INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 9th day of May, 2001, by and between AXP Variable
Portfolio - Partners Series, Inc. (the "Corporation") on behalf of its
underlying series fund: AXP Variable Portfolio - Partners Small Cap Value Fund
(the "Fund"), a Minnesota corporation, and IDS Life Insurance Company ("IDS
Life"), a Minnesota corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains IDS Life, and IDS Life hereby agrees,
for the period of this Agreement and under the terms and conditions hereinafter
set forth, to furnish the Corporation continuously with suggested investment
planning; to determine, consistent with the Fund's investment objectives and
policies, which securities in IDS Life'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 in connection therewith; to furnish all services of whatever nature
required in connection with the management of the Fund including transfer agent
and dividend-disbursing agent services; to furnish or pay for all supplies,
printed material, office equipment, furniture and office space as the Fund may
require; and to pay or reimburse such expenses of the Fund as may be provided
for in Part Three; subject always to the direction and control of the Board of
Directors (the "Board"), the Executive Committee and the authorized officers of
the Corporation and its underlying Fund. IDS Life agrees to maintain (directly
or through the contract described in paragraph (7) of this Part One) an adequate
organization of competent persons to provide the services and to perform the
functions herein mentioned. IDS Life agrees to meet with any persons at such
times as the Board deems appropriate for the purpose of reviewing IDS Life's
performance under this Agreement.
(2) IDS Life agrees that the investment planning and investment decisions
will be in accordance with general investment policies of the Fund as disclosed
to IDS Life from time to time by the Fund and as set forth in its prospectuses
and registration statements filed with the United States Securities and Exchange
Commission (the "SEC").
(3) IDS Life agrees that it will maintain all required records, memoranda,
instructions or authorizations relating to the acquisition or disposition of
securities for the Fund.
(4) The Fund agrees that it will furnish to IDS Life any information that
the latter may reasonably request with respect to the services performed or to
be performed by IDS Life under this Agreement.
(5) IDS Life is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund and is
directed to use its best efforts to obtain the best available price and most
favorable execution, except as prescribed herein. Subject to prior authorization
by the Board of appropriate policies and procedures, and subject to termination
at any time by the Board, IDS Life may also be authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, to the extent authorized by law, if IDS Life determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or American Express Financial
Corporation's ("AEFC") or IDS Life's overall responsibilities with respect to
the Fund and other Fund for which it acts as investment adviser.
(6) It is understood and agreed that in furnishing the Fund with the
services as herein provided, neither IDS Life, nor any officer, director or
agent thereof shall be held liable to a 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 IDS Life may rely upon information furnished to it
reasonably believed to be accurate and reliable.
(7) The existence of an investment advisory agreement between IDS Life and
AEFC is specifically acknowledged and approved.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation agrees to pay to IDS Life, and IDS Life covenants and
agrees to accept from the Corporation in full payment for the services
furnished, a fee composed of an asset charge and a performance incentive
adjustment.
(a) The asset charge
(i) The asset charge for each calendar day of each year shall be equal
to the total of 1/365th (1/366th in each leap year) of the amount
computed in accordance with paragraph (ii) below. The computation
shall be made for each day on the basis of net assets as of the
close of business of the full business day two (2) business days
prior to the day for which the computation is being made. In the
case of the suspension of the computation of net asset value, the
asset charge for each day during such suspension shall be
computed as of the close of business on the last full business
day on which the net assets were computed. Net assets as of the
close of a full business day shall include all transactions in
shares of the Fund recorded on the books of the Fund for that
day.
(ii) The asset charge shall be based on the net assets of each Fund as
set forth in the following table.
AXP Variable Portfolio - Partners
Small Cap Value Fund
Assets Annual Rate At
(Billions) Each Asset Level
------------ ----------------
First $ 0.25 1.02%
Next $ 0.25 1.00
Next $ 0.25 0.98
Next $ 0.25 0.96
Next $ 1.00 0.94
Over $ 2.00 0.92
(b) The performance incentive adjustment
(i) The performance incentive adjustment, determined monthly, shall
be computed by measuring the percentage point difference between
the performance of one share of the Fund and the performance of
an Index (the "Index"). The Index for AXP Variable Portfolio
-Partners Small Cap Value Fund is the Lipper Small-Cap Value
Funds Index. The performance of one share of a Fund shall be
measured by computing the percentage difference, carried to two
decimal places, between the opening net asset value of one share
of the Fund and the closing net asset value of such share as of
the last business day of the period selected for comparison,
adjusted for dividends or capital gain distributions treated as
reinvested at the end of the month during which the distribution
was made but without adjustment for expenses related to a
particular class of shares. The performance of the Index will
then be established by measuring the percentage difference,
carried to two decimal places, between the beginning and ending
Index for the comparison period, with dividends or capital gain
distributions on the securities which comprise the Index being
treated as reinvested at the end of the month during which the
distribution was made.
(ii) In computing the adjustment, one percentage point shall be
deducted from the difference, as determined in (b)(i) above. The
result shall be converted to a decimal value (e.g., 2.38% to
0.0238), multiplied by .01 and then multiplied by the Funds'
average net assets for the comparison period. This product next
shall
be divided by 12 to put the adjustment on a monthly basis. Where
the performance of the Fund exceeds the Index, the amount so
determined shall be an increase in fees as computed under
paragraph (a). Where Fund performance is exceeded by the Index,
the amount so determined shall be a decrease in such fees. The
percentage point difference between the performance of the Fund
and that of the Index, as determined above, is limited to a
maximum of 0.0012 per year.
(iii) The 12 month comparison period will roll over with each
succeeding month, so that it always equals 12 months, ending with
the month for which the performance adjustment is being computed.
(iv) If the Index ceases to be published for a period of more than 90
days, changes in any material respect or otherwise becomes
impracticable to use for purposes of the adjustment, no
adjustment will be made under this paragraph (b) until such time
as the Board approves a substitute index.
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, the fee accrued shall be prorated on the basis of
the number of days that this Agreement is in effect during the month with
respect to which such payment is made.
(3) The fee provided for hereunder shall be paid in cash by the Corporation
to IDS Life within five business days after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Fees payable to IDS Life for the latter's services under this
Agreement.
(b) All fees, costs, expenses and allowances payable to any person,
firm or corporation for services under any agreement entered into by the Fund
covering the offering for sale, sale and distribution of the Fund' shares.
(c) All taxes of any kind payable by the Fund other than federal
original issuance taxes on shares issued by the Fund.
(d) All brokerage commissions and charges in the purchase and sale of
assets.
(2) The Corporation agrees to reimburse IDS Life or its affiliates for the
aggregate cost of the services listed below incurred by IDS Life in its
operation of the Fund.
(a) All custodian or trustee fees, costs and expenses.
(b) Costs and expenses in connection with the auditing and
certification of the records and accounts of the Fund by independent certified
public accountants.
(c) Costs of obtaining and printing of dividend checks, reports to
shareholders, notices, proxies, proxy statements and tax notices to
shareholders, and also the cost of envelopes in which such are to be mailed.
(d) Postage on all communications, notices and statements to brokers,
dealers, and the Fund' shareholders.
(e) All fees and expenses paid to directors of the Fund; however, IDS
Life will pay fees to directors who are officers or employees of IDS Life or its
affiliated companies.
(f) Costs of fidelity and surety bonds covering officers, directors and
employees of the Fund.
(g) All fees and expenses of attorneys who are not officers or
employees of IDS Life or any of its affiliates.
(h) All fees paid for the qualification and registration for public
sales of the securities of the Fund under the laws of the United States and of
the several states of the United States in which the securities of the Fund
shall be offered for sale.
(i) Cost of printing prospectuses, statements of additional information
and application forms for existing shareholders, and any supplements thereto.
(j) Any losses due to theft and defalcation of the assets of the Fund,
or due to judgments or adjustments not covered by surety or fidelity bonds, and
not covered by agreement or obligation.
(k) Expenses incurred in connection with lending portfolio securities
of the Fund.
(l) Expenses properly payable by the Fund, approved by the Board.
Part Four: MISCELLANEOUS
(1) IDS Life 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 Fund.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Fund recognizes that AEFC and IDS Life now render and may continue
to render investment advice and other services to other investment companies and
persons which may or may not have investment policies and investments similar to
those of the Fund and that AEFC and IDS Life manage their own investments and/or
those of their subsidiaries. AEFC and IDS Life shall be free to render such
investment advice and other services and the Fund hereby consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto shall 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 AEFC or IDS Life or
any successor or assignee thereof, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of AEFC or IDS Life
are or may be interested in the Fund as directors, officers, shareholders, or
otherwise; or that AEFC or IDS Life or any successor or assignee, is or may be
interested in the Fund as shareholder or otherwise, provided, however, that
neither AEFC or IDS Life, 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.
(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 such, at such party's principal place of business in Minneapolis,
Minnesota, or to such other address as either party may designate in writing
mailed to the other.
(6) IDS Life agrees that no officer, director or employee of IDS Life will
deal for or on behalf of the Fund with himself as principal or agent, or with
any corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors or employees of IDS Life from having a
financial interest in the Fund or in IDS Life.
(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 IDS Life, 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 IDS
Life as may be allowed by rule or order of the SEC, and if made pursuant to
procedures adopted by the Fund' Board.
(7) IDS Life agrees that, except as herein otherwise expressly provided or
as may be permitted consistent with the use of a broker-dealer affiliate of IDS
Life 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.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for two years from the date of
this Agreement, or until a new agreement is approved by a vote of the majority
of the outstanding shares of the Fund and by vote of the Board, including the
vote required by (b) of this paragraph, and if no new agreement is so approved,
this Agreement shall continue from year to year thereafter unless and until
terminated by either party as hereinafter provided, except that such continuance
shall be specifically approved at least annually (a) by the Board or by a vote
of the majority of the outstanding shares of the Fund and (b) 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 Investment Company Act of 1940,
as amended (the "1940 Act").
(2) This Agreement may be terminated by either the Fund or IDS Life at any
time by giving the other party 60 days' written notice of such intention to
terminate, provided that any termination shall be made without the payment of
any penalty, and provided further that termination may be effected either by the
Board or by a vote of the majority of the outstanding voting shares of the Fund.
The vote of the majority of the outstanding voting shares of the Fund for the
purpose of this Part Five shall be the vote at a shareholders' regular meeting,
or a special meeting duly called for the purpose, of 67% or more of the Fund's
shares present at such meeting if the holders of more than 50% of the
outstanding voting shares are present or represented by proxy, or more than 50%
of the outstanding voting shares of the Fund, whichever is less.
(3) This Agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the 1940
Act.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
AXP VARIABLE PORTFOLIO - PARTNERS SERIES, INC.
AXP Variable Portfolio - Partners Small Cap Value Fund
By /s/ Xxxxxx X. Xxx
---------------------------
Xxxxxx X. Xxx
Vice President
IDS LIFE INSURANCE COMPANY
By /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
Director and Executive Vice President - Annuities
