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INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS Special
Tax-Exempt Series Trust (the "Trust"), a Massachusetts business trust, and
American Express Financial Corporation, a
Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Trust hereby retains American Express Financial Corporation, and
American Express Financial Corporation hereby agrees, for the period of this
Agreement and under the terms and conditions hereinafter set forth, to furnish
the Trust continuously with suggested investment planning; to determine,
consistent with the investment objectives and policies of each fund making up
the Trust, which securities in American Express Financial Corporation'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 Trust
all necessary research and statistical data in connection therewith; to furnish
all services of whatever nature required in connection with the management of
the Trust and its funds 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 Trustees (the "Board"), the Executive Committee and
the authorized officers of the Trust. American Express Financial Corporation
agrees to maintain an adequate organization of competent persons to provide the
services and to perform the functions herein mentioned. American Express
Financial Corporation agrees to meet with any persons at such times as the Board
deems appropriate for the purpose of reviewing American Express Financial
Corporation's performance under this Agreement.
(2) American Express Financial Corporation agrees that the investment
planning and investment decisions will be in accordance with general investment
policies of each fund of the Trust as disclosed to American Express Financial
Corporation from time to time by the Trust and as set forth in its prospectuses
and registration statements filed with the United States Securities and Exchange
Commission (the "SEC").
(3) American Express Financial Corporation agrees that it will maintain
all required records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for each fund of the Trust.
(4) The Trust agrees that it will furnish to American Express Financial
Corporation any information that the latter may reasonably request with respect
to the services performed or to be performed by American Express Financial
Corporation under this Agreement.
(5) American Express Financial Corporation is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities for the Trust 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,
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and subject to termination at any time by the Board, American Express Financial
Corporation 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 American Express Financial Corporation 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 overall responsibilities with respect to the Trust and
other funds for which it acts as investment adviser.
(6) It is understood and agreed that in furnishing the Trust with the
services as herein provided, neither American Express Financial Corporation, nor
any officer, director or agent thereof shall be held liable to the Trust 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 American Express Financial
Corporation may rely upon information furnished to it reasonably believed to be
accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Trust agrees to pay to American Express Financial Corporation,
and American Express Financial Corporation covenants and agrees to accept from
the Trust in full payment for the services furnished, a fee composed of an asset
charge equal to the total of 1/365th (1/366th in each leap year) of the amount
computed as described 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 a fund recorded on the books of the Trust for that day.
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 Assets Annual Rate at Each
(Billions) Each Asset Level (Billions) Asset Level
For Massachusetts, Michigan
Minnesota, New York and Ohio For Insured
First $0.25 0.470% First $1 0.450%
Next $0.25 0.445 Next $1 0.425
Next $0.25 0.420 Next $1 0.400
Next $0.25 0.405 Next $3 0.375
Over $1 0.380 Over $6 0.350
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(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 Trust
to American Express Financial Corporation within five business days
after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Trust agrees to pay:
(a) Fees payable to American Express Financial Corporation
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 Trust requests.
(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 Trust,
its trustees and officers, (ii) it employs in conjunction with a claim
asserted by the Board against American Express Financial Corporation,
except that American Express Financial Corporation shall reimburse the
Trust for such fees and expenses if it is ultimately determined by a
court of competent jurisdiction, or American Express Financial
Corporation agrees, that it is liable in whole or in part to the Trust,
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 each of the funds of the Trust 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 Trust.
(j) Trustees, officers and employees expenses which include fees,
salaries, memberships, dues, travel, seminars, pension, profit sharing,
and all other benefits paid to or provided for trustees, officers and
employees, trustees and officers liability insurance, errors and
omissions liability insurance, worker's compensation insurance and
other expenses applicable to the trustees, officers and employees,
except the Trust will not pay any fees or expenses of any person who is
an officer or employee of American Express Financial Corporation or its
affiliates.
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(k) Filing fees and charges incurred by the Trust in connection with
filing any amendment to its articles of incorporation, or incurred in
filing any other document with the state of Massachusetts or its
political subdivisions.
(l) Organizational expenses of the Trust.
(m) Expenses incurred in connection with lending portfolio
securities of a fund of the Trust.
(n) Expenses properly payable by the Trust, approved by the
Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this
Agreement. Further, American Express Financial Corporation agrees that
if, at the end of any month, the expenses of any fund of the Trust
under this Agreement and any other agreement between the Trust and
American Express Financial Corporation, 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 Trust shall not
pay those expenses set forth in (1)(a) and (d) through (n) of this Part
Three for that fund to the extent necessary to keep the fund's expenses
from exceeding the limitation, it being understood that American
Express Financial Corporation will assume all unpaid expenses and xxxx
the Trust for them in subsequent months but in no event can the
accumulation of unpaid expenses or billing be carried past the end of
the Trust's fiscal year.
Part Four: MISCELLANEOUS
(1) American Express Financial Corporation 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
Trust.
(2) A "full business day" shall be as defined in the
By-laws.
(3) The Trust recognizes that American Express Financial Corporation
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 Trust
and that American Express Financial Corporation manages its own
investments and/or those of its subsidiaries. American Express
Financial Corporation shall be free to render such investment advice
and other services and the Trust 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 trustees,
officers, agents and/or shareholders of the Trust are or may be
interested in American Express Financial Corporation or any successor
or assignee thereof, as directors, officers, stockholders or otherwise;
that directors, officers, stockholders or agents of American
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Express Financial Corporation are or may be interested in the Trust as
trustees, officers, shareholders, or otherwise; or that American
Express Financial Corporation or any successor or assignee, is or may
be interested in the Trust as shareholder or otherwise, provided,
however, that neither American Express Financial Corporation, nor any
officer, director, trustee or employee thereof or of the Trust, shall
sell to or buy from the Trust any property or security other than
shares issued by the Trust, 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) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will
deal for or on behalf of the Trust 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 American Express Financial
Corporation from having a financial interest in the Trust or in
American Express Financial Corporation.
(b) The purchase of securities for the Trust, or the sale of securities
owned by the Trust, through a security broker or dealer, one or more of
whose partners, officers, directors or employees is an officer,
director or employee of American Express Financial Corporation,
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 Trust by a broker-dealer affiliate of
American Express Financial Corporation as may be allowed by rule or
order of the SEC, and if made pursuant to procedures adopted by the
Board.
(7) American Express Financial Corporation agrees that, except as
herein otherwise expressly provided or as may be permitted consistent
with the use of a broker-dealer affiliate of American Express Financial
Corporation 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 Trust) or other assets by or for the Trust.
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Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until March 19, 1997, or
until a new agreement is approved by a vote of the majority of the
outstanding shares of the Trust 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 each fund of the Trust and (b) by the vote of a
majority of the trustees 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 Trust or American
Express Financial Corporation 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 a fund
of the Trust. 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.
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IDS SPECIAL TAX-EXEMPT SERIES TRUST IDS Insured Tax-Exempt Fund IDS
Massachusetts Tax-Exempt Fund IDS Michigan Tax-Exempt Fund IDS Minnesota
Tax-Exempt Fund IDS New York Tax-Exempt Fund IDS Ohio Tax-Exempt Fund
By /s/Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/Xxxxx X. Xxxxxx
Vice President
