EXHIBIT 10.7
X.X. XXXX & COMPANY, INC.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000 Reg. Rep. ____Office
Xxxxxx, XX 00000
INDEPENDENT CONTRACTOR AGREEMENT
___________________________________________ Date of Agreement__________________
Name of Independent Contractor
Number:____________________________
___________________________________________
Street Address
___________________________________________
City State Zip
This Agreement is made by and between X.X. Xxxx & Company, Inc., a
corporation organized and existing under the laws of Delaware (Company), and the
person whose name appears above (Contractor).
Background Circumstances:
The Company is engaged in business as a securities broker-dealer licensed
and qualified to transact business pursuant to laws, statutes, rules,
regulations and interpretations (collectively called Rules) promulgated by the
Securities and Exchange Commission (SEC), the National Association of Securities
Dealers, Inc. (NASD), and various other state, local and federal government
agencies (Regulators). Contractor wishes to become affiliated with the Company
as an independent contractor in order to effect securities transactions through
the facilities of the Company and its clearing broker-dealer, or either of them.
In consideration of the background circumstances and the following
agreements, the undersigned parties agree as follows:
1. Authority.
(a) During the term hereof, the Company authorizes the Contractor, as an
independent contractor, to represent it in securities transactions.
Such representation shall be subject to all of the terms, conditions,
and covenants contained in this Agreement, and is specifically limited
to include only those activities that are approved and authorized by
the Company as set forth on Exhibit A attached hereto and incorporated
herein by this reference and those securities that the Contractor is
qualified to deal in under applicable Rules.
(b) The Contractor shall not solicit any securities until duly registered
under applicable state and federal laws unless exempt from
registration, and until any license or permit required by law has been
obtained and is then in effect.
(c) The Contractor shall not represent any other broker/dealer or issuer
doing securities business unless agreed to in writing by the Company.
(d) The Contractor shall have no power or authority to incur any
indebtedness or liability of any kind in the name of the Company, nor
have the power to bind the Company in any manner not specified in this
contract.
2. Independent Contractor.
(a) THE CONTRACTOR RECOGNIZES, UNDERSTANDS AND AGREES THAT: (1) AS AN
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INDEPENDENT CONTRACTOR, CONTRACTOR IS NOT ENTITLED TO UNEMPLOYMENT
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INSURANCE BENEFITS UNLESS UNEMPLOYMENT COMPENSATION COVERAGE IS
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PROVIDED BY THE CONTRACTOR OR SOME OTHER ENTITY; (2) CONTRACTOR IS NOT
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ENTITLED TO WORKERS' COMPENSATION BENEFITS; AND (3) CONTRACTOR IS
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OBLIGATED TO PAY FEDERAL AND STATE INCOME TAX ON ANY MONEYS PAID
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PURSUANT TO THE CONTRACT RELATIONSHIP.
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(b) Nothing herein shall be construed to create the relationship of
employer and employee between the Company and the Contractor.
(c) The Contractor, as an independent contractor, shall be free to
determine, within the scope of this Agreement, the persons from whom
to solicit business and the method, time, place and manner of the
Contractor's performance, subject to compliance with all applicable
Rules adopted by the SEC, NASD and Regulators, all as from time to
time amended, and standard rules of procedures from time to time
adopted by the Company.
(d) In the course of the Contractor's business conduct, the Contractor
shall in no manner represent to the public that any relationship,
other than that of independent contractor, exists between the Company
and the Contractor.
(e) The Company enters into this Agreement for the sole purpose of
retaining Contractor to engage in securities transactions. The
Company has no right to control or direct the Contractor in the sales
of securities, or as to the result to be accomplished by the work, or
as to the details and means by which the result is accomplished,
excepting that the Company shall have the responsibility and right to
perform such supervisory overview as required by the Regulators and
the Rules. The Company's compliance manual is intended solely to
provide procedures reasonably designed to prevent violations of the
Rules and is not intended to otherwise control or supervise the
activities of Contractor. The Company shall also be permitted to
issue such instructions as may be necessary to explain, clarify and,
as required by Regulators, to ensure compliance with directives
promulgated by the Regulators. Except for such provisions, the
Contractor shall be completely free from the will and control of the
Company.
3. Procedures.
(a) All customer account applications are subject to acceptance by the
Company, and no transactions shall be deemed to be made until approved
and executed by the Company or its clearing firm. The Company
reserves the right in its sole discretion at any time to reject any
and all applications transmitted to it by the Contractor and to refund
to customers any payments made by them. If the Contractor has
received commissions on such refunded payments, the Contractor agrees
to repay such commissions to the Company, and the
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Company is hereby authorized to deduct the amount thereof from
commissions due or to become due the Contractor.
(b) The Contractor will forward immediately to the Company all buy and
sell orders for approved securities transactions solicited by the
Contractor for the Company, together with any payment received by the
contractor from the customer, without any deduction whatsoever and
without commingling with the Contractor's own funds. In the event of
the Contractor's failure to do so, all rights under this Agreement,
including accrued and accruing commissions, shall immediately
terminate at the Company's election.
(c) The Contractor shall cause all checks or other orders for the payment
of money received in connection with applications or orders to be made
payable to such custodian bank, underwriter, issuer or broker-dealer
as directed by the Company. The contractor shall not collect cash
from the customer in payment of purchases or sales.
(d) The Contractor shall not forward the Contractor's own funds to the
Company for or on behalf of any customer or otherwise directly or
indirectly furnish funds for any customer in connection with any
purchase. The Contractor shall not directly or indirectly arrange
for, or assist in arranging for, the extension or maintenance of
credit to, for, or on behalf of any person in connection with the
purchase of securities, other than in a margin account carried by the
Company or one of its correspondents in compliance with Regulation T
of the Federal Reserve Board.
4. Commissions.
(a) Compensation payable to Contractor shall be determined solely on the
basis of a written agreement entered into between the Branch Office
manager and me. Such compensation shall be paid from Office Income,
as hereinafter defined. All income derived from Branch Office
operations, including brokerage commissions, investment advisory
compensation, and all other income relating to the securities business
(the "Office Income") shall be routed through the Company and shall
not be under the direct or indirect control of the Branch Office or
manager of the Branch Office.
(b) Notwithstanding section 4(a), the Company shall retain certain amounts
from Contractor's personal production, for purposes of covering the
costs of due diligence, compliance and legal counsel in connection
with operation of the Branch Office in which Contractor conducts his
activities; provided, however, that such monthly fee shall be phased
in as set forth on Exhibit B attached hereto and incorporated herein
by reference.
(c) The Company retains a certain percentage from the production generated
by Contractor. The percentage retained shall fluctuate per increment
of monthly production for contractor as set forth on Exhibit C
attached hereto and incorporated herein by this reference.
(d) Contractor is required to carry errors and omissions insurance and
premiums for such insurance shall be deducted from contractor's
production as set forth on Exhibit D attached hereto and incorporated
herein by this reference.
(e) Unless otherwise agreed in writing, any payment made to or for the
account of the Contractor in excess of commissions actually earned
shall be repayable on demand or
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immediately upon termination of this Agreement and shall be a first
lien upon any funds which, for any reason, then or thereafter become
due to the contractor by the Company. The Contractor shall have no
right to assign or otherwise encumber the Contractor's right to
receive commissions without the express written consent of the
Company.
(f) Except as subsequently provided in this Agreement, the Contractor
shall have no right to receive commissions after ceasing to be a sales
representative of the Company except as to cash sales or open account
sales made before that time, but when and only to the extent that
payment has been received by the Company.
(g) The Company will, from time to time, furnish to the Contractor a
statement of the Contractor's account showing earnings and payments
made, the balance due from the Company or the amount of any balance
due from the Contractor to the Company. The Contractor agrees to
notify the company in writing within 30 days of any disagreement with
such statement in any respect.
(h) The Contractor agrees to repay the Company for any losses incurred by
it as a result of losses incurred in the Contractor's customer
accounts.
5. Sales Practices.
(a) The Contractor, in making solicitations, shall not take or recommend
any action which the Contractor may have reason to believe is not in
the best interests of the client or customer. The Contractor will not
make any untrue statement or misrepresentation, or omit any material
facts concerning the securities involved, and will comply in all
respects with the Company's compliance procedures, applicable rules
of the NASD, and with applicable Rules adopted by the SEC, NASD and
Regulators and modifications and supplements thereto, with respect to
securities transactions.
(b) The Contractor shall make no written or oral representations
concerning the approved products offered for sale by the Company
except those contained in the current prospectuses and supplementary
sales literature authorized by the Company. The Contractor shall not
solicit business through mailings or advertisements or other media
unless the contents thereof have previously been examined and approved
by the Company.
(c) The Contractor shall prepare and maintain such records as will comply
with applicable securities laws and Company policies and procedures
and shall open such records to inspection and review by the Company as
it shall deem advisable from time to time.
(d) The Company's compliance manual contains the operational rules and
regulations required by the rules and Regulators. The Contractor
acknowledges receipt of the manual and agrees to follow the procedures
and requirements contained therein, as amended from time to time.
Failure to comply with the provisions of the manual constitutes a
material breach of this Agreement. The Company manual, as published,
and as modified and amended from time to time, is incorporated into
this contract by reference as though fully set out.
(e) Full and complete disclosure of Contractor's other business interests
is set forth on Exhibit E attached hereto and incorporated into this
contract by reference as though fully set out.
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6. General Provisions.
(a) Nothing in this Agreement shall be interpreted as relieving either
party from its obligations to comply with all applicable securities
laws of the United States, the laws of the states in which either or
both parties are or may be registered or licensed or that may be
applicable to any particular transaction, or the Rules of the SEC,
NASD or any other Regulator with which the parties are, or may be
required to be, registered.
(b) The terms, conditions and covenants contained in this Agreement
comprise the entirety of the agreement between the parties to this
instrument. All understandings, either oral or in writing, that have
previously existed or been reached prior to or simultaneously with the
acceptance by the Company of this Agreement, are expressly abrogated
and superseded by the terms, conditions, and covenants herein
contained. This Agreement may not be modified except in writing
jointly executed by the parties.
(c) The parties agree that any dispute or claim arising out of the terms
of this Agreement shall be submitted to binding arbitration and
settled in accordance with the Code of Arbitration Procedure of the
NASD. Any arbitration, legal suit or other proceeding arising out of
or relating in any way to this Agreement shall be instituted and held
in Denver, Colorado. The construction and interpretation of this
Agreement shall be determined in accordance with the laws of the State
of Colorado, including the arbitration law of the State of Colorado,
and its provisions prohibiting the award of punitive damages in
arbitration. The prevailing party may be awarded attorneys' fees and
costs. Contractor waives any objection that Contractor now has or
might subsequently make to such laying of venue.
(d) This Agreement shall take effect on the date of the execution thereof
and shall not be deemed accepted by the Company until and unless
subscribed with the signature of a duly authorized officer thereof.
In the event that any provisions of this Agreement are held to be in
contravention of any laws or rulings presently in force or hereinafter
existing, such provisions may be deemed to be void. In such event,
however, no other provision of this Agreement shall be deemed affected
by such holding.
(e) The Contractor shall not, either during the period of this Agreement
or subsequent to discharge of the Contractor, directly or indirectly,
communicate or divulge to or use for the benefit of the Contractor or
any other person, firm or corporation, the names of customers of the
Company or any other confidential information or data that may have
been communicated to or acquired by the Contractor by virtue of this
Agreement, or use any information acquired by the Contractor during
the period of this Agreement or subsequent to termination. The
Contractor will not induce any person to terminate an agreement with
the Company, and will not make, or solicit, or recommend the making of
unwarranted claims against the Company. The Contractor further agrees
that following termination from the Company, or in contemplation
thereof, the Contractor will not solicit or recommend the sale,
surrender, or redemption of securities that are underwritten,
distributed, or managed by affiliates of the Company, and that the
Contractor will not cause or attempt to cause the owner or holder of
such securities to cease performance of any investment programs
related to them.
(f) The Company shall not be responsible for the Contractor's expenses of
any type, including, but not limited to, dues and registration fees,
bonding, transportation, office, secretarial,
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postage, advertising, telephone charges, and other expenses incidental
to the Contractor's solicitation of business.
(g) Contractor shall reimburse the Company for all losses and charges
incurred due to the actions of Contractor's customers, including, but
not limited to, sell-outs, buy-ins, reneges, late charges and
extensions. Contractor specifically authorizes the Company to
withhold from commissions amounts reasonably estimated by the Company
to be sufficient or necessary to indemnify the Company hereunder or to
secure any indebtedness of the Contractor to the Company. Contractor
also grants a security interest to the Company in any brokerage or
other account held by the Company in the name of, the joint name of,
or for the benefit of Contractor, to secure any indebtedness of the
Contractor to the Company.
(h) This Agreement is not assignable or transferable by the Contractor,
and no rights, interests or benefits accruing to Contractor shall be
subject to assignment or transfer without the written consent of the
Company.
(i) The Contractor shall indemnify and save the Company and its agents,
affiliates, successors and assigns harmless from any and all expenses,
costs, causes of action and damages resulting from or growing out of
unauthorized acts or transactions by the Contractor.
7. Termination.
(a) This Agreement may be terminated at any time by either party upon
written notice to the other given 10 business days in advance, and may
be terminated immediately by the Company for cause. Notice of any
such termination shall be deemed to be given on the day mailed or
delivered. If mailed to the Company, it shall be addressed to the
principal office of the Company, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, XX 00000, and if mailed to the Contractor, shall be addressed
to the Contractor's last known address as shown on the records of the
Company.
(b) Upon termination of this Agreement as previously provided, the account
of the Contractor with the Company shall be settled within 45 days.
The Company shall furnish the Contractor by ordinary mail a statement
of the Contractor's account as of the effective date of the
termination, showing the balance due the Contractor from the Company,
or the amount of the Contractor's indebtedness to the Company, as the
case may be. The Contractor agrees, within 15 days thereafter, to
notify the Company in writing of any objection or exception that the
Contractor may have to the statement, setting forth the specific
grounds of the Contractor's objection and the particular items
involved. If the Contractor fails to give the required notice within
15 days, the Contractor shall be deemed to have waived all rights to
any claim based upon such objection or exception. If a balance is due
the Contractor from the Company, the Company shall remit the amount of
said balance to the Contractor. If the Contractor is indebted to the
Company, the Company has the right to offset such indebtedness against
amounts otherwise payable to the Contractor by the Company. If any
amounts payable to Contractor are insufficient to cover Contractor's
outstanding indebtedness to the Company, the Contractor shall
forthwith remit the amount of such indebtedness to the Company, and if
the indebtedness is not paid within 30 days, interest shall accrue at
the rate of 6% per annum, or at such rate provided for in any
instrument evidencing such indebtedness, and the Contractor agrees to
pay the Company's reasonable attorneys' fees and costs incurred in
collection of the account.
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(c) Upon notice of termination of this Agreement by the Contractor or the
Company, all supplies and equipment furnished by the Company and all
original records, holding pages, customer and client lists, accounts,
holding pages and similar records, files and manuals furnished by the
Company shall be surrendered to the Company and remain the property of
the Company as valuable, special and unique assets that constitute
trade secrets owned exclusively by the Company. Notwithstanding
anything to the contrary, Contractor may retain a duplicate copy of
such client lists, books, records, documents and other information for
Contractor's personal use and client development.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing
Agreement.
_________________________________________________ Date:_______________________
Independent Contractor
X.X. XXXX & COMPANY, INC.
By:______________________________________________ Date:_______________________
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