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DISTRIBUTION AGREEMENT
This Agreement is made as of March 29, 1996, by and between IDS
Certificate Company, a Delaware corporation (the "Company"), and
American Express Service Corporation, a Delaware corporation
("American Express").
I. SOLICITATION OF APPLICATIONS
(1) During the term of this Agreement, American Express and
persons designated by it shall have the nonexclusive
right to solicit applications for and to distribute the
IDS Stock Market Certificate issued by the Company and
other such Certificates issues by the Company as the
parties hereto shall agree (the "Certificates").
(2) American Express will use its best efforts to solicit or
cause the solicitation of applications for the
Certificates currently issued by the Company.
(3) American Express agrees that all applications for the
Certificates shall be made in writing on forms acceptable
to the Company. Every application shall be subject to
acceptance or rejection by the Company according to the
terms thereof. American Express shall promptly remit to
the Company the payment tendered with each application,
such payment to be in conformity with the provisions of
the Certificate for which such application is made.
(4) The Certificates shall not be offered by either American
Express or the Company under any of the provisions of
this Agreement and no application for the purchase or
sale of the Certificates hereunder shall be accepted by
the Company if and so long as the effectiveness of the
registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the
provisions of the Securities Act of 1933 (the "1933 Act")
or if and so long as a current prospectus as required by
Section 5(b)(2) of the 1933 Act is not on file with the
Securities and Exchange Commission (the "SEC"); provided,
however, that nothing contained in this paragraph I(4)
shall in any way restrict or have an application to or
bearing upon the Company's obligation to comply with any
withdrawal request from any Certificate owner in
accordance with the provisions of the Company's
prospectus or articles of incorporation.
II. COMPANY'S RESPONSIBILITY
The Company shall make prompt and reasonable effort to do any
and all things necessary in its reasonable opinion or in the
reasonable opinion of American Express in connection with the
offer and sale of the Certificates and the performance of any
of the provisions of this Agreement, including by not limited
to the preparation and filing of registration statements,
accounting statements (audited and unaudited), pamphlets,
prospectuses, literature and any other data about the Company,
its records or business, in such detail and in such form (with
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such signatures and opinions) as legally required or as
reasonably requested by American Express.
III. ALLOCATION OF EXPENSES
(1) American Express shall pay:
(a) All registration or qualification fees or other sums
required by law to be paid in connection with any
registration or qualification of the Company and the
Certificates, and the renewal, continuation,
extension or amendment thereof, in order legally to
offer, to sell or to continue the sale of the
Certificates in such federal, state or other
jurisdictions as American Express may from time to
time designate.
(b) All fees, expenses and disbursements of counsel and
others in connection with all such registrations or
qualifications of the Company and the Certificates.
(c) All fees, charges, expenses or other sums paid or
incurred in connection with the registration or
qualification of the Company, for the Certificates,
as a foreign corporation or for the purpose of
enabling the Company to do business in any federal,
state or other jurisdiction as American Express may
from time to time designate.
(d) All costs of advertising the Certificates and the
Company with regard to the Certificates.
(e) All costs and expenses of filing, recording,
preparing and printing statements, records,
circulars, pamphlets, applications, prospectuses,
annual reports, certificates and other documents or
materials also necessary or desirable in connection
with the registration or qualification described in
sub-paragraph (a) hereof or in connection with the
offer or sale of the Certificates.
(f) All costs and expenses of internal auditing and
accounting, and maintaining and preparing original
accounting records and reports arising in connection
with the Company's offer and sale of the
Certificates.
(g) All other costs and expenses in connection with the
offer and sale of the Certificates by American
Express pursuant to the provisions of this
Agreement, including the acceptance of applications
and the establishment of original certificate
owners' records.
(2) Except as hereinbefore provided, the Company agrees to
pay fees and expenses for services provided to the
Company at its request, or by requirement, by attorneys
and other professional consultants who are not officers
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or employees of American Express, American Express Travel
Related Services Company, Inc. or American Express
Company.
IV. COMPENSATION
The Company shall pay American Express and American Express
accepts in full payment for its services under this Agreement,
the following distribution fees.
(a) A distribution fee as disclosed in the Certificate
prospectus or prospectuses.
Up to 100% of the distribution fee paid may be refunded
to the Company if the Certificate is surrendered for cash
within the first twenty four months from the date of
acceptance by the Company. The amount of the refund, if
any, shall be mutually agreed upon between the Company
and American Express from time to time.
V. REPRESENTATIONS AND WARRANTIES
The Company represents to American Express that all
registration statements and prospectuses filed by the Company
with the SEC under the 1933 Act and the Investment Company Act
of 1940 (the "1940 Act") with respect to the Certificates have
been prepared in conformity with the requirements of the 1933
Act, the 1940 Act and the rules and regulations of the SEC
thereunder. As used in this Agreement the terms "registration
statement" and "prospectus" shall mean any registration
statement and prospectus filed by the Company with the SEC and
any amendments and supplements thereto which at any time shall
have been filed by the Company with the SEC. The Company
represents and warrants to American Express that any
registration statement and prospectus, when such registration
statement becomes effective, will include all statements
required to be contained therein in conformity with the 1933
Act, the 1940 Act and the rules and regulations of the SEC;
that all statements of fact contained in any registration
statement or prospectus will be true and correct when such
registration statement becomes effective; and that neither any
registration statement nor any prospectus when such
registration statement becomes effective will include an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading to a purchaser of
the Certificate. American Express may, but shall not be
obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement
or supplements to any prospectus as, in the light of future
developments, may, in the opinion of American Express'
counsel, be necessary or advisable. If the Company shall not
propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Company
of a written request from American Express to do so, American
Express may, at its option, terminate this Agreement. The
Company shall not file any amendment to any registration
statement or supplement to any prospectus without giving
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American Express reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement
shall in any way limit the Company's right to file at any time
such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the
Company may deem advisable, such right being in all respects
absolute and unconditional.
American Express represents and warrants that American Express
is a securities broker/dealer registered with the SEC and with
any jurisdiction in which it is required to be registered and
a member in good standing of the National Association of
Securities Dealers, Inc. and agrees to comply with all state
and federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.,
including specifically Article III, Section 26 thereof.
American Express likewise agrees that it will not offer to
sell the Certificates in any state or other jurisdiction in
which they may not lawfully be offered for sale.
VI. INDEMNIFICATION
(1) The Company authorizes American Express and any dealers
with whom American Express has entered into dealer
agreements to use any current prospectus furnished by the
Company from time to time, in connection with the sale of
the Certificates. The Company agrees to indemnify,
defend and hold American Express, its several officers
and directors, and any person who controls American
Express within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which American Express, its officers and
directors, or any such controlling person, may incur
under the 1933 Act, the 1940 Act or common law or
otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement or any
prospectus, or arising out of or based upon any omission
or alleged omission to state a material fact required to
be stated in any registration statement or any
prospectus, or necessary to make the statements in any of
them not misleading; provided, however, that the
Company's agreement to indemnify American Express, its
officers or directors, and any such controlling person
shall not be deemed to cover any claims, demands,
liabilities or expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) arising out of or based upon any statements or
representations made by American Express or its
representatives or agents other than such statements and
representations as are contained in any registration
statement or prospectus and in such financial and other
statements as are furnished to American Express pursuant
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to Section II hereof and as are current at the time of
such statements and representations; and further provided
that the Company's agreement to indemnify American
Express and the Company's representations and warranties
hereinbefore set forth in Section V shall not be deemed
to cover any liability to the Company or its shareholders
or certificate owners to which American Express would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or negligence in the
performance of its duties, or by reason of American
Express' reckless disregard of its obligations and duties
under this Agreement. The Company's agreement to
indemnify American Express, its officers and directors,
and any such controlling person, as aforesaid, is
expressly conditioned upon the Company's being notified
of any action brought against American Express, its
officers or directors, or any such controlling person,
such notification to be given by letter or by telegram
addressed to the Company at its principal office in
Minneapolis, Minnesota, and sent to the Company by the
person against whom such action is brought, within ten
days after the summons or other first legal process shall
have been served. The failure so to notify the Company
of any such action shall not relieve the Company from any
liability that the Company may have to the person against
whom such action is brought by reason of any such untrue
or alleged untrue statement or omission or alleged
omission otherwise than on account of the Company's
indemnity agreement contained in this paragraph VI(1).
The Company's indemnification agreement contained in this
paragraph VI(1) (except so far as such indemnification
agreement is expressly limited as set forth herein) and
the Company's representations and warranties in this
Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on
behalf of American Express, its officers and directors,
or any controlling person, and shall survive the delivery
of any Certificates. This agreement of indemnity will
inure exclusively to American Express' benefit, to the
benefit of its several officers and directors, and their
respective estates, and to the benefit of the controlling
persons and their successors. The Company agrees to
notify American Express promptly of the commencement of
any litigation or proceedings against the Company or any
of its officers or directors in connection with the
issuance and sale of the Certificates.
(2) American Express agrees to indemnify, defend and hold the
Company, its several officers and directors, and any
person who controls the Company within the meaning of
Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and
expenses (including the costs of investigating or
defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the
Company, its officers or directors or any such
controlling person may incur under the 1933 Act, the 1940
Act or common law or otherwise, but only to the extent
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that such liability or expense incurred by the Company,
its officers or directors or such controlling person
resulting from such claims or demands shall arise out of
or be based upon (a) any unauthorized sales literature,
advertisements, information statements or representations
or (b) any untrue or alleged untrue statement of a
material fact contained in information furnished in
writing by American Express to the Company and used in
the answers to any of the items of the registration
statement or in the corresponding statements made in the
prospectus, or shall arise out of or be based upon any
omission or alleged omission to state a material fact in
connection with such information furnished in writing by
American Express to the Company and required to be stated
in such answers or necessary to make such information not
misleading. American Express' agreement to indemnify the
Company, its officers and directors, and any such
controlling person, as aforesaid, is expressly
conditioned upon American Express' being notified of any
action brought against the Company, its officers or
directors, or any such controlling person, such
notification to be given by letter or telegram addressed
to American Express at its principal office in New York,
New York and sent to American Express by the person
against whom such action is brought, within ten days
after the summons or other first legal process shall have
been served. The failure so to notify American Express
of any action shall not relieve American Express from any
liability that American Express may have to the Company,
its officers or directors, or to such controlling person
by reason of any such untrue or alleged untrue statement
or omission or alleged omission otherwise than on account
of American Express' indemnity agreement contained in
this paragraph VI(2). American Express agrees to notify
the Company promptly of the commencement of any
litigation or proceedings against American Express or any
of its officers or directors in connection with the
issuance and sale of the Certificate.
(3) In case any action shall be brought against any
indemnified party under paragraph VI(1) or VI(2), and the
indemnified party shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it
shall wish to do so, to assume the defense thereof with
counsel satisfactory to such indemnified party. If the
indemnifying party opts to assume the defense of such
action, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses
subsequently incurred by the indemnified party in
connection with the defense thereof other than (a)
reasonable costs of investigation or the furnishing of
documents or witnesses and (b) all reasonable fees and
expenses of separate counsel to such indemnified party if
(i) the indemnifying party and the indemnified party
shall have agreed to the retention of such counsel or
(ii) the indemnified party shall have concluded
reasonably that representation of the indemnifying party
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and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing
interests between them in the conduct of the defense of
such action.
VII. MISCELLANEOUS
(1) American Express 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 or represent the Company.
(2) American Express shall use no advertisement or sales
literature for the Certificate without prior approval by
the Company. American Express shall submit any
advertisement or sales literature for the Certificate to
the Company for its prior review and approval, which
approval shall not be unreasonably withheld.
(3) American Express shall be free to render to other
persons, firms and corporations services similar or
dissimilar to those herein described.
(4) Neither this Agreement, nor any transaction performed
pursuant to this Agreement shall be invalidated or in any
way affected by the fact that directors, officers and
agents of the Company are or may be interested in
American Express, American Express Travel Related
Services Company, Inc. or American Express Company, in
such capacities or otherwise; that directors, officers,
stockholders or agents of American Express, American
Express Travel Related Services Company, Inc. or American
Express Company, are or may be interested in the Company
as directors, officers or otherwise; that American
Express, American Express Travel Related Services
Company, Inc. or American Express Company or any
successor or assignee is or may be interested in the
Company as stockholder or otherwise.
(5) Any notice 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,
(a) if to the Company, at IDS Tower 10, Minneapolis,
Minnesota 55440, Attn: President, and (b) if to American
Express, at American Express Tower, World Financial
Center, New York, N.Y. 10285-2800, attention: President,
or to such other address as either party may designate in
writing mailed to the other.
VIII. TERMINATION
(1) This Agreement shall continue in effect through March 29,
1997, and shall continue from year to year thereafter
unless and until terminated by either party as
hereinafter provided, except that such continuance after
March 29, 1997, shall be specifically approved at least
annually by the Board of Directors of the Company, or by
a vote of a majority of the outstanding voting securities
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of the Company, and by the vote of a majority of the
directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such
approval. As used in this paragraph, the term
"interested person" shall have the same meaning as set
forth in the 1940 Act.
(2) This Agreement may be terminated without penalty by
either the Company or American Express at any time
whether prior to, at or after March 29, 1997, by giving
the other party at least sixty days' prior written notice
of such intention to terminate. Any such termination by
the Company may be effected by its Board of Directors or
by a vote of a majority of its outstanding voting
securities.
(3) This Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act.)
IN WITNESS WHEREOF, the parties have executed this agreement
as of the day and year first above written.
IDS CERTIFICATE COMPANY
/s/ Jay Hatlestad
Vice President and Controller
/s/ Tom Kelly
Assistant Secretary
AMERICAN EXPRESS SERVICE
CORPORATION
/s/ Ronald Abrahamson
Vice President
/s/ Timothy Meehan
Secretary