SELLING DEALER AGREEMENT
This Agreement is made as of July 31, 2000 ("Effective Date"), by and between
American Express Financial Advisors Inc., a Delaware corporation (the
"Distributor"), distributor for certain registered face-amount certificates
offered by American Express Certificate Company (the "Issuer"), and Securities
America Inc., a Delaware corporation (the "Dealer").
I. DEALER ACTIVITIES
(1) During the term of this Agreement, the Dealer and persons designated
by it shall have the non-exclusive right to solicit orders for and to
distribute those face-amount certificates issued by the Issuer that
the Distributor may from time to time agree to permit the Dealer to
offer to the Dealer's clients ("Certificates"). The Dealer and the
Distributor agree to be bound by the terms of this Agreement in
connection with any such offers of Certificates. Each Certificate that
the Distributor may permit the Dealer to offer shall be described in a
Product Exhibit attached hereto, which Product Exhibits may be amended
or supplemented by the Distributor from time to time by mailing a
revised Product Exhibit to the Dealer.
(2) It is the Dealer's responsibility to insure that any investments in
Certificates by its clients are suitable for those clients pursuant to
the applicable suitability requirements of the National Association of
Securities Dealers, Inc. ("NASD") and any state or federal law, as
amended from time to time.
(3) The Dealer agrees that all orders and instructions for Certificates
shall be made by the facilities of the Depository Trust Company
("DTC") or if those facilities are not available for the Certificates
being sold, then in writing on forms acceptable to the Distributor and
the Issuer sent by facsimile, or as the Distributor and the Dealer
otherwise agree; provided however, that the Dealer may accept telex or
telephone purchase instructions from Dealer's clients in accordance
with Section VI (3) hereof. Every order by the Dealer shall be subject
to acceptance or rejection by the Distributor or Issuer in the sole
discretion of either. The Dealer shall handle orders in accordance
with instructions forwarded by the Distributor to the Dealer from time
to time. All such orders and instructions shall comply with time
frames and other requirements of DTC to the extent applicable.
(4) Payment for Certificates ordered by Dealer shall be made in federal
funds or by check or bank wire in U.S. dollars, through DTC if
applicable, and must be received by Distributor by or before the
settlement date of such Certificates or such other settlement period
as then may be required by Rule 15c6-1 under the Securities Exchange
Act of 0000 (xxx "Xxxxxxxx
Xxx"). If, for any reason, payment is not received by Distributor
after the execution of any order by or through Dealer, Distributor
reserves the right, without any notice, to cancel the sale and to hold
Dealer responsible for any loss, including loss of profits, suffered
by Distributor or Issuer resulting from such failure.
(5) Distributor reserves the right in its discretion to suspend sales or
withdraw the offering of any Certificate in whole or in part, without
notice and without incurring any liability or obligation to Dealer.
(6) Upon notice to the Dealer that the Distributor has so suspended sales
or withdrawn an offering, or of the suspension of the effectiveness of
a registration statement or amendment or that a prospectus is not on
file as described below in this Section I (6), Certificates shall not
be offered by the Dealer under any of the provisions of this Agreement
and no order for the purchase or sale of Certificates hereunder shall
be accepted if and so long as the effectiveness of the current
registration statement or any necessary amendments thereto shall be
suspended under any of the provisions of the Securities Act of 1933
(the "Securities Act") or any applicable state securities laws or if
and so long as a current prospectus as required by Section 5(b)(2) of
the Securities Act or any applicable state securities laws is not on
file with the Securities and Exchange Commission (the "SEC") or any
applicable state securities regulator, as the case may be.
(7) The Dealer and its personnel shall not make any representations
concerning a Certificate except those contained in the prospectus
therefor, or the registration statement of the Issuer on Form S-1
relating to the sale of the Certificates, including all exhibits, as
of the effective date of the registration statement or the most recent
post effective amendment thereto (the "Registration Statement").
(8) The Dealer and its personnel shall be responsible for determining the
suitability of each sale, as further described in Section I (2) of
this Agreement, and of any other transaction recommended by the Dealer
to one or more of its clients, and for servicing its client accounts.
Servicing client accounts shall include the following:
i) serving as the primary contact for the Dealer's clients and
prospects regarding Certificates;
ii) receiving from clients and prospects and timely transmitting to
Distributor instructions as to sales, surrenders or withdrawals,
ownership changes (if applicable), term changes (if applicable)
and other actions sought with respect to Certificates;
iii) answering client questions and inquiries regarding Certificates;
iv) determining whether the actions sought by clients concerning
Certificate ownership, transfer, surrender or withdrawal, and the
like are legally permissible or advisable in all applicable
jurisdictions;
v) keeping and maintaining such records as required pursuant to
this agreement or by law;
vi) promptly forwarding to the Dealer's clients who own
Certificates all notices from the Issuer or the Distributor
to such owners, including without limitation notices about
upcoming renewal dates;
vii) sending to the client confirmations of Certificate
transactions as required by law or by the terms of the
Certificate, as described in the applicable prospectus or
otherwise;
viii) sending a current applicable prospectus for a Certificate,
and, if applicable, a flyer containing current rates for the
Certificate ("Rate Flyer") and any other required
supplemental material to a client prior to or at the same
time as the confirmation of a purchase of a Certificate; and
ix) carrying out such other activities and responsibilities as
are described in this Agreement and/or may be agreed to
between the Dealer and Distributor from time to time;
(9) Dealer shall provide to the Distributor or the Issuer a certified copy
of a death certificate of a registered or beneficial owner of a
Certificate, and such other evidence of such death as is reasonably
requested by the Distributor or the Issuer, as a condition precedent
to any obligation of the Distributor or the Issuer to take any action
contingent on the death of such registered or beneficial owner.
II. DISTRIBUTOR'S RESPONSIBILITY
The Distributor shall promptly provide the Dealer with current prospectuses
and other information legally required or reasonably requested by the
Dealer; provided, however, that the Distributor and the Issuer shall not be
obligated to disclose proprietary information, trade secrets or other
confidential information.
III. COMPENSATION
(1) The Distributor shall pay the Dealer and the Dealer accepts in full
payment for its activities hereunder, compensation with respect to
each Certificate as described in the Product Exhibit(s) attached
hereto. Such Product Exhibit(s) may be amended or supplemented by the
Distributor from time to time by mailing a revised Product Exhibit to
the Dealer. The Dealer's placement of an order for Certificates after
the date of mailing of the revised Product Exhibit shall conclusively
evidence Dealer's agreement to the terms of the revised Product
Exhibit.
(2) Chargebacks: If the Issuer, Distributor or a court or other legal
authority cancels or revokes a sale of a Certificate, Dealer shall
repay its compensation to the Distributor.
IV. FURTHER LEGAL COMPLIANCE
(1) This Agreement and any transaction through, or payment to, the Dealer
pursuant to the terms of this Agreement is conditioned on the Dealer's
representation to the Distributor and the Issuer that, as of the date
of this Agreement, the Dealer is, and at all times during its
effectiveness the Dealer will be, a registered broker-dealer under the
Exchange Act and qualified under applicable state securities laws in
each jurisdiction in which the Dealer is required to be qualified to
act as a broker-dealer in securities, and a member in good standing of
the NASD. The Dealer agrees to immediately notify the Distributor and
the Issuer promptly in writing and immediately suspend sales of
Certificates if this representation ceases to be true. The Dealer
agrees that it will comply with the rules of the NASD and applicable
laws.
(2) Upon application by Dealer, the Distributor may furnish the Dealer
information as to any advice received from Distributor's blue sky
agent (currently Clear Sky Corporation) concerning the jurisdictions
in which the Certificates have been qualified for offer or sale or are
exempt under the securities or Blue Sky laws of such jurisdictions.
The Distributor and the Issuer shall have no obligation or
responsibility with respect to the Dealer's right to sell Certificates
in any state or jurisdiction. The Dealer shall not transact orders for
Certificates in states or jurisdictions in which the Distributor or
the Issuer indicates Certificates may not be sold.
(3) Each order that Dealer submits, directly or indirectly, to Distributor
for the purchase of a Certificate shall identify the state or states
of offer and sale of such Certificate and the amount purchased by
customers in each such state who will be the beneficial owners of such
Certificate. If the sale of Certificates to customers in a particular
state would cause the total amount of Certificates sold in such state
to exceed the amount of such Certificates that had been registered in
such state, Distributor will have no obligation to sell such
Certificates to Dealer or its customer. Dealer will indemnify and hold
Distributor harmless against any liabilities (including costs of
investigation and defense) to which Distributor may become subject as
a result of any misrepresentation as to the state of offer and sale to
customers for whom Dealer purchases Certificates.
(4) The Distributor or the Issuer will furnish the Dealer with copies of
the prospectus for each Certificate identified in a Product Exhibit
hereto in reasonable quantities upon the Dealer's request. If a Rate
Flyer or other supplemental materials are required, then upon the
Dealer's request, the Distributor or the Issuer will furnish the
Dealer, at the Distributor or Issuer's option, with either a copy
(which may be an electronic copy) from which the Dealer may make
copies, or with reasonable quantities, of the Rate Flyer. The Dealer
agrees to deliver a copy of the current prospectus and, if a
Rate Flyer is applicable, a copy of the Rate Flyer, in accordance with
the provisions of the Securities Act applicable to prospectus
delivery, to each purchaser of such a Certificate for whom the Dealer
acts as broker or dealer. The Dealer shall file sales literature and
promotional material for such Certificates with the NASD and the SEC
as required; provided, however, that Dealer may not publish or use any
sales literature or promotional materials with respect to Certificates
without the Distributor's prior written consent (but, notwithstanding
such consent, Dealer shall remain solely responsible for any
advertising or sales material it prepared). Dealer agrees to indemnify
and hold Distributor harmless against any liabilities (including costs
of investigation and defense) to which Distributor may be subject in
respect of any such information, advertising or sales material that is
furnished to any person, published or used with or without prior
written consent of Distributor.
V. REPRESENTATIONS AND WARRANTIES
(1) Dealer represents and warrants to Distributor that:
(a) Dealer is a corporation, partnership or other entity duly organized
and validly existing in good standing under the laws of the
jurisdiction in which it is organized, and is qualified to act as a
broker-dealer in the states or other jurisdictions in which it
transacts business.
(b) The execution and delivery of this Agreement and the performance of
the transactions contemplated hereby have been duly authorized by all
necessary action and all other authorizations and approvals (if any)
required for Dealer's lawful execution and delivery of this Agreement
and Dealer's performance hereunder have been obtained.
(c) Upon execution and delivery by it, and assuming due and valid
execution by Distributor, this Agreement will constitute a valid and
binding agreement, enforceable against Dealer in accordance with its
terms.
(d) Dealer is familiar with Rule 15c2-8 under the Exchange Act, Section
4(3) of the Securities Act and Section 24(d) of the Investment Company
Act of 1940 (the "Investment Company Act") relating to the
distribution and delivery of preliminary and final prospectuses and
agrees that it will comply therewith and that it will deliver a
prospectus (and, if applicable, a Rate Flyer and any other required
supplemental materials) to all customers for whom it accepts an order
for purchase of Certificates. Additional copies of the Prospectuses
will be supplied to it as it may reasonably request. Upon Dealer's
receipt from a customer of an order for the purchase of Certificates,
Dealer shall send to the customer a written confirmation of the
transaction that satisfies the requirements of Rule 10b-10 of the
Exchange Act. In addition, upon receipt of payment for Certificates
ordered from Distributor through or by Dealer or upon the renewal of
Certificates
pursuant to the terms of the prospectus, Distributor shall send to the
customer a written confirmation of such transaction; provided,
however, that Distributor shall not send such confirmation to the
customer in such cases where Dealer, DTC, or another intermediary is
the record owner of such Certificates or where the parties have agreed
that Dealer shall send such confirmation to the customer.
(e) Dealer will obtain from each customer to whom it sells Certificates
any taxpayer identification number or other certification required
under Section 1441 or 3406 of the Internal Revenue Code of 1954, as
amended (the "Code"), and the regulations promulgated thereunder, and
comply with applicable tax reporting requirements.
(f) Dealer is a member in good standing of the NASD or, if it is not such
a member, it is a foreign bank or a dealer or institution not eligible
for membership in the NASD which agrees to make no sales within the
United States, including territories or possessions of the United
States, or to persons who are citizens thereof or residents therein,
and in making other sales to comply, as though it were a member of
NASD, with the provisions of Sections 2730, IM-2730, 2740, IM-2740,
2750 and IM-2750 of the Conduct Rules of the NASD and with Section
2420 thereof as that Section applies to a non-NASD member broker or
dealer in a foreign country.
(g) Dealer will undertake to comply with respect to the offering of
Certificates to the public pursuant to this Agreement with all
applicable provisions of the Securities Act, the Exchange Act and the
Investment Company Act and the rules and regulations thereunder and
with the applicable rules of the NASD and the conduct of Dealer's
business in relation thereto and all other applicable laws, including
but not limited to laws, rules and regulations relating to currency
transactions, transporting funds or monetary instruments in or out of
the United States, wire transfers and financial transactions, and
Dealer will indemnify and hold Distributor harmless against any
liabilities (including costs of investigation and defense) to which
Distributor may become subject in respect of Dealer's breach of this
Section V(g).
(h) Certificates will only be offered by Dealer's agents who are
appropriately registered with the NASD and under state securities
laws, as amended from time to time.
(i) If the Certificates sold by Dealer are indexed Certificates, Dealer
agrees that its confirmations and statements to owners of such
certificates will state, if applicable:
i) the maximum return for the term of the Certificate,
ii) the percentage participation in the index for the term of
the Certificate, and
iii) the minimum interest for the term of the Certificate.
Dealer further agrees that its confirmations, statements and other
communications to such owners will not include an indexed value for
the Certificate before the end of the term of the Certificate if the
indexed value depends on the value of the index on the last day of
such term.
VI. MISCELLANEOUS
(1) The Dealer for all purposes herein shall be deemed to be an
independent contractor, and except as expressly provided or authorized
in this Agreement, shall have no authority to act for, represent or
bind the Distributor, the Issuer or its transfer agent.
(2) Any notice to a party under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid to the party to this
Agreement entitled to receive the same:
If to the Distributor:
American Express Financial Advisors Inc.
1818 AXP Financial Center
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Compliance Officer
If to the Dealer:
_________________________
_________________________
_________________________
_________________________
or to such other address as either party may designate by such written
notice to the other.
(3) The Dealer may at its own risk accept telex or telephone purchase,
withdrawal or transfer instructions from its clients in accordance
with the Dealer's internal procedures. All such instructions shall
nevertheless be communicated in written form to the Distributor and
shall be subject to acceptance or rejection by the Distributor or the
Issuer. In the event that the facilities of DTC are not available, all
communication with the Distributor shall be in writing sent by US
Mail, courier, or facsimile.
(4) Distributor may modify this Agreement at any time by written notice to
you. The first order placed by Dealer subsequent to the giving of such
notice shall be deemed acceptance by Dealer of the modification
described in such notice.
(5) This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only
one Agreement.
(6) All references in this Agreement to the prospectus refer to the then
current version of the relevant prospectus and include any stickers or
supplements thereto.
(7) Each party acknowledges that the names, addresses and other
information concerning their respective customers are and shall remain
the sole property of such party, and neither party or any affiliate
shall use such names, addresses or other information concerning the
other party's customers for any purpose except in connection with the
performance of its respective duties and responsibilities hereunder
and except for servicing and informational mailings relating to the
Certificates. Notwithstanding the foregoing, this paragraph VI (7)
shall not prohibit either party or its affiliates from utilizing for
any purpose the names, addresses or other information concerning any
of the other party's customer names, addresses or other information if
such information is obtained in any manner other than from each other
pursuant to this Agreement. The provisions of this paragraph (7) shall
survive the termination of this Agreement.
VII. INDEMNIFICATION
(1) The Dealer shall reimburse or indemnify, defend and hold harmless the
Distributor, the Issuer and their affiliates from and against any and
all claims, demands, actions, losses, damages, costs and expenses
(including reasonable attorneys' fees) arising out of or relating to
(1) any breach by Dealer or Issuer of any term, condition,
representation or warranty, covenant or provision contained in this
Agreement; (2) any violation of any law, rule or regulation by Dealer;
and (3) Dealer's negligence or willful misconduct. The Distributor and
the Issuer may offset any such claims, demands, actions, losses,
damages, costs and expenses against any amounts due to the Dealer
hereunder.
(2) The Distributor shall reimburse or indemnify, defend and hold harmless
Dealer from and against any and all claims, demands, actions, losses,
damages, costs and expenses (including reasonable attorney's fees)
arising out of or relating to (1) any inaccuracy or omission in any
prospectus for any Certificate or the registration statement of the
Issuer relating to the sale of the Certificates, including all
exhibits, as of the effective date of the registration statement or
the most recent post-effective amendment thereto, or any annual report
or proxy statement of the Issuer for any Certificate or any
advertising or promotional material for the Certificate prepared by
Distributor or Issuer or its affiliates or agents; (2)
any breach by Distributor or Issuer of any term, condition,
representation, warranty, covenant or provision contained in this
Agreement; (3) any violation of any law, rule or regulation by
Distributor or Issuer; and (4) Distributor or Issuer's negligence or
willful misconduct.
(3) Neither party shall have any obligation of indemnity to the extent
said claim, demand, action, loss, damage, cost or expense is caused by
an act or omission of the other party. Each party shall use its best
efforts to mitigate all costs and expenses. Additionally, each party
acknowledges and agrees that the other party's obligation of indemnity
or reimbursement, if any, shall be limited to actual damages. In no
event shall either party be liable, in any manner whatsoever, for
consequential, incidental, special or punitive damages.
VIII. TERMINATION
(1) This Agreement shall remain in effect beginning upon the Effective
Date, until such time it is terminated in accordance with this
Section.
(2) This Agreement may be terminated without penalty by either the
Distributor or the Dealer at any time whether prior to, at or after
the date hereof by giving the other party at least sixty (60) days'
prior written notice of such intention to terminate.
(3) This Agreement will terminate automatically in the event of its
assignment (as defined in the Investment Company Act of 1940).
IX. REPRESENTATIONS TO SURVIVE
The provisions of Sections IV (2), IV (3), V and VII of this Agreement
shall survive the offer and sale of the Certificates, to the extent
permitted by law, and the termination and cancellation of this agreement.
X. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota, without giving effect to principles of
conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
AMERICAN EXPRESS FINANCIAL ADVISORS INC. SECURITIES AMERICA INC.
Distributor Dealer
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxx Xxxx
------------------- ----------------------------
Xxxxxxx Xxxxxxx Xxxxx Xxxx
Title: Vice President Title: President
Date: August 21, 2000 Date: September 15, 2000
Product Exhibit
American Express Equity Indexed Savings Certificate
Effective as of July 31, 2000
1. Pursuant to Section I (1) of the Selling Dealer Agreement, dated as of
July 31, 2000, the Dealer may offer American Express Equity Indexed
Savings Certificates ("Indexed Certificates"), which Indexed
Certificates bear interest that may be tied in whole or in part to any
upward movement in a stock market index.
2. The Dealer shall be compensated as follows on the basis of the
principal amount of the Indexed Certificates, if the client has
purchased an Indexed Certificate through the Dealer and has not
designated another selling dealer, distributor or servicing agent for
the account, or if the client has designated the Dealer as selling
dealer or servicing dealer for the account, or if the Distributor, the
Issuer and the Agent agree in writing that the Agent should be
compensated with regard to the client's Indexed Certificate account.
The Dealer shall receive a sales commission equal to .65% per term of
the principal amount of each such Indexed Certificate. Dealer shall
receive additional compensation equal to .20% per term of the principal
amount of each such Indexed Certificate. Such additional compensation
shall be for payment or reimbursement of ticket charges or other fees
charged by transfer agents or others to the Dealer, and for selling,
promotional and client servicing activities. For the purposes of this
Product Exhibit, "principal amount" shall be equal to the amount
invested, plus additional investments and interest when credited to the
account but less withdrawals and penalties.
Provided, however, that no payment shall be made to the Dealer, or to
any other selling dealer or distributor (except the Distributor) with
whom the Distributor or the Issuer has a selling dealer or distribution
agreement, of compensation as to which the Distributor or the Issuer
has actually received at its principal office written notice of a
competing claim to such compensation from the Dealer or such a selling
dealer or distributor, until the parties disputing the payment resolve
their dispute or such payment is ordered by a court, panel of
arbitrators, or similar authority with jurisdiction over the matter.
The Dealer shall be paid upon commencement of a term of the Indexed
Certificates as described in the applicable prospectus.
3. The compensation payable to the Dealer for terms other than an initial
term of an Indexed Certificate beginning during any given calendar
month shall be aggregated and paid to the Dealer in a lump sum within
15 days after each calendar month end. The Dealer may withhold the
compensation from the amount transmitted to the Distributor upon the
sale of an Indexed Certificates.
