SELLING AGREEMENT
FOR
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
This SELLING AGREEMENT ("Agreement") is entered into as of May 15, 2000
("Effective Date") by and between American Enterprise Life Insurance Company
("Company"), American Express Financial Advisors Inc. ("Distributor", together
with Company, "American Express"), and First Union Brokerage Services, Inc.,
("Broker-Dealer"), First Union Mortgage Corporation and affiliated insurance
agencies identified on Exhibit A who have also executed this Agreement or an
Affiliate Participation Agreement (each an "Agency").
Recitals
The purpose of this Agreement is to establish the terms and conditions under
which Broker-Dealer and Agency (referred to and defined further in Section 1.1
herein as "Authorized Selling Firm") will market and sell Company's variable
annuity and/or variable life insurance products. American Express and Authorized
Selling Firm intend that Authorized Selling Firm will be responsible for
managing and supervising the marketing and sales of Company's variable annuity
and/or variable life insurance products by its Producers pursuant to this
Agreement.
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
1.1 "Authorized Selling Firm" means the Broker-Dealer taken together with
the Agency or Agencies, with respect to the sale of Products under this
Agreement, in accordance with the terms and conditions of the SEC
no-action letter First of America Brokerage Service, Inc. (dated
September 28, 1995).
1.2 "Broker-Dealer" is an entity duly registered as a broker-dealer with
the Securities and Exchange Commission ("SEC"), the National
Association of Securities Dealers ("NASD"), and states where required.
1.3 "Company Rules" mean any written instructions, bulletins, manuals,
training materials, and any underwriting or suitability guidelines
provided to Authorized Selling Firm by the Company that directly relate
to the marketing and selling of Company's variable annuity or variable
life insurance products under this Agreement.
1.4 "Producer" is a duly licensed individual who sells Products as an
employee or independent contractor of Agency and who is appropriately
registered with the NASD and licensed and appointed in accordance with
all applicable insurance laws.
1.5 "Products" are those variable annuity and/or life insurance products
issued by Company which will be marketed or sold by Agency,
Broker-Dealer and their Producers under this Agreement, and which are
set forth in the Product Exhibit(s) attached hereto.
1.6 "Replacement" is the sale of a Product which is funded by the purchaser
with money obtained from the liquidation of another life insurance
policy or annuity contract, either of which was previously issued
either by Company or by any other life insurance company.
1.7 "Agency" is an insurance agency licensed in one or more states, and
affiliated with Broker-Dealer by ownership or contract with respect to
the sale of Products under this Agreement. Broker-Dealer may also act
as "Agency".
1.8 "Territory" may be any 48 of the 50 United States (all states other
than New York and New Hampshire), and the District of Columbia, but
includes only those jurisdictions in which Agency is authorized to
market and sell the Products under this Agreement, as shown on each of
the Product Exhibits attached and, as updated from time to time.
1.9 "Contract" is the variable annuity or variable life insurance policy
validly issued by Company to a purchaser meeting underwriting standards
of the Company.
2. TERM OF AGREEMENT. This Agreement shall remain in effect beginning upon the
Effective Date, until such time it is terminated pursuant to Section 9,
"Termination."
3. APPOINTMENT AND AUTHORIZATION OF AGENCY AND BROKER-DEALER.
3.1 Appointment and Authorization of Agency and Broker-Dealer. Company and
Distributor hereby appoint Agency and hereby authorize Broker-Dealer to
solicit sales of and sell Products in accordance with the terms and
conditions of this Agreement as an Authorized Selling Firm, and Agency
and Broker-Dealer hereby accept the appointment and authorization.
These two appointments, taken together, constitute the appointment of
Authorized Selling Firm. Authorized Selling Firm's authority will be
nonexclusive, and will be limited to the performance of the services
and responsibilities set forth in this Agreement.
4. DUTIES, OBLIGATIONS AND LIMITATIONS OF AUTHORIZED SELLING FIRM. Commencing
on the Effective Date, Authorized Selling Firm will faithfully perform all
of Authorized Selling Firm's duties within the scope of the agency
relationship created under this Agreement to the best of Authorized Selling
Firm's knowledge, skill and judgment. As Authorized Selling Firm, Agency
and Broker-Dealer shall be jointly and severally responsible and liable to
American Express for the faithful performance of all obligations and duties
except those which this Agreement specifically identifies as duties of
Broker-Dealer. Authorized Selling Firm's duties shall include, but not be
limited to the following:
4.1 Recruitment of Producers. Authorized Selling Firm may recruit Producers
to sell under the supervision of Authorized Selling Firm. A Producer so
recruited may not solicit or sell Products prior to acquiring any
required state insurance license(s) in the state(s) where such Producer
will solicit and sell Products, being registered with the NASD as a
representative of the Broker-Dealer, being appointed by Company as an
agent, and completing the training described in Section 4.4.11.
4.2 Licensing, Registration and Appointment of Agency and Producers. Agency
shall be responsible for the preparation and submission of proper
licensing forms and the assurance that all Producers recruited by
Authorized Selling Firm are appropriately licensed as insurance agents
in the state(s) where such Producers will solicit and sell Products.
Broker-Dealer shall be responsible for the preparation and submission
to the NASD of proper representative registration forms and the
assurance that all Producers are and remain registered as
representatives of Broker-Dealer with the NASD. Authorized Selling Firm
shall recommend Producers for appointment with Company, but Company
shall retain sole authority to make appointments and may, by written
notice to Authorized Selling Firm, refuse to permit any Producer to
solicit contracts for the sale of the Products. Company shall be
responsible for the preparation and submission of proper appointment
forms and the payment of appointment fees in those states that require
the Company to appoint Producers.
4.3 Compliance with Company Policies and Applicable Laws. Authorized
Selling Firm will comply with all Company Rules and with all applicable
federal and state laws and regulations.
4.4 Supervision and Administration. Authorized Selling Firm shall have
full, joint and several responsibility for the training and supervision
of all of its Producers who are engaged directly or indirectly in the
offer or sale of the Products, and all such Producers shall be subject
to the control of Authorized Selling Firm with respect to their
securities and insurance regulated activities in connection with the
Products. Authorized Selling Firm shall be responsible for all acts or
omissions of Producers. Agency's supervisory and administrative
responsibilities include, but are not limited to:
4.4.1 ensuring that Producers comply with Company Rules and all
federal and state laws and regulations applicable to the
Products;
4.4.2 ensuring that Producers comply with all terms of the Agreement
in soliciting, selling and providing service for Products;
4.4.3 supplying sales literature and application forms approved by
Company to Producers;
4.4.4 assisting Producers in responding to customer inquiries;
4.4.5 promptly delivering to Producers relevant Company
communications and Company Rules concerning Products, such as
changes in rates, regulatory notices or new Product
announcements;
4.4.6 on all Replacement sales, ensuring that Producers provide
Product applicants sufficient information and disclosures to
ensure the suitability of the Replacement sale. Such
information includes that which is required by the rules of
the NASD and any state insurance authority but is not limited
to:
(a) all fees, expenses and possible charges, such as surrender
charges, on both the new and the surrendered investments;
(b) any change in the investment risk to the Product
applicant;
(c) any change in the nature or the provider of any guarantees
associated with the Product and/or the surrendered product;
All such information will be retained by Agency for seven
years from the date of the completion and signature of any
application, and will be made available to Company as is shown
in Section 4.8, "Accurate Record; Audit," herein
4.4.7 notifying Company if any Agency or Producer fails to maintain
the required state insurance license or becomes inactive;
4.4.8 promptly informing Company of any violation of law or Company
Rules by Authorized Selling Firm or Producer, or of any
allegation by Contract holder or regulatory agency of
wrongdoing as regards the activities of Authorized Selling
Firm, or a Producer with respect to the Products; and
4.4.9 any other duties necessary or appropriate to perform
Authorized Selling Firm's obligations under this Agreement.
4.4.10 Broker-Dealer will fully comply with and will ensure Agency's
and Producers' compliance with the requirements of the NASD,
the SEC and all other applicable federal and state laws, and,
with Agency, will establish and maintain such rules and
procedures as may be necessary to cause diligent supervision
of the securities activities of Agency and Producers.
Broker-Dealer's duties with respect to Agency and Producers'
securities activities, include, but are not limited to:
(a) delivering to each person submitting an application a
prospectus for the Product to be furnished by American
Express in the form required by the applicable federal
laws or by the acts or statutes of any applicable state,
province or country;
(b) reviewing all Product applications for accuracy and
completeness, and to determine the suitability of the
sale, which includes reasonable efforts to obtain
information concerning the applicant's financial and tax
status, investment objectives and any other information
used or considered reasonable in making a Product
recommendation;
(c) complying with all applicable requirements of the
Securities Exchange Act of 1934 ("1934 Act") and the NASD,
including the requirements to maintain and preserve books
and records pursuant to Section 17(a) of the 1934 Act and
the rules thereunder and making such records and files
available to staff of American Express and personnel of
state insurance departments, the NASD, SEC or other
regulatory agencies which have authority over American
Express.
4.4.11 Authorized Selling Firm shall be responsible for ensuring
that their Producers who market and sell the Products are
trained on (i) the product specifications and features, (ii)
all Company Rules and other requirements communicated to
Authorized Selling Firm that American Express has adopted to
satisfy insurance laws and regulations regarding
replacements, and (iii) standards that American Express has
established for and communicated to Authorized Selling Firms
and their Producers to use in meeting their respective
duties to ensure suitable sales of the Products before they
begin to solicit or sell Products. If Authorized Selling
Firm chooses not to use Company-provided materials in
training their Representatives on (i), (ii) and (iii) above,
then Authorized Selling Firm shall provide to American
Express, for approval, documentation of its own form and
content of training to be used, prior to the execution of
this Agreement.
After the execution of this Agreement, to the extent that
Authorized Selling Firm uses training material related to the
sale of the Products that is materially different from that
contained in the Company-provided training material,
Authorized Selling Firm must provide that training material to
American Express for approval prior to use. Authorized Selling
Firm shall also be responsible for assuring that its Producers
comply with all Company-provided materials, and with 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, in selling
the Products.
4.5 Collection and Submission of Premiums. American Express and Authorized
Selling Firm agree that Authorized Selling Firm will assure its
Producers' collection and timely remittance of premiums received from
the sale of Products. All premiums associated with sales of variable
life insurance policies will be remitted using the Check with
Application method described below. Generally, five methods of
collection and remittance are available for variable annuity sales.
Authorized Selling Firm will decide which of the methods listed below
it will employ for variable annuity sales.
4.5.1 Check with Application: in which the premium is paid in a
check from the applicant payable to Company.
4.5.2 Gross Sweep: in which the premium will be deposited into a
Company-owned account. Company, upon notification of a sale,
will deposit the premium into its own premium receipt account.
4.5.3 Gross ACH Through Clearing Broker: in which the Authorized
Selling Firm contracts with a Clearing Broker to transfer and
clear funds from sales (the "Clearing Broker"). The Clearing
Broker will remit the entire premium to Company using the ACH
transfer facility available to financial institutions. If this
method is chosen, then Section 7.1.4 is applicable.
4.5.4 Net Wire: in which the Authorized Selling Firm transfers and
clears premiums from sales, retaining its commission and
forwarding the net amount only to Company.
4.5.5 Net Wire Through Clearing Broker: in which the Authorized
Selling Firm contracts with a Clearing Broker to transfer and
clear funds from sales (the "Clearing Broker"). The Clearing
Broker remits the premium (net of commissions) to Company, and
remits the remaining portion of the premium (commission) to
Agency. If this method is chosen, then Section 7.1.4 is
applicable.
4.6 Solicitation. Authorized Selling Firm, through Producers, will solicit
applicants who appear to meet Company's and Distributor's underwriting
and suitability standards, provided that nothing in this Agreement
shall be deemed to require Authorized Selling Firm to solicit any
particular customer's application for an annuity.
4.7 Company Property. Authorized Selling Firm will safeguard, maintain and
account for all policies, forms, manuals, equipment, supplies,
advertising and sales literature furnished to Authorized Selling Firm
and Producers by American Express and will destroy or return the same
to American Express promptly upon request.
4.8 Accurate Record; Audit. As required by applicable laws and Company's
policies and procedures, Authorized Selling Firm will keep identifiable
and accurate records and accounts of all business and transactions
effected pursuant to this Agreement. Upon reasonable notice and at
reasonable times, continuing during a period of one year following the
termination of this Agreement, Authorized Selling Firm will permit
American Express to visit, inspect, examine, audit and verify, at
Authorized Selling Firms offices or elsewhere, any of the properties,
accounts, files, documents, books, reports, work papers and other
records belonging to or in the possession or control of Authorized
Selling Firm relating to the business covered by this Agreement, and to
make copies thereof and extracts therefrom, provided that such audit
shall not unreasonably interfere with Authorized Selling Firm's normal
course of business.
4.9 Approved Advertising. No sales promotions, promotional materials, or
any advertising relating to Products or Company or Distributor ("Sales
Material") shall be used by Authorized Selling Firm or Producers unless
the specific item has been approved in writing by Company and/or
Distributor before use. Any promotional material developed by
Authorized Selling Firm will become the sole property of Company and/or
Distributor once approved. Any modification of the promotional
materials to enable the use of such in a financial institution setting
must also be approved in accordance with this section.
4.10 Fidelity Bond. Authorized Selling Firm represents and warrants that all
directors, officers, employees and representatives of Agency who are
appointed pursuant to this Agreement as Producers for Company or who
have access to funds of Company, including but not limited to funds
submitted with applications for Products or funds being returned to
owners, are and shall be covered by a blanket fidelity bond, including
coverage for larceny and embezzlement, issued by a reputable bonding
company acceptable to Company. Broker-Dealer shall maintain the bond at
Broker-Dealer and/or Agency's expense. Company may require evidence,
satisfactory to it, that such coverage is in force. Authorized Selling
Firm shall give prompt written notice to Company of cancellation or
change of coverage.
4.11 Limitations. Authorized Selling Firm shall have no authority with
respect to American Express, nor shall it represent itself as having
such authority, other than as is specifically set forth in this
Agreement. Without limiting the foregoing, neither Agency nor
Broker-Dealer shall, without the express written consent of Company
and/or Distributor, as applicable:
4.11.1 make, waive, alter or change any term, rate or condition
stated in any Company Contract or Company or Distributor
approved form, or discharge any Contract in the name of
Company;
4.11.2 waive a forfeiture;
4.11.3 extend the time for the payment of premiums or other monies
due Company;
4.11.4 institute, prosecute or maintain any legal proceedings on
behalf of Company or Distributor in connection with any matter
pertaining to Company's business, nor accept service of
process on behalf of Company or Distributor;
4.11.5 transact business in contravention of the rules and
regulations of any insurance department and/or other
governmental authorities having jurisdiction over any subject
matter embraced by this Agreement;
4.11.6 make, accept or endorse notes, or endorse checks payable to
Company or Distributor, or otherwise incur any expense or
liability on behalf of Company or Distributor;
4.11.7 offer to pay or pay, directly or indirectly, any rebate of
premium or any other inducement not specified in the Products
to any Contract holder;
4.11.8 misrepresent the Products for the purpose of inducing a
Contract holder in any other company to lapse, forfeit or
surrender his/her insurance therewith;
4.11.9 give or offer to give any advice or opinion regarding the
taxation of any customer's income or estate in connection with
the purchase of any Product;
4.11.10 enter into an agreement with any person or entity to market or
sell the Products without the written consent of Company and
Distributor;
4.11.11 use Company's or Distributor's names, logos, trademarks,
service marks or any other proprietary designation without the
prior written permission of Company; or
4.11.12 engage in any program designed to replace Products with any
variable annuity or variable life insurance products of other
companies, at any time while this Agreement is in force; or
provide data to any other person or organization which would
allow or facilitate such replacement of Company's Products.
Nothing herein shall preclude the replacement of Company's
fixed annuity products with Company's own variable annuity or
variable insurance products, so long as such sales are
suitable and documented according to Section 4.4.6,
Replacement Sales. (See also Section 9.3, Post Termination
Limitations, and Section 11, Confidentiality, generally.)
5. COMPANY AND DISTRIBUTOR REPRESENTATIONS AND RESPONSIBILITIES.
5.1 Representations.
5.1.1 Company represents and warrants that (a) it is duly
incorporated in the State of Indiana and licensed in all
states in the Territory; (b) that all Products, and all Sales
Material (as defined in Section 4.9, above) provided by
Company or Distributor have been filed and approved as
required by state insurance departments shown in the Product
Exhibit(s); and (c) that these materials comply with all
applicable laws and regulations and rules of the NASD.
5.1.2 Distributor represents and warrants that it is duly registered
as a broker-dealer with the SEC, the NASD, all fifty states
and the District of Columbia, and is qualified to do business
in all states in which Company is licensed and qualified to do
business.
5.1.3 Distributor and Company represent and warrant that Company, as
issuer and on behalf of the underlying investment account(s),
has registered the underlying investment account(s) of the
Products with the SEC as a security under the Securities Act
of 1933 ("1933 Act") and as a unit investment trust under the
Investment Company Act of 1940.
5.1.4 Company represents and warrants that the prospectuses and
registration statements relating to the Products do not
contain any untrue statements of material fact or any omission
to state a material fact, the omission of which makes any
statement contained in the prospectuses and registration
statements misleading.
5.2 Prospectuses, Sales Literature and Advertising. American Express will
provide to Authorized Selling Firm, without any expense to Authorized
Selling Firm, prospectuses for the Products and such other Sales
Material (as defined is Section 4.9, above) as American Express
determines is necessary or desirable for use in connection with sales
of the Products.
5.3 Transmission of Contracts for Delivery to Contract Owners. Company will
transmit variable annuity contracts directly to Contract holders.
Variable life insurance policies will be transmitted to Producers for
delivery to Contract holders.
5.4 Confirmations. Upon Company's acceptance of any payment for a Product,
Company as agent for Distributor will deliver to each contract owner a
statement confirming the transaction in accordance with Rule 10b-10
under the 1934 Act.
5.5 Contract Holder Services. Company shall provide administrative,
accounting and other services to Contract holders as necessary and
appropriate, in the same manner as such services are provided to
Company's other Contract holders.
5.6 Reservation of Rights. Notwithstanding any other provision of this
Agreement or any other agreement between Company and/or Distributor and
Agency and/or Broker-Dealer, Company reserves the unconditional right
to modify any of the Products in any respect whatsoever or to suspend
the sale of any Products in whole or in part at any time and without
prior notice. Company reserves the unconditional rights to refuse to
accept applications procured by Authorized Selling Firm or Producers
which fail to meet underwriting or other standards of Company.
5.7 Company Rules. American Express shall provide Authorized Selling Firm
with Company Rules as soon as is practicable. Company and Distributor
shall provide all revisions, modifications and replacements of such
Company Rules to Authorized Selling Firm promptly after issuance by
Company and/or Distributor.
5.8 Compliance with Applicable Laws. Company will comply with all
applicable federal and state laws and regulations.
6. COMPENSATION. Company shall pay a total compensation on premiums collected
pursuant to this Agreement based on the rates of commission set forth on
the attached Product Exhibit(s). No compensation will be paid on the sale
of a product under this Agreement if that sale involves replacement of an
asset or investment issued by Company or by another insurance company owned
or controlled by American Express Company. The Product Exhibit(s) included
in this Agreement are subject to change by Company at anytime, but only
upon written notice to Agency. No such change shall affect compensation for
any Products(s) sold whose applications are received by Company in
Minneapolis, MN prior to effective date of such change.
6.1 Product Exhibits. Any Product Exhibit(s) included in this Agreement or
subsequently made a part hereof may provide other or additional
conditions regarding compensation and, if so, will be controlling to
the extent of such other or additional conditions.
6.2 Expenses. Except as otherwise provided in this Agreement, or
subsequently agreed to in writing by American Express, Authorized
Selling Firm will be responsible for all costs and expenses of any kind
and nature incurred by Authorized Selling Firm in the performance of
its duties under this Agreement.
6.3 For Cause Termination Compensation Obligations. In the event of
termination of this Agreement for one or more of the reasons specified
below in Section 9.1, Termination for Cause, no further compensation
shall thereafter be payable.
6.4 Post Termination Compensation Obligations. Upon termination of this
Agreement, Company's obligation to pay compensation to Agency or
Producers shall immediately cease except that:
6.4.1 Company will pay compensation, as the same become due and
payable, upon Products for which the application has been
taken and the required premium has been collected (or has
become irrevocably collectable from a third party) as of the
date of termination, and for which the Company subsequently
issues a policy.
6.4.2 Company will charge back against those commissions due
identified in Product Exhibit(s) in the event of surrenders of
Products sold prior to the termination of this Agreement by
Authorized Selling Firm or Producers. Company will invoice
Agency unless Company and Agency agree upon another method of
payment of such amounts.
6.4.3 Subject to Section 6.4.1, above, Company will pay Supplemental
Trail Commissions as set forth in and as provided by any
Product Exhibit in effect as of the time of the effective date
of termination of this Agreement.
6.5 Compensation Limitations. Agency will not pay or share commissions with
any person or entity that is not appropriately licensed and/or
appointed to sell Products, if such action would violate any applicable
law, rule, or regulation.
6.6 Advance Commissions on IRS Section 2-1035 Exchanges. Company will
advance commissions monthly, in accordance to the Base Commission
schedules identified in the variable annuity Product Exhibit(s), based
on premium expected to be deposited with Company to effect an IRS
Section 2-1035 exchange of one investment product for a variable
annuity product sold under this Agreement. In the event that the
expected premium does not reach Company within 90 days of the date of
the contract application, the entire commission for the transaction
will be charged back during the next normal commission cycle.
7. INDEMNIFICATION.
7.1 Indemnification of Company and Distributor. Authorized Selling Firm
shall indemnify, defend and hold harmless American Express and any of
its officers, directors and employees, from and against any and all
losses, claims, damages, liabilities, actions, costs or expenses to
which American Express, or any of its officers, directors and
employees, may become subject (including any reasonable legal or other
reasonable expenses incurred by it in connection with investigating any
claim against it and defending any action and, provided Authorized
Selling Firm will have given prior written approval of such settlement
or compromise, which consent will not be unreasonably withheld or
delayed, any amounts paid in settlement or compromise) insofar as such
losses, claims, damages, liabilities, actions, costs or expenses arise
out of or are based upon:
7.1.1 The acts or omissions of Authorized Selling Firm or any of its
employees, agents or Producers while acting (whether under
actual or apparent authority, or otherwise) on behalf of
Authorized Selling Firm or American Express in connection with
this Agreement;
7.1.2 Any breach of any covenant or agreement made by Authorized
Selling Firm under this Agreement; or
7.1.3 The inaccuracy or breach of any representation or warranty made
by Authorized Selling Firm under this Agreement.
7.1.4 The acts or omissions of the Clearing Broker or any employee or
agent of Clearing Broker while performing the activities
covered by this Agreement. The indemnity obligation of this
paragraph will extend to any regulatory penalties incurred by
Company as a result of said activities.
This indemnification obligation shall not apply to the extent
that such alleged act or omission is attributable to American
Express either because (1) American Express directed the act or
omission, or (2) the act or omission by Authorized Selling Firm
or any of its employees, agents or Producers was the result of
their compliance with the Company Rules.
7.2 Indemnification of Agency and Broker-Dealer. American Express shall
indemnify, defend and hold harmless Authorized Selling Firm, any of its
officers, directors and employees, from and against any and all losses,
claims, damages, liabilities, actions, costs or expenses to which
Authorized Selling Firm, or any of its officers, directors and
employees, may become subject (including any reasonable legal or other
reasonable expenses incurred by it in connection with investigating any
claim against it and defending any action and, provided American
Express will have given prior written approval of such settlement or
compromise, which consent will not be unreasonably withheld or delayed,
any amounts paid in settlement or compromise) insofar as such losses,
claims, damages, liabilities, actions, costs or expenses arise out of
or are based upon:
7.2.1 The acts or omissions of American Express, or any employee or
agent of American Express, (excluding Authorized Selling Firm
or Producers) while acting (whether under actual or apparent
authority or otherwise) on behalf of American Express in
connection with this Agreement;
7.2.2 Any breach of any covenant or agreement made by American
Express under this Agreement; or
7.2.3 The inaccuracy or breach of any representation or warranty
made by American Express under this Agreement.
7.3 Limitation of Liability. Except as expressly stated herein, as between
the parties, in no event will any party to this Agreement be
responsible to any other party for any incidental, indirect,
consequential, punitive, or exemplary damages of any kind arising from
this Agreement, including without limitation, lost revenues, loss of
profits or loss of business. The parties agree that the losses and
damages arising under and/or covered by Section 7.1 and 7.2 shall be
subject to this limitation.
8. ARBITRATION. The parties agree to attempt to settle any misunderstandings
or disputes arising out of this Agreement through consultation and
negotiation in good faith and a spirit of mutual cooperation. However, if
those attempts fail, the parties agree that any misunderstandings or
disputes arising from this Agreement will be decided by arbitration which
will be conducted, upon request of either party, before three arbitrators
(unless both parties agree on one arbitrator) designated by the American
Arbitration Association located in the city of Company's principal place of
business. The parties further agree that the arbitrator(s) will decide
which party must bear the expenses of the arbitration. This agreement to
arbitrate shall not preclude either party from obtaining provisional
remedies such as injunctive relief or the appointment of a receiver from a
court having jurisdiction, before, during or after the pendency of the
arbitration. The institution and maintenance of such provisional remedies
shall not constitute a waiver of the right of a party to submit a dispute
to arbitration.
9. TERMINATION.
9.1 Termination for Cause. At any time during the Term of this Agreement,
American Express or Authorized Selling Firm may terminate this
Agreement immediately for cause upon written notice of such termination
to the other party. Such written notice shall state the cause with
specificity. As used in this Section, the term "cause" shall include
any one or more of the following:
9.1.1 the conviction of any party, its officers or supervisory
personnel of any felony, of fraud, or of any crime involving
dishonesty;
9.1.2 the intentional misappropriation by a party of funds or
property of any other party, or of funds received for it or
for annuity Contract holders;
9.1.3 the cancellation, or the refusal to renew by the issuing
insurance regulatory authority of, any license, certificate or
other regulatory approval required in order for any party to
perform its duties under this Agreement;
9.1.4 any action by a regulatory authority with jurisdiction over
the activities of a party that would place the party in
receivership or conservatorship or otherwise substantially
interfere or prevent such party from continuing to engage in
the lines of business relevant to the subject matter hereof;
or
9.1.5 a party becoming a debtor in bankruptcy (whether voluntary or
involuntary) or the subject of an insolvency proceeding.
9.2 Termination without Cause. American Express or Authorized Selling Firm
may terminate this Agreement without cause upon 30 days prior written
notice to the other parties.
9.3 Post Termination Limitation. For a period of one year after termination
of this Agreement, Authorized Selling Firm and Producers shall not
knowingly induce or cause, or attempt to induce or cause, any concerted
or organized effort to recommend, promote, encourage or endorse the
termination, surrender, or cancellation of any Product sold pursuant to
this Agreement.
10. INDEPENDENT CONTRACTOR. This Agreement is not a contract of employment.
Nothing contained in this Agreement shall be construed or deemed to create
the relationship of joint venture, partnership, or employer and employee
between American Express and Authorized Selling Firm. Each party is an
independent contractor and shall be free, subject to the terms and
conditions of this Agreement, to exercise judgment and discretion with
regard to the conduct of business.
11. CONFIDENTIALITY.
11.1 Each party agrees that, during the term of this Agreement and at all
times thereafter, it will not disclose to any unaffiliated person,
firm, corporation or other entity, nor use for its own account, any of
the other parties' trade secrets or confidential information,
including, without limitation, the terms of this Agreement; non-public
program materials; member or customer lists; proprietary information;
information as to the other party's business methods, operations or
affairs, or the processes and systems used in its operations and
affairs, or the processes and systems used in any aspect of the
operation of its business; all whether now known or subsequently
learned by it. If this Agreement is terminated, each party, within 60
days after such termination, will return to the other parties,
respectively, any and all copies, in whatever form or medium, of any
material disclosing any of the other parties' trade secrets or
confidential information as described above.
Nothing in this Agreement shall require a party to keep confidential
any information that:
11.1.1 the party can prove was known to it prior to any disclosure by
any other party;
11.1.2 is or becomes publicly available through no fault of the
party;
11.1.3 the party can prove was independently developed by it outside
the scope of this Agreement and with no access to any
confidential or proprietary information of any other party;
11.1.4 is required to be disclosed to governmental regulators or
pursuant to judicial or administrative process or subpoena;
11.1.5 is required in order to perform that party's obligation
under this Agreement;
11.1.6 is required to be disclosed by any applicable law; or
11.1.7 is mutually agreed upon by all parties to this Agreement.
11.2 In the event Authorized Selling Firm during the term of this Agreement
and for a period of one year after the effective date of its
termination, engages in a concerted effort to promote, recommend or
encourage the termination, surrender, or cancellation of any Product
sold under this Agreement, without reasonable grounds to believe that
such termination, cancellation or surrender is in each individual
customer's best interest, then American Express will have the right to
contact present and former purchasers of the Products sold under this
Agreement with a view to retaining the assets in their accounts with
Company, without being found in violation of this Section 11.
12. ASSIGNMENT. The parties to this Agreement may not assign, either wholly
or partially, this Agreement or any of the benefits accrued or to accrue
under it, or subcontract their interests or obligations under this
Agreement, without the written approval of all parties.
13. AMENDMENT OF AGREEMENT. American Express reserves the right to amend this
Agreement at any time, but no amendment shall be effective until approved
in writing by Authorized Selling Firm, subject to the provisions of
Section 5.6, "Reservation of Rights," Section 6, "Compensation" and
Section 12, "Assignment," in this Agreement. Any affiliated insurance
agency signing below or which has executed an Affiliate Participation
Agreement acknowledges and agrees that Agency shall be authorized to
execute any amendment to this Agreement, including all Exhibits, Addenda,
Schedules and Product Exhibit(s), on its behalf, and that such execution
will be binding upon it.
14. MISCELLANEOUS.
14.1 Applicable Law. This Agreement shall be governed by and interpreted
under the laws of the State of Minnesota.
14.2 Severability. Should any part of this Agreement be declared
invalid, the remainder of this Agreement shall remain in full force
and effect, as if the Agreement had originally been executed
without the invalid provisions.
14.3 Notice. Any notice hereunder shall be in writing and shall be
deemed to have been duly given if sent by certified or registered
mail, postage prepaid, or via a national courier service with the
capacity to track its shipments, to the following addresses:
If to Company: If to Distributor:
American Enterprise Life Insurance Company American Express Financial Advisors Inc.
00 Xxxxx 0xx Xxxxxx 00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Attn: Compliance Officer (Unit 1818) Attn: Compliance Officer (Unit 1818)
If to Agency: If to Broker-Dealer:
First Union Insurance Group First Union Securities Inc.
000 X. Xxxxx Xxxxxx 000 X. Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000 Xxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxxx, VP Annuity Products Attn: Xxxxx Xxxxxxxxx, VP Annuity Products
14.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns, subject to the provisions of this Agreement limiting
assignment.
14.5 Headings. The headings in this Agreement are for convenience only
and are not intended to have any legal effect.
14.6 Defined Terms. The terms defined in this Agreement are to be
interpreted in accordance with this Agreement. Such defined terms are
not intended to conform to specific statutory definitions of any
state.
14.7 Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes
all previous communications, representations, understandings and
agreements, either oral or written, between the parties or any
official representative thereof.
14.8 Survival. All terms and conditions of Section 6.4, "Post Termination
Compensation Obligations"; Section 7, "Indemnification"; Section 9.3
"Post Termination Limitations"; Section 11, "Confidentiality," and
(subject to Section 6.4.3) the Supplemental Trail Commission
provisions of any Product Exhibits in effect as of termination of
this Agreement, will survive termination of this Agreement.
14.9 No Waiver. No failure to enforce, nor any breach of any term or
condition of this Agreement, shall operate as a waiver of such term
or condition, or of any other term or condition, nor constitute nor
be deemed a waiver or release of any other rights at law or in
equity, or of claims which any party may have against any other
party, for anything arising out of, connected with, or based upon
this Agreement. Any waiver, including a waiver of this Section, must
be in writing and signed by the parties hereto.
(Signatures on following page)
American Enterprise Life Insurance Company First Union Securities Inc.
Company Broker-Dealer
By: By:
Title: Title:
Date: Date:
American Express Financial Advisors Inc. First Union Mortgage Corporation
Distributor Agency
By: By:
Title: Title:
Date: Date:
First Fidelity Insurance Services, Inc. Old York Agency, Inc.
Agency Agency
By: By:
Title: Title:
Date: Date:
Water Street Insurance Agency, Inc.
Agency
By:
Title:
Date:
EXHIBIT A
Agency and Affiliated Agencies, Authorized States,
Product Description and Premium Remittance
Effective Date of Agreement: Effective Date of Agreement
SUMMARY:
This Exhibit is intended to summarize the Authorized Selling Firm's Agency and
its affiliated insurance agencies, the states in which the Agency and Affiliated
Agencies holds an insurance license to sell Product, the Product Description and
the method of Premium remittance.
------------------------------------------------------------ -------------------
Agency or Affiliated Agencies Authorized States of Agency
or Affiliated Agencies
------------------------------------------------------------ -------------------
First Union Mortgage Corporation CT, DE, DC, GA, MD, NC, SC,
VA, TN
First Fidelity Insurance Services, Inc. NJ only
Old York Agency, Inc. PA only
Water Street Insurance Agency, Inc. FL only
------------------------------------------------------------ -------------------
------------------------------------------------ --------------------------
Product Description Remittance of Premiums
(See Product Exhibits to identify states where (See Section 4.5)
product is available)
------------------------------------------------ --------------------------
American Express New Solutions Variable Annuity Net Wire
------------------------------------------------ --------------------------
Effective Revision Date: Effective Date of Revision
Purpose of Revision: Purpose of Revision
AEL Product Exhibit:
American Express New Solutionssm Variable Annuity
States of: AK, AZ, CO, DE, DC, GA, HI, IA, ID, KS, KY, LA, ME, MS, MO, NE,
NM, NV, OH, RI, TN, WI, WV, WY
The Product to be offered through Authorized Selling Firm is a flexible premium
variable annuity known as the American Express New Solutionssm Variable Annuity,
that may be offered only in those states shown above in which the product has
been filed and approved.
Effective Revision Date:
Purpose of Last Revision:
COMMISSION
1. The commission payable for contracts described in this Product Exhibit will
be paid according to the following commission schedule.
------------------------------------------------------ --------------- -- --------------
Non Qualified (No Trail Available) Issue Ages: Issue Ages:
0-80 (Older 81+ (Older of
of Annuitant Annuitant or
or Owner) Owner)
Accumulative Premium Paid $0 - $100,000 6.50% 3.15%
Accumulative Premium Paid $100,000 + 6.00% 2.65%
Qualified (No Trail Available)
Accumulative Premium Paid $0 - $100,000 6.00% 2.65%
Accumulative Premium Paid $100,000 + 5.50% 2.15%
------------------------------------------------------ --------------- -- -------------
2. No commission is payable for contracts described in this Product Exhibit
where the issue age of either the annuitant or owner exceeds age 85
(qualified or non-qualified).
3. Advance Commissions on IRS Section 2-1035 exchanges. Subject to #4 below,
Company will advance commissions monthly based on premium expected to be
deposited with Company to effect an IRS Section 2-1035 exchange of one
investment product for a Product sold under this Agreement. In the event
that the expected premium does not reach Company within 90 days of the date
of the application, the entire commission for the transaction will be
charged back during the next normal commission cycle.
4. No commission is payable on the sale of Products under this Agreement if
that sale involves replacement of an asset or investment issued by Company
or by any other insurance company owned or controlled by American Express
Company.
CHARGEBACKS
In the event of the surrender of an annuity within six months of each premium
payment date, there will be a chargeback of commissions paid with respect to
premiums received, according to the following schedule:
----------------------------------- --------------------------
Time Elapsed Since Premium Chargeback Percentage
Payment Date
----------------------------------- --------------------------
0-6 Months 100%
7-12 Months 50%
Over 12 Months 0%
----------------------------------- --------------------------
Chargebacks will be assessed in their entirety against Agency. The chargeback
will be waived in the events of death of an annuitant or owner, or in case of
annuitization or partial withdrawal. The chargeback schedule applies separately
to each payment upon cancellation or full withdrawal. The chargeback schedule
applies during the free look period, or for any full withdrawal.
