Revised May 1996
FIRST INVESTORS CORPORATION
00 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
ASSOCIATE'S AGREEMENT
This Agreement shall govern my affiliation with First Investors
Corporation ("Company") as a registered representative ("Representative") or
manager ("Manager") of the Company. I agree to comply with the terms and
conditions set forth in this Agreement in consideration for the sales and
administrative support, initial and ongoing training, and compensation that will
be provided to me by the Company.
SECTION ONE: SERVICES TO BE PROVIDED; MANNER AND MEANS OF SERVICES:
(a) Services as a Representative. If I am affiliated with the Company
as a Representative, my services will consist of selling investments and other
products sponsored or approved by the Company ("Authorized Products") to clients
("Clients") and servicing Client accounts ("Accounts") in accordance with (i)
the terms of this Agreement, (ii) the rules of the National Association of
Securities Dealers, Inc. ("NASD"), (iii) applicable federal, state and local
laws and (iv) any policies and procedures which the Company may, in its sole
discretion, adopt from time to time to satisfy its regulatory obligations under
the NASD's rules and federal and state law with respect to supervision,
training, and compliance ("Regulatory Obligations").
I understand that the Company will exercise no control over the time,
place and manner in which I perform services, except to the extent required to
satisfy its Regulatory Obligations. I understand that any training required by
the Company will be limited to that which is required to meet its Regulatory
Obligations. I further understand that it is my responsibility to obtain all
required securities and insurance licenses before engaging in any sales
activities, to comply with the laws, regulations, and Company policies that
apply to my activities, and to act ethically, honestly, and in the best
interests of Clients at all times.
(b) Services as a Manager. If I am affiliated with the Company as a
Manager, my services will consist of (i) supervising one or more sales offices
or Representatives in accordance with the Company's policies and procedures,
(ii) providing Representatives with such initial and ongoing training as the
Company deems necessary to comply with its Regulatory Obligations, and (iii)
carrying out such other duties and responsibilities as may be assigned by the
Company. I will also be permitted to sell Authorized Products to Clients and to
service Client Accounts, as long as such activities do not, in the opinion of
the Company, interfere with my supervisory responsibilities. I understand that
the Company reserves the right, at its sole discretion, to select those
Associated Persons who will be offered the opportunity to become Managers.
SECTION TWO: STATUS AS AN INDEPENDENT CONTRACTOR OR EMPLOYEE:
(a) Registered Representatives. If I am associated with the Company as
a Representative, I will be treated as an independent contractor and not as an
employee for federal tax purposes and will be personally responsible for (i)
paying all employment-related federal, state and local taxes (including, but not
limited to, federal Self-Employment Contribution Act taxes) as well as income
taxes imposed on compensation received pursuant to this Agreement, (ii) making
all required deposits of such taxes, and (iii) filing all appropriate tax
returns and information reports related to such taxes.
(b) Managers. If I am associated with the Company as a Manager,
I will be treated as an at-will employee for federal tax purposes.
SECTION THREE: COMPENSATION:
(a) Compensation as a Representative. As a Representative, my
compensation will consist solely of (i) commissions ("Commissions") on sales of
Authorized Products at the rates and under the conditions set forth in the
Commission schedules ("Commission Schedules") that are in effect at the time the
Commissions are earned, (ii) service and other fees for providing ongoing
service and advice to Clients ("Service Fees") at the rates and under the
conditions set forth in the Commission Schedules in effect at the time that the
Service Fees are earned, and (iii) such bonuses, prizes, fees and other benefits
as may, from time to time, be awarded by the Company in its sole discretion.
I understand that the Company's principal purpose is to serve as the
distributor for its own family of mutual funds and variable insurance products,
that the Commissions, Service Fees and other compensation paid to
Representatives with respect to those products are based upon the assumption
that Clients will maintain the products for the long-term, and that any action
on my part to induce Clients to liquidate such products prematurely without the
Company's consent would be inconsistent with the basis on which I will be
compensated.
(b) Compensation as a Manager. As a Manager, my compensation will
consist of (i) overrides, to the extent permitted by law, on Commissions,
Service Fees and other compensation earned by Representatives whom I supervise
("Overrides") at the rates and under the conditions set forth in the Override
schedules ("Override Schedules") which are in effect at the time the Commissions
and Service Fees are earned, (ii) such bonuses, prizes, fees and other benefits
as may, from time to time, be awarded by the Company in its sole discretion and
(iii) Commissions and Service Fees on my personal sales and personal servicing
of Client Accounts at the rates and under the conditions set forth in the
then-current Commission Schedules.
(c) Terms and Conditions Relating to Compensation. I understand that:
(i) Commissions, Service Fees and Overrides (if applicable) are not earned until
all required paperwork is submitted "in good order" and the Company receives and
becomes legally entitled to retain the payments from which such compensation is
to be paid; (ii) bonuses and prizes are not earned until they are awarded and
thus I must be affiliated with the Company at the time bonuses and prizes are
awarded to receive them; (iii) Service Fees are paid only for continuing service
to Client Accounts and the Company reserves the right to determine the
conditions under which Service Fees are to be paid and their amounts; (iv) the
Company may at any time, in its sole discretion, with prior notice, terminate or
modify any Commission, Override, Service Fee, or other compensation schedule,
including its conditions, as it applies to new sales and services; (v)
additional investments to existing accounts constitute new sales for purposes of
Commissions, Overrides, bonuses, prizes, and awards, unless the customer is
considered by the Company to be contractually committed to make them; (vi) the
Company may temporarily withhold, from Commissions, Overrides, bonuses, prizes,
awards and other compensation, amounts sufficient to protect the Company against
refunds to customers; (vii) and the failure of the Company to withhold money
from any payment made to me shall not be deemed a waiver of the Company's right
to collect any debt I owe to the Company.
(d) Expenses. I am solely responsible for paying any expenses that I
incur in rendering services under this Agreement, other than expenses that are
expressly assumed by the Company in writing.
SECTION FOUR: REFUNDS; CHARGEBACKS; LOANS:
The Company reserves the right, in its sole discretion, to refund to
any Client all or part of any payment made by the Client in connection with the
purchase of any Authorized Product. In the event that the Company makes any
refund to a Client relating to any Authorized Product, I will be responsible for
repaying to the Company all or any portion of any Commission, Override, or other
compensation that I have received which was attributable to the Product without
regard for whether I was at fault, provided that no repayment shall be required
for any refund made to a purchaser of a periodic payment plan in accordance with
any refund privilege provided by federal or state law if the Commission,
Override, or other compensation was paid on a non-recourse basis.
In the event that monies are transferred to me by the Company (or any
of its affiliates) over and above the amounts earned through Commissions,
Overrides, and other compensation or I become responsible for repaying any
monies as a result of refunds, I agree that such monies shall be loans to me
from the Company ("Loans"). Upon the termination of this Agreement, any Loan
that I owe will become immediately due and payable without need for demand. If I
do not immediately repay any Loan in full upon demand or termination of my
affiliation with the Company, I will also pay interest, compounded monthly, on
the balance due at the current prime rate as published from time to time in the
Wall Street Journal multiplied by 1.4. I grant the Company a lien on, and the
right to take, any compensation, payment, or benefit that is due or that may
become due to me to offset any unpaid Loan. This right of offset does not limit
in any way the Company's right to take legal action to collect any Loan. If a
Loan is placed in the hands of an agency or attorney for collection, I will also
be responsible for paying the costs of collection, including attorney fees.
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SECTION FIVE: COVENANTS:
(a) Client Information. I understand and agree that all information
maintained by the Company regarding Client Accounts ("Client Information"),
including the names, addresses, phone numbers, account numbers, and financial
histories and profiles of Clients, is the sole and exclusive property of the
Company and is entitled to the status and protection of trade secrets. I will
not divulge or reveal Client Information to any third party and under no
circumstances will I reveal or permit such information to become known by any
competitor of the Company either during my affiliation with the Company or at
any time thereafter. On or before termination of my affiliation with the
Company, I will return all records containing Client Information, whether in
original, duplicated, computerized, handwritten, or other form, and I will not
attempt to reconstruct such information from memory after my termination.
(b) Solicitation of Clients. I agree that at no time during the term of
this Agreement or for one year after its termination will I, directly or
indirectly, without the Company's consent, attempt to solicit, by mail, phone,
personal meeting, or any other means, any Client (other than my spouse or a
member of my family) whose Account I serviced or whose name became known to me
during my affiliation with the Company: (i) to transfer his or her Account to
any other broker-dealer or financial services firm; (ii) to open a new account
with any other broker-dealer or financial services firm; or, (iii) to close his
or her Account, liquidate Authorized Products, or otherwise discontinue his or
her association with the Company and its products.
I understand and agree that the prohibitions on solicitation of Clients
apply whether the Clients are obtained through my own efforts or as the result
of reassignments of house accounts, seminars, advertising, or other means. I
understand that, while I may develop Clients from contacts with friends and
acquaintances that I may have had prior to my affiliation with the Company, in
doing so I will be using the Company's name, good will, and resources.
I also understand and agree that the terms "solicit" and "solicitation"
are to be construed broadly to include any contact or communication of any kind
whatsoever with a Client, including an announcement of new employment, that is
intended or reasonably likely to invite, encourage or induce any such person to
do business with me at another broker-dealer or financial services firm, to
liquidate (partially or entirely) Authorized Products sold by the Company, or to
close (partially or entirely) Accounts with the Company.
(c) Solicitation of Associated Persons. At no time during the term of
this Agreement or for one year after its termination will I, directly or
indirectly, solicit any Representative, Manager, or employee of the Company or
any of its affiliates (collectively, "Associated Person") to terminate his or
her affiliation or to breach or terminate any contract with the Company or any
of its affiliates. The term "solicit" is to be broadly construed, in the manner
previously indicated, to include all communications that are intended or
reasonably likely to invite, encourage, or induce an Associated Person to
terminate an affiliation.
SECTION SIX: REMEDIES:
(a) Injunctive and Other Equitable Relief. If I violate any of the
covenants of Section Five of this Agreement, the Company shall be entitled to
obtain injunctive and other equitable relief from the NASD or any court of
competent jurisdiction to prevent any further breach of such Agreement and to
prevent me from being unjustly enriched by the violation. Equitable relief may
include an order requiring that I disgorge any profit that I have made or will
make as the result of the violation, including any Commissions, Overrides (if
applicable), Service Fees, advisory fees, wrap fees or other fees that I have
earned or will earn, as a result of the violation.
(b) Actual Damages. In addition to injunctive and equitable relief that
may be available, the Company shall be entitled to recover from me any actual
damages that result from the violation of any of the terms of this Agreement,
including the loss of Service Fees, management fees, advisory fees, and other
fees that could have been earned by the Company and its affiliates if Client
Accounts and Authorized Products had not been liquidated or transferred in
violation of Section Five of this Agreement. I agree that I will not contest the
Company's legal authority or standing to collect such damages in any proceeding
brought to enforce this Agreement.
(c) Liquidated Damages. Because actual damages may be difficult to
quantify, I agree that the Company shall be entitled to obtain liquidated
damages in the amounts of: (i) two times the compensation over the prior twelve
months of any Associated Person who is induced to terminate his or her
affiliation with the Company as
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the result of any violation of Section Five, which sum is intended to compensate
the Company for the costs of recruiting, training, and developing a replacement;
(ii) two times the gross Commissions generated in connection with any
liquidations and reinvestments of Authorized Products that are induced by any
violation of Section Five, which sum is intended to compensate the Company for
the costs incurred in selling Authorized Products and the profits that are lost
by the Company and its affiliates as the result of the liquidation of such
Products; (iii) two times the annual Service Fees generated on Client Accounts
that are transferred to a new broker-dealer or financial services firm as the
result of a violation of Section Five, which sum is intended to compensate the
Company for the loss of Service Fee income on accounts that are improperly
solicited; and, (iv) $10,000 (increased annually after 1996 for inflation based
upon the Consumer Price Index) for any other violation of this Agreement.
(d) Non-Exclusivity of Remedies. I agree that the Company shall be
entitled to seek actual damages, disgorgement, and liquidated damages as
alternative remedies in the same proceeding. It shall also be entitled to obtain
injunctive relief, irrespective of whether damages are sought or obtained.
(e) Attorney Fees, Costs and Indemnification. I agree that I will pay
the Company's attorney's fees and costs if it is required to file a lawsuit,
complaint or NASD petition to enforce its rights under this Agreement as a
result of a violation by me of any of the provisions of this Agreement. I also
agree to indemnify and hold the Company harmless from claims of third parties
that arise from my violation of any of the terms of this Agreement.
SECTION SEVEN: WAIVER:
Failure or delay on the part of the Company to exercise any right,
power or privilege under this Agreement shall not operate as a waiver of such
right, power or privilege. Nor shall any single or partial exercise of any
right, power or privilege preclude any further exercise of the same or any other
right, power or privilege.
SECTION EIGHT: NOTICE:
I agree to notify the Company immediately in writing of the happening
of any event which constitutes a breach of the terms of this Agreement, which
results in the cessation of my right to receive payment of Commissions,
Overrides, Service Fees or other compensation under this Agreement, or which
could otherwise affect the interests of the Company or its affiliates.
SECTION NINE: AUTHORITY:
I shall have no authority by any statement, promise, representation,
agreement or contract of any kind to bind the Company to any contract with any
third party or to waive any of the Company's rights or requirements (or those of
any affiliate of the Company).
SECTION TEN: ARBITRATION; CHOICE OF LAW; FORUM:
I understand and agree that any dispute between me, the Company, or any
of its officers, directors, Associated Persons, or affiliates, concerning this
Agreement, my affiliation with the Company, or any other matter shall be settled
through binding arbitration under the NASD's Code of Arbitration, provided that
the Company shall be entitled to seek injunctive and other equitable relief in
any court of law having jurisdiction to the extent permitted under NASD rules.
This Agreement and its enforcement shall be construed in accordance with, and
shall be governed by, the laws of the State of New York.
SECTION ELEVEN: TERMINATION OF AGREEMENT:
The Company may terminate this Agreement at any time by filing a notice
of termination with the NASD in accordance with the NASD's rules. This Agreement
shall also terminate upon notice by me or by my death.
SECTION TWELVE: ENTIRE AGREEMENT; PREVIOUS AGREEMENTS; AMENDMENTS; INVALID
PROVISIONS:
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This is the entire agreement between the Company and myself. Any and
all previous agreements with respect to compensation, services, and affiliations
between the Company and myself are hereby terminated, cancelled and superseded
by this Agreement, as of the date hereof, unless otherwise separately agreed to
in writing. This Agreement may not be modified, amended or waived by the
Parties, except by a written instrument duly executed by an Executive Officer of
the Company. The invalidity or unenforceability of any section or subsection of
this Agreement shall not affect the other sections or subsections hereof.
Moreover, a court of competent jurisdiction or an NASD arbitration panel shall
have the authority to strike, amend, or "blue pencil" any section, subsection,
or portion of this Agreement to the extent necessary to make it valid and
enforceable.
SECTION THIRTEEN: SURVIVAL:
Sections Three, Four, Five, Six, Seven, Eight, Nine, Ten, and Twelve of
this Agreement shall survive the termination of this Agreement.
SECTION FOURTEEN: ACKNOWLEDGEMENTS:
I acknowledge that I have had the opportunity to read this Agreement in
its entirety before signing it, to ask the Company questions about this
Agreement, and to seek the advice of my own legal counsel (at my own expense). I
also acknowledge that I understand the terms of this Agreement and knowingly and
freely agree to abide by them.
IN WITNESS WHEREOF, the Associate and the Company have duly
executed this Agreement on this day of , .
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THE ASSOCIATE
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Associate's Signature
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Associate's Name (Print)
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Xxxxxx Xxxxxxx
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Xxxx, Xxxxx Zip Code
Office No. FIRST INVESTORS CORPORATION
Recommended by: BY:
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Manager Authorized Officer
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