INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement dated as of January 10, 2002, is by and between AXP
Growth Series, Inc., a Minnesota Corporation, (the "Corporation") on behalf of
its underlying series AXP Large Cap Equity Fund, (the "Fund") and American
Express Financial Corporation, a Delaware corporation ("AEFC").
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains AEFC, and AEFC 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 AEFC'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 other services of whatever nature
required in connection with the management of the Fund as provided under this
Agreement; and to pay such expenses 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. AEFC agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions herein mentioned.
AEFC agrees to meet with any persons at such times as the Board deems
appropriate for the purpose of reviewing AEFC's performance under this
Agreement.
(2) AEFC agrees that the investment planning and investment decisions will
be in accordance with general investment policies of the Fund as disclosed to
AEFC from time to time by the Fund and as set forth in its prospectus and
registration statement filed with the United States Securities and Exchange
Commission (the "SEC").
(3) AEFC 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 Corporation agrees that it will furnish to AEFC any information
that the latter may reasonably request with respect to the services performed or
to be performed by AEFC under this Agreement.
(5) AEFC 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, AEFC 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 AEFC 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 AEFC's overall
responsibilities with respect to the Fund and other funds 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 AEFC, nor any officer, director or agent
thereof shall be held liable to 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 AEFC may rely upon information furnished to it
reasonably believed to be accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Fund agrees to pay to AEFC, and AEFC covenants and agrees to accept
from the Fund 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 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 the
Fund as set forth in the following table.
Asset Charge
Assets Annual Rate At
(Billions) Each Asset Level
First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Next 6.0 0.500
Next 12.0 0.490
Over 24.0 0.480
(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 Class A share of the Fund and the performance
of the Lipper Large-Cap Core Fund Index (the "Index"). The performance
of one Class A share of the 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, 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.
(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 Fund's 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 first adjustment will be made on October 1, 2002, and
will cover the six-month period beginning April 1, 2002. The
comparison period will increase by one month each month, until it
reaches 12 months. 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 Fund to
AEFC 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 AEFC for its services under the terms of this
Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection with the purchase
and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified public accountants
for services the Funds request.
(f) Premium on the bond required by Rule 17g-1 under the Investment
Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the
Corporation, its directors and officers, (ii) it employs in
conjunction with a claim asserted by the Board against AEFC,
except that AEFC shall reimburse the Corporation for such fees
and expenses if it is ultimately determined by a court of
competent jurisdiction, or AEFC agrees, that it is liable in
whole or in part to the Corporation, and (iii) it employs to
assert a claim against a third party.
(h) Fees paid for the qualification and registration for public sale
of the securities of the Fund under the laws of the United States
and of the several states in which such securities shall be
offered for sale.
(i) Fees of consultants employed by the Fund.
(j) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension,
profit sharing, and all other benefits paid to or provided for
directors, officers and employees, directors and officers
liability insurance, errors and omissions liability insurance,
worker's compensation insurance and other expenses applicable to
the directors, officers and employees, except the Corporation
will not pay any fees or expenses of any person who is an officer
or employee of AEFC or its affiliates.
(k) Filing fees and charges incurred by the Corporation in connection
with filing any amendment to its articles of incorporation, or
incurred in filing any other document with the State of Minnesota
or its political subdivisions.
(l) Organizational expenses of the Corporation.
(m) Expenses incurred in connection with lending portfolio securities
of the Fund.
(n) Expenses properly payable by the Fund, approved by the Board.
(2) AEFC agrees to pay all expenses associated with the services it
provides under the terms of this Agreement. Further, AEFC agrees that if, at the
end of any month, the expenses of the Fund under this Agreement and any other
agreement between the Fund and AEFC, but excluding those expenses set forth in
(1)(b) and (1)(c) of this Part Three, exceed the most restrictive applicable
state expenses limitation, the Fund shall not pay those expenses set forth in
(1)(a) and (d) through (n) of this Part Three to the extent necessary to keep
the Fund's expenses from exceeding the limitation, it being understood that AEFC
will assume all unpaid expenses and xxxx the Fund for them in subsequent months
but in no event can the accumulation of unpaid expenses or billing be carried
past the end of the Fund's fiscal year.
Part Four: MISCELLANEOUS
(1) AEFC 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 of the
Corporation.
(3) The Fund recognizes that AEFC now renders 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 manages its own investments and/or those of its
subsidiaries. AEFC 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 any successor or assignee thereof, as directors,
officers, stockholders or otherwise; that directors, officers,
stockholders or agents of AEFC are or may be interested in the Fund as
directors, officers, shareholders, or otherwise; or that AEFC or any
successor or assignee, is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither AEFC, 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) AEFC agrees that no officer, director or employee of AEFC will deal for
or on behalf of the Funds 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 AEFC from having a financial
interest in the Fund or in AEFC.
(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 AEFC, 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 AEFC
as may be allowed by rule or order of the SEC and if made
pursuant to procedures adopted by the Board.
(7) AEFC agrees that, except as herein otherwise expressly provided or as
may be permitted consistent with the use of a broker-dealer affiliate
of AEFC 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.
(8) The Agreement shall be governed by the laws of the State of Minnesota.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until March 13, 2004, 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 Fund's 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 AEFC 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 GROWTH SERIES, INC.
AXP Large Cap Equity Fund
By /s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Vice President- Mutual Funds
