SUB-ADVISORY AGREEMENT
This Agreement is effective as of the 13th day of September, 1999 by and between
American Express Financial Corporation ("AEFC"), a Delaware corporation and
Kenwood Capital Management LLC ("Kenwood"), a Delaware limited liability
company.
Each of the Funds and Portfolios listed in Exhibit A (individually a "Fund" and
collectively the "Funds" ), is registered as an investment company under the
Investment Company Act of 1940 (the "1940 Act"); and
Each Fund has entered into an Investment Management Services Agreement with
AEFC, an investment adviser registered under the Investment Advisers Act of 1940
(the "Advisers Act"), under which AEFC provides investment advisory services to
the Fund; and
Kenwood is a registered investment adviser under the Advisers Act and has a
staff of experienced investment personnel and facilities for the kind of
investment portfolio contemplated for the Funds.
Therefore, it is mutually agreed with respect to each Fund:
Part One: Investment Management Services
(1) AEFC retains Kenwood, and Kenwood agrees, with respect to the Fund's assets
allocated to Kenwood by AEFC, to furnish the Fund continuously with
suggested investment planning; to determine, consistent with the Fund's
investment objectives and policies, which securities in Kenwood's
discretion shall be purchased, held or sold and to execute or cause the
execution of purchase or sell orders; to prepare and make available to the
Fund all necessary research and statistical data; subject always to the
direction and control of the Board of Directors (the "Board"), the officers
of the Fund and AEFC. AEFC will be responsible for investing and
reinvesting all of the Fund's cash and cash items held by the Fund's U.S.
custodian. Kenwood agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions described in
this Agreement.
(2) All transactions will be executed in accordance with the procedures and
standards set forth in, or established in accordance with, the Investment
Management Services Agreement between AEFC and the Fund. AEFC will provide
Kenwood with information concerning those procedures and standards and
Kenwood will maintain records to assure that transactions have been
executed in accordance those procedures and standards.
(3) Kenwood agrees that the investment planning and investment decisions will
be in accordance with investment policies and strategies of the Fund as
disclosed to Kenwood from time to time by the Fund and as set forth in its
prospectus and statement of additional information filed with the
Securities and Exchange Commission (the "SEC").
(4) AEFC agrees that it will furnish to Kenwood any information that the latter
may reasonably request with respect to the services performed or to be
performed by Kenwood under this Agreement.
(5) Kenwood agrees to provide the Board and AEFC with information and reports
regarding its activities as deemed appropriate by AEFC or as requested by
the Board and to meet with any persons at the request of the Board or AEFC
for the purpose of reviewing Kenwood's performance under this Agreement.
(6) It is understood and agreed that in furnishing the Fund with advisory
services, neither Kenwood, nor any of its officers, directors or agents
will be held liable to AEFC, the Fund or its creditors or shareholders for
errors of judgment or for anything except willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or reckless disregard
of its obligations and duties under the terms of this Agreement. It is
further understood and agreed that Kenwood may rely upon information
furnished to it reasonably believed to be accurate and reliable and that,
except as provided above, Kenwood will not be accountable for any loss
suffered by AEFC or the Fund by reason of the latter's action or nonaction
on the basis of any advice or recommendation of Kenwood, its officers,
directors or agents.
Part Two: Compensation To Kenwood.
As compensation for its services, AEFC will pay Kenwood a fee as described in
Exhibit A. AEFC will pay this fee to Kenwood on a monthly basis in cash within 5
business days after the last day of each month. In the event of the termination
of this Agreement, the fee accrued will be prorated on the basis of the number
of days that this Agreement is in effect during the month.
Part Three: Miscellaneous
(1) Kenwood will be deemed to be an independent contractor and, unless
expressly authorized, will have no authority to act for or represent the
Fund.
(2) AEFC agrees that Kenwood may render investment advice and other services to
other persons that may or may not have investment policies and investments
similar to those of the Fund, and that Kenwood may manage its own
investments, provided that these activities do not impair Kenwood's ability
to render services under this Agreement.
(3) Neither this Agreement nor any transaction under this Agreement will be
invalidated or in any way affected by the fact that directors, officers,
agents and/or shareholders of the Fund are or may be interested in Kenwood
or any successor or assignee, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of Kenwood are
or may be interested in the Fund as directors, officers, shareholders, or
otherwise; or that Kenwood or any successor or assignee, is or may be
interested in the Fund as shareholder or otherwise, provided, however, that
neither Kenwood, nor any officer, director or employee thereof or of the
Fund, shall sell to or buy from the Fund any property or security other
than shares issued by the Fund, except in accordance with applicable
regulations or orders of the SEC.
(4) Any notice under this Agreement must be given in writing delivered to the
party's principal place of business in Minneapolis, Minnesota, or to
another address as either party may designate in writing to the other.
(5) Kenwood agrees that no officer, director or employee of Kenwood will deal
for or on behalf of the Fund with himself or herself as principal or agent,
or with any corporation or partnership in which he or she may have a
financial interest, except that this shall not prohibit:
(a) Officers, directors or employees of Kenwood from having a financial
interest in the Fund or in Kenwood.
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of
whose partners, officers, directors or employees is an officer,
director or employee of Kenwood, provided such transactions are
handled in the capacity of broker only and provided commissions
charged do not exceed customary brokerage charges for such services.
(c) Transactions with the Fund by a broker-dealer affiliate of Kenwood as
may be allowed by rule or order of the SEC, and if made pursuant to
procedures adopted by the Fund's Board.
(6) Kenwood agrees that, except as herein otherwise expressly provided or as
may be permitted consistent with the use of a broker-dealer affiliate of
Kenwood under applicable provisions of the federal securities laws, neither
it nor any of its officers, directors or employees shall at any time during
the period of this Agreement, make, accept or receive, directly or
indirectly, any fees, profits or emoluments of any character in connection
with the purchase or sale of securities (except shares issued by the Fund)
or other assets by or for the Fund.
(7) Kenwood agrees to protect the confidentiality of any non-public information
provided to it by AEFC or the Fund.
Part Four: Renewal And Termination
(1) This Agreement, unless terminated under paragraph 2, 3, or 4 below, will
continue in effect from year to year, provided its continued applicability
is specifically approved at least annually (i) by the Board of the Fund or
by a vote of the holders of a majority of the outstanding votes of the Fund
and (ii) by vote of a majority of the Board members 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" has the same meaning as set forth
in the 1940 Act, as amended.
(2) This Agreement may be terminated at any time, without penalty, by the Board
of the Fund or by vote of the holders of a majority of the Fund's
outstanding shares, on 60 days' written notice to AEFC or to Kenwood.
(3) AEFC or Kenwood may terminate this Agreement by giving sixty days written
notice to the other party.
(4) This Agreement will terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning set forth in the 1940
Act, as amended.
In Witness Thereof, the parties hereto have executed this Agreement as of the
day and year first above written.
AMERICAN EXPRESS FINANCIAL CORPORATION
By:/s/Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Senior Vice President -Investment Operations
Kenwood Capital Management LLC
By:/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Principal
EXHIBIT A
With respect to the Fund's assets allocated to Kenwood, AEFC will pay Kenwood a
fee equal on an annual basis as follows:
Fund Fee
AXP Variable Portfolio -
Small Cap Advantage Fund 0.35% of average daily net assets
