; (c) offer or sell any security
unless there exists at the time of such offer or sale an effective dealer
agreement between RSC and the issuer, underwriter custodian or transfer agent of
said security; (d) make, alter or discharge on behalf of RSC any contract or
investment, or waive any provision other than in strict compliance with the
terms and conditions of the securities laws and in accordance with this
Agreement and the procedures, manuals, rules and regulations with this Agreement
and the procedures, manuals, rules and regulations of RSC; or (e) make any
misrepresentation, or improperly induce a Customer to purchase or sell any
security or any Securities Product.
8. TRANSACTIONS WITH OTHER BROKER-DEALERS
During the Term of this Agreement, RR shall not: (a) be associated with or
be a registered representative of any other broker-dealer; (b) maintain any NASD
registration other than with RSC; or (c) solicit or offer for purchase or sale
any securities, or investments except on behalf of RSC. RR agrees to immediately
notify RSC in writing if RR acquires or obtains any interest in or affiliation
with any other broker-dealer or engages in any employment relating to the sale
of securities or investments, either directly or indirectly, either alone or
with any person or entity other than RSC. RR shall immediately notify RSC if RR
becomes involved in any activity that would create the possibility of a conflict
of interest on the part of RR with respect to RSC or any Securities Product
offered by or on behalf of RSC RR shall not execute a securities transaction for
the account of any RR or employee (or close relative of either) of any other
broker-dealer without the prior written approval of RSC.
9. BREACH OF REGULATORY DUTIES
Notwithstanding the provisions of paragraph 2 hereto as to notice to
termination of this Agreement, RSC shall have the right to require RR to suspend
transactions in a particular security to the extent that any such transaction,
or the actions of the RR with respect hereto, could, in the opinion of RSC, be
considered a breach of any law, rule or regulation of any Regulatory Authority.
Provided Further, that said right to require suspension of any transaction or
transactions shall be enforceable by injunction by a court of competent
jurisdiction. Failure by RR to suspend transactions when notified by RSC shall
be deemed a material breach of this Agreement, and RSC may at its option
terminate this agreement on the occurrence of such breach.
10. USE OF RSC NAME; INDEMNIFICATION
The RR agrees to indemnify and save harmless RSC from any cost, expense or
damages, including reasonable attorney's fees to which RSC may become obligated
by reason of such grant of such status as a RR of RSC. If the RR operates under
any other name than RSC, he agrees not to advertise such name with respect to
the solicitation for or sale of securities. He further agrees that his clients
will be made aware that he is acting in the capacity of a RR of RSC.
Any advertising for the sale of securities must be approved by RSC to insure
that it adheres to the guidelines of the Regulatory Authorities. Nothing
contained herein shall be construed as a grant of authority to the RR, which
authority is specifically disclaimed.
11. CONSTRUCTION; SERVERABILITY
It is the intent of the parties hereto that the terms of this Agreement
shall be construed pursuant to the laws of the State of Texas, and in accordance
with the requirements of the SEC, NASD, and other Regulatory Authorities, to the
extent applicable hereto. To the extent that any of the provisions of this
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agreement shall be invalid or unenforceable, then this Agreement shall be
construed in all respects as if such invalid or unenforceable provision were
omitted.
12. MODIFICATION
No change of this Agreement (including Exhibit A) shall be valid unless the
same be made in writing to RR by RSC.
13. ENTIRE AGREEMENT
This instrument is the entire Agreement of the parties, except to the
extent of any document incorporated herein by reference or any statutes rules
and regulations, clearing agreements or manuals referred to herein.
14. NON-ASSIGNABILITY; DEATH, DISABILITY
The services contracted hereunder are personal and dependent upon the
qualifications of the parties hereto and may not be assigned by either party
without the express consent of the other in writing. In the event of death,
disability or incapacity of the RR this agreement shall terminate.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT IN
DUPLICATE ORIGINALS THE DAY AND YEAR FIRST ABOVE WRITTEN.
REGISTERED REPRESENTATIVE RUSHMORE SECURITIES CORP.
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxx X. Xxxxx
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Signature Signature
/s/ Xxxxxxx X. Xxxxxxxx PRESIDENT - TITLE
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Print or Type Name of Signatory
EXHIBIT "A"
Commission payable to the RR will be 75% net of all clearing charges and/or
the dealer allowance paid to RSC on the following types of business:
Mutual Funds
Variable Annuities
Variable Life Products
Unit Investment Trusts
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