INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 10th day of May 2001, by and between AXP Partners
Series, Inc. (the "Corporation"), a Minnesota Corporation, on behalf of its
underlying series funds AXP Partners Fundamental Value Fund, AXP Partners Value
Fund and AXP Partners Small Cap Value Fund (individually a "Fund" and
collectively the "Funds"), and American Express Financial Corporation, a
Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation 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 Corporation continuously with suggested investment
planning; to determine, consistent with the Funds' investment objectives
and policies, 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 Funds all necessary research and statistical data in
connection therewith; to furnish services of whatever nature required in
connection with the management of the 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 Directors
(the "Board"), the Executive Committee and the authorized officers of the
Corporation. 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 the Funds as disclosed to American Express
Financial Corporation from time to time by the Funds 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 the Funds.
(4) The Corporation 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 Funds 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, 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 Funds and other funds for which it acts as investment
adviser.
(6) It is understood and agreed that in furnishing the Funds with the
services as herein provided, neither American Express Financial
Corporation, nor any officer, director or agent thereof shall be held
liable to the Corporation (and/or the Fund) 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 Corporation agrees to pay to American Express Financial Corporation,
and American Express Financial Corporation 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 Funds recorded on the books
of the Funds for that day.
(ii) The asset charge shall be based on the net assets of each Fund as set
forth in the following table.
Fundamental Value Value Small Cap Value
----------------- ----- ---------------
Assets Annual Rate At Assets Annual Rate At Assets Annual Rate At
(Billions) Each Asset Level (Billions) Each Asset Level (Billions) Each Asset Level
--------- ---------------- ---------- ---------------- ---------- ----------------
First $0.50 0.730% First $0.50 0.730% First $0.25 0.970%
Next 0.50 0.705 Next 0.50 0.705 Next 0.25 0.945
Next 1.00 0.680 Next 1.00 0.680 Next 0.25 0.920
Next 1.00 0.655 Next 1.00 0.655 Next 0.25 0.895
Next 3.00 0.630 Next 3.00 0.630 Over 1.00 0.870
Over 6.00 0.600 Over 6.00 0.600
(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 a
Fund and the performance of an Index (the "Index"). The
Index for AXP Partners Fundamental Value Fund is Lipper
Large Cap Value Funds Index. The Index for AXP Partners
Value Fund is Lipper Large Cap Value Funds Index. The Index
for AXP Partners Small Cap Value Fund is Lipper Small Cap
Value Funds Index. The performance of one Class A 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
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 0.0008 per year
for AXP Partners Fundamental Value Fund, 0.0008 per year for
AXP Partners Value Fund and, 0.0012 per year for AXP Partners
Small Cap Value Fund.
(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 Funds to
American Express Financial Corporation within five business days after
the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Corporation, on behalf of the Fund, 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 Corporation 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 American
Express Financial Corporation, except that American Express Financial
Corporation shall reimburse the Corporation 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 Corporation (and/or the
Fund), 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 Funds 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 Funds.
(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 American
Express Financial Corporation 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 Funds.
(n) Expenses properly payable by the Funds, 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 a Fund under this Agreement
and any other agreement between the Fund 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 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
American Express Financial Corporation 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) 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
Funds.
(2) A "full business day" shall be as defined in the By-laws.
(3) Each Fund 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 Funds 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
each 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 Funds 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 Express Financial
Corporation are or may be interested in the Funds as directors, officers,
shareholders, or otherwise; or that American Express Financial
Corporation or any successor or assignee, is or may be interested in the
Funds as shareholder or otherwise, provided, however, that neither
American Express Financial Corporation, nor any officer, director or
employee thereof or of the Funds, shall sell to or buy from the Funds any
property or security other than shares issued by the Funds, 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 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 American Express Financial
Corporation from having a financial interest in the Funds or in
American Express Financial Corporation.
(b) The purchase of securities for the Funds, or the sale of securities
owned by the Funds, 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 Funds 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 Funds) or other assets by or for the Funds.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until May 10, 2003,
or until a new agreement is approved by a vote of the majority of the
outstanding shares of each 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 Funds 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 Corporation 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 the Fund.
The vote of the majority of the outstanding voting shares of a 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 PARTNERS SERIES, INC.
AXP Partners Fundamental Value Fund
AXP Partners Value Fund
AXP Partners Small Cap Value Fund
By /s/Xxxxxx X. Xxx
-----------------
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Xxxxxx X. Xxxxx
-------------------
Xxxxxx X. Xxxxx
Senior Vice President
