INDEPENDENT REGISTERED REPRESENTATIVE AGREEMENT

Transcription

1 Member, FINRA/SIPC West8 Tower Westheimer, Suite 500 Houston, Texas Phone: (713) Fax: (713) INDEPENDENT REGISTERED REPRESENTATIVE AGREEMENT This Agreement is entered into by and between IMS SECURITIES, INC., a Texas corporation (hereinafter referred to as "IMS") and (hereinafter referred to as "REPRESENTATIVE"). WHEREAS, IMS is a broker/dealer in securities, licensed and qualified to transact business pursuant to federal and state law. It is subject to the rules and regulations (hereinafter may be referred to as "RULES" promulgated by the Securities and Exchange Commission ("SEC"), the Financial Industry Regulatory Authority ("FINRA") and other state, local and federal governmental agencies (hereinafter may be referred to as "REGULATORS') and, WHEREAS, REPRESENTATIVE is or will become duly qualified and licensed to sell securities as a registered representative. NOW, THEREFORE, in consideration of the mutual covenants as hereinafter set forth, the parties hereto agree as follows: I. BASIC AGREEMENT: IMS agrees to permit REPRESENTATIVE to become registered with it and to execute securities transactions exclusively through it. REPRESENTATIVE agrees to become registered with IMS and to execute securities transactions exclusively through it. For the purposes of complying with the rules of the FINRA and other REGULATORS governing the conduct of registered representatives and the supervisory responsibility of IMS, all associated persons are considered to be employees; however, for all other purposes, REPRESENTATIVE is an independent contractor. II. TERMS OF AGREEMENT: This Agreement revokes and supersedes any and all previously existing agreements between IMS and REPRESENTATIVE. This Agreement may be terminated by either party hereto upon written notice. However, IMS reserves the right to immediately terminate this Agreement should the REPRESENTATIVE violate rules of the SEC, FINRA, REGULATORS, IMS, or the intent of this Agreement. IMS shall notify all appropriate regulatory bodies or agencies upon termination of this Agreement and shall make appropriate disclosure of the reasons for such termination. This Agreement shall take effect upon the latter date of execution or the date of REPRESENTATIVE becoming duly licensed, and shall govern all securities transactions made by the REPRESENTATIVE until termination. 1

2 III. REPRESENTATIVE'S ACTIVITIES: All activities conducted by REPRESENTATIVE under this agreement shall be conducted in compliance with all state and federal securities laws and the rules of the FINRA, and any other REGULATORS having jurisdiction over IMS or the REPRESENTATIVE. REPRESENTATIVE is specifically prohibited from: A. Having personal securities transactions with or through another broker/ dealer without first informing IMS in writing and receiving the permission of IMS in writing. B. Making any loan arrangements, handling any loan forms, or making appointments with officers of lending institutions for clients in connection with securities transactions. C. Acting independently in any capacity for the purpose of effecting private securities transactions for any individual or entity other than IMS, without first receiving written permission from IMS. D. Warranting or guaranteeing the present or future value or price of any security, or that any company or issuer of securities will meet its promises or obligations. E. Agreeing to repurchase at some future time any security from a client for REPRESENTATIVE S own account, for the account of IMS, or for any other account. F. Raising money, or participating in the raising of money for any company, individual or venture in a transaction not approved in writing by IMS. G. Holding of securities, stock power, money or other property belonging to a client. H. Accepting cash or checks made out to the REPRESENTATIVE or to IMS, in payment of purchases of securities. REPRESENTATIVE is further prohibited from commingling a client's funds with his own. I. Borrowing money or securities from a client without specific written permission from IMS. J. Accepting gratuities, compensation or commission in connection with securities transactions from anyone other than IMS, without prior written permission from IMS. K. Making payment in excess of $100, per individual, per annum, to any person where such payment or gratuity is in relation to the business of the employer of the recipient, unless such payment is pursuant to a written agreement between the parties and approved by the recipient's employer. L. Recommending the purchase, sale or exchange of any security unless the REPRESENTATIVE has reasonable grounds to believe that the recommendation is suitable for the customer, based on the customer's other securities holdings, financial situation and needs. M. Maintaining a joint account in securities with any client, or sharing in any benefit with any client resulting from a securities transaction, without prior written permission from IMS. 2

3 N. Representing self as an investment advisor or consultant, or charging fees for financial planning, without being properly registered and without the written consent of IMS. O. Placing any media (radio, TV, newspaper, etc.) advertising, offering or holding seminars or speaking engagements, or engaging in individual mailings or letters to ten (10) or more members of the public, without submitting the text of such communication to IMS for its prior approval. Further, REPRESENTATIVE, will not, directly or indirectly place any media advertising or circulate literature, pamphlets, books, letters, or papers concerning IMS, its business, or any securities, without the prior approval thereof by IMS. P. Utilizing IMS company stationery or IMS company letterhead for correspondence concerning transactions or matters not related to authorized securities transactions. All correspondence shall be approved by the COMPANY prior to use (see IV K.) Q. Marketing and/or sales of index annuities, except through IMS approved marketing organization(s), effective as of September 1, IV. REPRESENTATIVE S ACCEPTANCE OF REGISTRATION CONDITIONS: As further consideration for registration with IMS, REPRESENTATIVE accepts the following conditions to the continuation of such registration: A. REPRESENTATIVE will abide by and strictly comply with all RULES of IMS now in force or which may later be adopted. B. REPRESENTATIVE will strictly comply with the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act of 1940, the securities acts of all states in which the REPRESENTATIVE and IMS are doing business, and all RULES of the SEC, FINRA and any REGULATORS having jurisdiction over securities activities. C. REPRESENTATIVE will not make any statements, either oral or written, regarding any security, which are untrue or misleading or which omit a material fact necessary in order to make the statements, in the light of circumstances under which they were made, not misleading. D. In connection with each sale of a security and each offer to sell or solicitation of an offer to buy a security, REPRESENTATIVE will deliver or cause to be delivered to the customer, if applicable, a current prospectus, and REPRESENTATIVE will make no representations to such customer except such as are contained in such prospectus. E. REPRESENTATIVE will not effect or attempt to effect any transaction in, or induce or attempt to induce the purchase or sale of, any security by means of any manipulative, deceptive, or other fraudulent device or contrivance, as such terms are used in Sections 10(b) and 15(c) of the Securities Exchange Act of 1934, as amended, and the RULES promulgated thereunder. F. REPRESENTATIVE will not represent that any security has been approved or disapproved by the SEC or any other governmental authority, or that the SEC or REGULATORS have passed on the merits thereof or has made any finding that the statements made in any prospectus or registration statement with respect thereto are correct. 3

4 G. REPRESENTATIVE will neither accept nor exercise any discretionary power with respect to the purchase or sale of securities for the account of any customer without the prior written approval of IMS. H. REPRESENTATIVE has no authority to act, and will not act, as custodian, trustee, executor, administrator, or guardian of the estate of any customer, without the prior written approval of IMS. I. REPRESENTATIVE has no authority to act, and will not act, for any customer in any dealings in securities except as sales representative of IMS in the execution of orders given by the customers; and REPRESENTATIVE will not accept compensation in any form, from any person or entity, directly or indirectly relating to any transactions in securities, without the prior written approval of IMS. J. In the event that REPRESENTATIVE should terminate this Agreement with IMS, all records required to be maintained by IMS, as set forth in Section 17(a)(3) and Section 17(a)(4) of the Securities Exchange Act of 1934, or any other self-regulatory organization or state law requirements pertaining to REPRESENTATIVE'S customers, will remain in the possession of IMS, provided that REPRESENTATIVE will be afforded an opportunity to obtain appropriate copies of account records. K. All written communications between REPRESENTATIVE and the public (i.e. clients and/or prospects) shall be approved by a Registered Principal of IMS and a copy retained in the home office. L. REPRESENTATIVE has no authority to sell or to solicit the sale of any product which might be deemed to be a security, except with the express prior written consent of IMS. Further, REPRESENTATIVE has no authority to sell or to solicit the sale of any product which might be deemed to be a security other than through IMS as a REPRESENTATIVE of IMS. M. New account forms, supporting documents and agreements are obtained as required and promptly forwarded to IMS home office. IMS will review these documents for completeness and return to the independent contractor those documents not properly executed. REPRESENTATIVE will be notified periodically in writing as to documents not provided to IMS; those documents must be promptly submitted to IMS. N. Each independent REPRESENTATIVE will complete and maintain a pencil or electronic ticket for each order entered to the IMS's clearing agents, Southwest Securities, Inc and Pershing LLC. This ticket will reflect, at a minimum the following information: 1. Action: buy or sell. All sales with the exception of those notes as short sales will be considered as long sales. 2. On sales: the disposition of the customer security. Long in account or good delivery from customer. 3. The symbol or description of the security. 4. The customer's account number and/or name. 5. Acting as agent or principal. 6. Price entered and any change, modification or cancellation. 7. Times relating to order entries, execution, changes and reports must also be noted. 8. Commission. 9. Trade number, if applicable 10. Any other information specific to the order. 4

5 The REPRESENTATIVE will be required to furnish IMS home office copies of trade tickets. Immediately upon entering the order, either by hand, fax, or transmission. The firm's clearing agents, Southwest Securities, Inc. or Pershing, LLC, are the only entities which may execute orders on behalf of IMS for the purchase or sale of stocks and/or bonds. Prior to offering Private or Public Limited Partnership Offerings, the offerings must be approved in writing by IMS. O. The REPRESENTATIVE must maintain copies of all incoming and outgoing correspondence which pertain to his general securities business. All incoming correspondence should be reviewed to determine if there are customer complaints which should be sent to the IMS home office for handling. All outgoing correspondence that pertain to general securities and is written by an Independent REPRESENTATIVE who is not a FINRA principal must be reviewed by a principal in the IMS home office and forwarded to IMS for review. Minor written complaints may be handled directly by the REPRESENTATIVE. P. Monthly customer statement should be retained and reviewed for possible errors and omissions. Q. The REPRESENTATIVE, when appropriate, is required to obtain mutual fund switch letters and/or variable products disclosure statements, and maintain files for these items. R. With the exception of publicly published research, no research material, including PC Computer generated reports on companies will be produced, reproduced and/or mailed to customers without first obtaining written approval for the information from IMS home office. S. All advertising must be approved, in writing, by IMS home office prior to publication. This includes "yellow page" advertisements. A file containing the advertisement and the written approval must be maintained. T. Business cards and letterheads must be approved, in writing, by IMS home office prior to printing. U. REPRESENTATIVE S direct supervisor is the IMS compliance officer, unless REPRESENTATIVE is licensed under an IMS branch office. Then, REPRESENTATIVE S direct supervisor is the branch office manager. V. The REPRESENTATIVE acknowledges that his/her place of business is not an Office of Supervisory Jurisdiction (OSJ), unless his/her place of business has been designated by IMS as a branch office, and proper documentation and licensing has been secured. The following functions will not take place in the REPRESENTATIVE'S location, unless the REPRESENTATIVE is licensed under a duly designated branch office for IMS: 1. Order execution and/or market making. 2. Structuring of public offerings or private placements. 3. Maintaining custody of customer's funds and/or securities. 4. Final acceptance (approval) of new accounts on behalf of IMS. 5. Review and endorsement of customer orders. 6. Final approval of advertising or sales literature. 7. Responsibility for supervising activities of persons associated with IMS. W. In accordance with FINRA Rule 94-44, copy of which is available upon request, IMS is required to supervise all investment advisory activities, and as such will not allow independently registered investment advisors within the firm without specific written 5

6 authority from IMS to do so. All IMS REPRESENTATIVES, who are qualified either through licensing or education, will be deemed Associate Investment Advisors under the IMS SEC corporately registered investment advisory firm, IMS Financial Advisors, Inc. Any and all fees charged to a client by an IMS associate investment advisor in lieu of commissions must be submitted to IMS and IMS is entitled to its share of such fees based upon REPRESENTATIVES current pay-out structure. No IMS associate advisor may accept fees into their own account. These fees must be made payable to IMS Financial Advisors, Inc., processed through IMS. X. REPRESENTATIVE agrees that he will totally bear the responsibility of his customer non-performance, if any. Any debit balance created by customer non-performance will be charged to REPRESENTATIVE. If there is insufficient revenue from REPRESENTATIVE to offset any charges, REPRESENTATIVE will be personally responsible for immediately paying the difference to IMS. V. OBLIGATIONS: IMS's obligation hereunder is to pay REPRESENTATIVE a commission in Accordance with the Commission Schedule attached hereto as Addendum A. All trading costs will be deducted from the amount due to be paid to REPRESENTATIVE. VI. REMUNERATION: The REPRESENTATIVE'S sole remuneration under this agreement shall be as outlined in Addendum A. Such commissions are subject to reduction by certain fees, charges and costs, as outlined in this Agreement. Payment of any commission checks shall be made semimonthly on the fifth (5 th ) or the closest business day to the fifth, and the twentieth (20 th ), or the closest business day to the twentieth day of each month. Commissions will be paid based upon checks received by IMS by the last day of each month and the 15 th day of each month respectively. No commission check will be generated for amounts less than $ The compensation schedule is subject to revision by IMS from time to time; provided, however that no such revision shall have retroactive effect. REPRESENTATIVE hereby agrees that the payment of any commissions or concessions earned shall not become due or payable until such time as IMS is in actual receipt of the commissions or concessions: A. "Trailing Commissions" shall be those commissions resulting from multiyear installment payments following the initial payment made to purchase a security. If REPRESENTATIVE is not registered with IMS at the time such Trailing Commissions become due and payable, and has transferred his securities license to another FINRA broker/dealer, said commissions may, at the sole discretion of IMS be paid to REPRESENTATIVE. It is the general policy of IMS to pay trailing commissions for thirty (30) days after the date of termination If, after termination, commissions are received by IMS for any terminated REPRESENTATIVE, the terminated REPRESENTATIVE has not transferred to another FINRA broker/dealer, or if REPRESENTATIVE has been terminated by IMS for cause, then all commissions shall be retained by IMS. B. "Back-End Participations" are those moneys paid by issuers to IMS upon the closing of a product program. Such participation will be paid to the REPRESENTATIVE only after actual receipt of payment by IMS. The Commission Schedule in effect at the time of receipt of the Back-End Participation shall apply to the payment of such commission to REPRESENTATIVE. Such participations will be paid to the broker/ 6

7 dealer with whom the REPRESENTATIVE is registered, if not registered with IMS, or to the REPRESENTATIVE'S estate, provided that the REPRESENTATIVE or his estate has: 1. on file with IMS a current address, and 2. made written demand on IMS within thirty (30) days after IMS receives the applicable Back-End Participation. The sharing arrangements for Back-End Participations for REPRESENTATIVES not registered with IMS or his estate shall be 60% to the REPRESENTATIVE and 40% to the COMPANY. C. "Mutual Fund Reinvestment Concessions" are those moneys paid to IMS by mutual fund distributors for reinvestment of dividends, or additional cash investments in existing accounts. The Commission Schedule in effect at the time of receipt of same shall apply for payment of such commissions to REPRESENTATIVE. Said concessions shall be paid to the REPRESENTATIVE for a period of thirty (30) days after termination of REPRESENTATIVE. Thereafter, all such concessions shall be the sole property of IMS. D. Commissions paid on any other securities products (i.e. variable insurance products, continuing commissions on direct participation products, etc.) will be paid to REPRESENTATIVE for a period of thirty (30) days after termination. Thereafter, all such commissions shall be the sole property of IMS. VII. VIII. ADVANCES, DRAWS AND LOANS: REPRESENTATIVE shall not be entitled to any advances or draws against commissions. In the event that IMS should lend funds to REPRESENTATIVE, such loan shall be repaid by REPRESENTATIVE to IMS with interest, pursuant to the terms of the loan agreement. NATURE OF RELATIONSHIP: The relationship between IMS and the REPRESENTATIVE is that of a company and an independent contractor. Payment of the Federal Insurance Contribution Act (FICA), the Federal Unemployment Contributions Act, the collection of State and Federal Income Tax at source of wages, and each State's Workers' Compensation Act shall be the sole responsibility of REPRESENTATIVE. A. IMS will not withhold any moneys for any federal, state or local taxing authorities from commissions earned by REPRESENTATIVE pursuant to this Agreement. B. REPRESENTATIVE'S Agreement and relationship with IMS is unique and separate from any agreement IMS may have with another person. The REPRESENTATIVE'S rights and obligations with respect to IMS are entirely dependent on this Agreement, and, with his unique relationship with IMS. REPRESENTATIVE may conduct any other type of business pursuit, upon notification in writing to IMS, if such endeavor is not violative of any laws, rules, regulations or written policies of IMS or any other regulatory authority, and shall not be restricted to conducting business only under this Agreement, except as herein provided. IX. INDEMNIFICATION: REPRESENTATIVE agrees hereby to indemnify, defend and hold IMS harmless for any claims, liabilities, damages or causes of action, known and unknown, accruing from any source as the result of REPRESENTATIVE'S activities, exclusive of claims under federal or state securities laws or otherwise that a private placement memorandum, prospectus or other written document misstates facts or fails to state facts, such document having been approved by IMS and such document not having been prepared by the REPRESENTATIVE. 7

8 The REPRESENTATIVE will indemnify, defend and hold harmless IMS from any and all claims incurred by IMS in investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any action, or asserted failure of or negligence of, the REPRESENTATIVE to comply with the various federal and state laws, RULES and REGULATIONS. The REPRESENTATIVE agrees to immediately notify IMS in writing, upon receipt of any action in respect of which indemnity may be sought against IMS. The REPRESENTATIVE 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 IMS. IMS shall not be liable to indemnify any person for any settlement of any such action effected without the consent of IMS. X. REPRESENTATIVE'S INDEPENDENCE: IMS enters into this agreement for the sole purpose of retaining the undersigned REPRESENTATIVE to engage in securities transactions. IMS has no right to control or direct the REPRESENTATIVE 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, except that IMS shall have the responsibility and right to perform such supervisory control required by the REGULATORS and their RULES. IMS shall also be permitted to issue such instructions as may be necessary to explain, clarify and to insure compliance with directives promulgated by the aforementioned REGULATORS. Except for the aforementioned, the REPRESENTATIVE shall be completely free from the will and control of IMS. REPRESENTATIVE shall not receive company-paid insurance benefits, disability income, company-paid vacation, expense reimbursement, Worker's Compensation, or pension and profit sharing benefits. However, IMS may, at IMS's election, make insurance benefits and/or vacation plans and other benefits available to REPRESENTATIVE at the REPRESENTATIVE'S expense. REPRESENTATIVE shall be solely responsible for all expenses, including, but not limited to travel, entertainment, office expense, telephone, education expense, dues, subscriptions, licenses, fees, and shall receive no remuneration or reimbursement of any nature other than commissions. REPRESENTATIVE shall render no reports or other information to IMS other than as required by REGULATORS and IMS in conjunction with such REGULATOR's RULES. REPRESENTATIVE shall not be required: A. To submit to detailed IMS direction. B. To follow up and report on leads. C. To keep appointments with prospective customers arranged by IMS. REPRESENTATIVE may service or refuse to service any customer at his direction upon proper notification to the customer and IMS. D. To produce a minimum "quota" of transactions. E. To keep fixed hours, or be required to work any specified hours or specified days. F. To purchase any items such as periodicals, tables, brochures, or other such materials or equipment. 8

9 G. To be restricted from, or assigned to, any geographical or demographically territory for client solicitation, other than those imposed by his licenses or registrations. XI. FEES & FINES: REPRESENTATIVE agrees to pay IMS fifty dollars ($50.00) per month Administration Fee. Said Administration Fee is due and payable monthly on the last production day of each monthly period, and only if the total gross dealer concessions generated by REPRESENTATIVE are less than $ per month, or a total Aggregate of $6, annually. All licensing and registration fees of REPRESENTATIVE shall be paid by REPRESENTATIVE. REPRESENTATIVE is responsible for payment of all clearing charges incurred by IMS on behalf of REPRESENTATIVE, for trades cleared through the firm s clearing firm(s). REPRESENTATIVE will be responsible for his share of the mandatory Errors and Omissions Insurance premium. This annual premium is due on July 15 th of each year. Further explanation is contained in Paragraph XXX of this contract. REPRESENTATIVE is responsible for payment of his/her firm level continuing education. This fee is payable when invoiced by IMS, on a periodic basis. In the event of termination of this Agreement for any reason, all fees incurred on behalf of or by the REPRESENTATIVE shall become immediately due and payable to IMS. Failure of REPRESENTATIVE to immediately render payment in full to IMS shall subject REPRESENTATIVE to legal proceedings called for under Paragraph XXVIII of this Agreement. In addition, a termination fee of five hundred and no/100 Dollars ($500.00) will be imposed on each REPRESENTATIVE whose affiliation with IMS ceases for any reason. Fines may be levied against REPRESENTATIVE for non-compliance with the rules and regulations of IMS or any Regulator. XII. LIMITATION OF ACTIVITY: REPRESENTATIVE agrees that only those securities permitted to be sold under the limitations or restrictions of any license issued to REPRESENTATIVE will be offered for sale to REPRESENTATIVE'S clients. REPRESENTATIVE understands that licensing limitations are subject to change by REGULATORS, and agrees to abide by the limitations or restrictions imposed on REPRESENTATIVE'S license. Further, REPRESENTATIVE agrees to offer and to sell only such products as have been approved in advance by IMS. IMS will enter into sales agreements with the underwriter and/or sponsor of various securities and investment products which meet IMS's standards for participation. XIII. XIV. OUTSIDE BUSINESS INTEREST: Outside Business Activity form, is for the purpose of setting forth full and complete disclosure to IMS of REPRESENTATIVE S other business interests. REPRESENTATIVE agrees to notify IMS in writing within fifteen (15) days of any new activity. Upon written notification, IMS will either approve or disapprove of the REPRESENTATIVE S proposed outside activity in writing to the REPRESENTATIVE. In addition, REPRESENTATIVE is required to complete the IMS Annual Certification form furnished to REPRESENTATIVE on an annual basis by IMS, setting out any changes, additions or deletions to REPRESENTATIVE S outside business activities. PAYMENT OF COMMISSIONS UPON TERMINATION: All commissions earned by the REPRESENTATIVE shall be paid by IMS to the REPRESENTATIVE within a reasonable period of time, but not prior to receipt by IMS following termination of this Agreement by either party. 9

10 Commissions accruing to customer's accounts may be paid to REPRESENTATIVE only as permitted by the FINRA RULES. IMS shall have the right to offset against commissions, charges and fees attributable to REPRESENTATIVE'S activities, including the termination fee. No commissions will be paid to REPRESENTATIVE after thirty (30) days. Should REPRESENTATIVE be terminated for violation(s) of any RULE(S) promulgated by any REGULATORY authority or by any rules or regulations of IMS, then IMS has the right not to pay commissions resulting from said violation(s), and to reverse and reclaim any commissions paid to REPRESENTATIVE before IMS became aware of any such violation(s). XV. XVI. XVII. DISCLOSURE: REPRESENTATIVE agrees to disclose to all securities clients and prospective securities clients that REPRESENTATIVE is acting as a representative of IMS, a broker/dealer and that orders for securities will be placed through IMS. Disclosure of such relationship must be printed on REPRESENTATIVE'S business cards and stationery. REFUSAL OF ACCOUNTS: IMS reserves the right to refuse the account of any client and/or discontinue dealing with any client if, in IMS's opinion, the client credit or business practices are not satisfactory or for any other reason. REGULATORY COMPLIANCE: REPRESENTATIVE shall, at all times, comply with all applicable RULES promulgated by the various REGULATORS with which registered or licensed, and failure to comply constitutes a material breach of this Agreement. In keeping with such RULES, IMS reserves the right to periodically review REPRESENTATIVE'S activities and knowledge of such RULES and IMS's compliance procedures. Any REPRESENTATIVE who is suspected of a violation of any RULE will be placed under the firms Procedures for Reprimands and Fines for Infractions and/or violations of FINRA Rules and Regulations ( Reprimand Procedures ), and IMS Securities, Inc. Compliance Requirements, until the matter(s) is resolved. XVIII. PARTIAL INVALIDITY: This Agreement and the provisions herein are subject to all applicable federal and state statutes. If, in the event any provision of this Agreement is deemed to be violative of any said statute, law, rule or regulation of federal or state laws or the FINRA or any other regulatory authority, said provision shall be deemed invalid ab initio and of no force or effect. The invalidity or inability to enforce any provision in this Agreement shall in no way affect the validity or enforceability of any other provision. XIX. XX. XXI. XXII. NO WAIVER: Failure of either IMS or REPRESENTATIVE to declare breach or termination of this Agreement because of any violation or violations, hereof, shall not be deemed a waiver by either party, hereto. In case of any subsequent violation, either party may demand strict compliance herewith. DEATH OF REPRESENTATIVE: In the event of the death of REPRESENTATIVE during the term of this Agreement, all commission accrued or payable to REPRESENTATIVE hereunder shall be payable to REPRESENTATIVE'S estate or designated beneficiary or designated assignee, but only after actual receipt of such commission by IMS, and only in accordance with Paragraph VI of this Agreement. REPRESENTATION: No representation, inducement or commitments, other than those expressly set forth in this contract, have been made to REPRESENTATIVE. BINDING UPON SUCCESSORS: This Agreement is binding upon IMS, its successors and assignees, and upon the REPRESENTATIVE, his executors and heirs. XXIII. ASSIGNMENT: This Agreement constitutes a personal service contract and REPRESENTATIVE shall not transfer or assign this Agreement or any right, benefit or interest herein. IMS may assign this Agreement. 10

11 XXIV. CAPTIONS: Captions of this Agreement are for convenience and reference only and the words contained therein shall in no way be held to explain, modify, amplify or aid in the interpretation, construction or meaning of the provisions of this Agreement. XXV. STATUS OF ACCOUNTS: It is agreed that upon termination of this Agreement, IMS will not attempt to assign REPRESENTATIVE'S accounts to other persons contracting with IMS, provided, however, that REPRESENTATIVE was not terminated by IMS for cause, REPRESENTATIVE is not deceased, and/or REPRESENTATIVE has an active securities license with an FINRA broker/dealer. XXVI. INTERPRETATIONS AND DEFINITIONS: Unless otherwise provided in this Agreement, or unless the context otherwise requires, the following definitions and rules of construction shall apply herein: A. The neuter gender includes the feminine and the masculine. B. The singular number includes the plural. C. The word "person" includes corporation, partnership, firm or association wherever the context so requires. D. "Shall", "will" and "agrees" are mandatory. E. All references to the term of the Agreement or the Agreement term shall include any extensions of such term. XXVII. CUSTOMER COMPLAINTS AND RULES VIOLATIONS: REPRESENTATIVE shall immediately advise IMS of any customer complaint, or action or fact whatsoever which comes to the REPRESENTATIVE'S attention which may be a violation of any securities laws, rules or regulations, with respect to IMS or the REPRESENTATIVE, or with respect to any party who is doing business with IMS. IMS has the responsibility of reporting any complaint to the REGULATORS in accordance with the rules of REGULATORS. If any kind of infraction is suspected on the part of REPRESENTATIVE, REPRESENTATIVE will be placed under the Firm s Reprimand Procedures until the matter is resolved. If, after investigation, the REPRESENTATIVE is found by IMS to have committed an infraction(s) or violation(s) of the RULES of any REGULATOR or of IMS, then IMS has the right to place a formal reprimand in the REPRESENTATIVE S file, fine the REPRESENTATIVE in accordance with the IMS Reprimand Procedure Schedule and/or immediately terminate the REPRESENTATIVE for the commission of said infraction(s) or violation(s) depending upon the severity of the infraction(s) or violation(s). IMS is also under strict duty to report violations to the REGULATORS. XXVIII. ARBITRATION: Any controversy between IMS and the REPRESENTATIVE arising out of or relating to this Agreement or the breach thereof, shall be settled by arbitration in accordance with the rules, then pertaining, of the FINRA. Any arbitration hereunder and award of the arbitrators, or of a majority of them, shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction. All arbitration procedures shall be held in the city in which the Firm is domiciled, which is Houston, Harris County, Texas. However, because of the cost of arbitration for all parties, at the discretion of IMS, any controversy involving a monetary sum of five thousand dollars ($5,000.00) or less, may be settled in the Small Claims Court where IMS is domiciled, which is Houston, Harris County, Texas, said court being deemed to have jurisdiction over the matter. XXIX. APPLICABLE STATE LAW: This Agreement shall be controlled, construed and enforced in accordance with the laws of the State of Texas. 11

12 XXX. ERRORS AND OMMISSIONS INSURANCE: It is mandatory that each REPRESENTATIVE be covered at his expense for his pro-rata share of the cost of coverage provided under IMS errors and omissions policy. This policy will be the best that IMS can secure, based upon the mix of business of the firm, and the current conditions present in the marketplace. The premium will be due and payable by the REPRESENTATIVE on the date it is submitted to said REPRESENTATIVE via his commission statement, which will be furnished to the REPRESENTATIVE prior to the end of the policy year. The policy year is from July 15 th to July 15 th. If a REPRESENTATIVE is terminated from IMS during the policy year, for any reason, he understands that he will receive no return of pro-rata premium for errors and omissions coverage, since there is no refund of premium credited to IMS for any REPRESENTATIVE S termination of coverage. Any REPRESENTATIVE not wishing to pay the errors and omissions insurance premium may terminate his association with IMS by notification in writing of said termination at any time prior to July 15 th of each year. After July 15 th the premium will be due and payable for the full annual premium. Failure on the part of the REPRESENTATIVE to notify IMS that he wishes termination will cause automatic renewal of his errors and omissions insurance for another year. As is standard in the industry, the IMS errors and omissions the IMS coverage will terminate with the termination of the REPRESENTATIVE. XXXI. FULL COOPERATION: IMS agrees in advance to cooperate with any reasonable request for REPRESENTATIVE who chooses to terminate his business relationship with IMS. XXXII. ACKNOWLEDGEMENT: This is to acknowledge that the Representative has read the Addendum attached hereto. IN WITNESS WHEREOF, IMS has caused this Agreement to be executed by its Chief Executive Officer or Chief Financial Officer, and the REPRESENTATIVE has set his hand to this Agreement as of the date and year written below. This Agreement has been executed in two counterparts, each of which shall be deemed to be an original. Effective Date: COMPANY: REPRESENTATIVE: IMS SECURITIES, INC. By: Date: Date: 12

13 ADDENDUM A IMS SECURITIES, INC. INDEPENDENT REGISTERED REPRESENTATIVE COMMISSION SCHEDULE The commission schedule for each REPRESENTATIVE joining IMS Securities, Inc. will be individually negotiated. 13