INVESTMENT SUBADVISORY AGREEMENT
This Agreement is effective as of the 16th day of January, 2001, by and between
American Express Financial Corporation ("AEFC"), a Delaware corporation, and RS
Investment Management, L.P., a California limited partnership ("Sub-Advisor").
The Fund listed in Exhibit A is a series of an investment company registered
under the Investment Company Act of 1940 as amended (the "1940 Act"); and
The 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
Sub-Advisor is in the business of providing, among other things, investment
advisory services and has a staff of experienced investment personnel and
facilities for the management of the kind of investment portfolio contemplated
for the Fund.
Therefore, it is mutually agreed with respect to the Fund:
Part One: Investment Management Services
(1) AEFC retains Sub-Advisor, and Sub-Advisor agrees, with respect to the
Fund's assets allocated to Sub-Advisor by AEFC, to furnish the Fund continuously
with suggested investment planning; to determine, consistent with the Fund's
investment objectives and policies, which investments in Sub-Advisor's
discretion, shall be purchased, held or sold and to execute or cause the
execution of purchase or sell orders; to furnish all services of whatever nature
may be required in connection with the management of the Fund's assets as
provided under this Agreement; subject always to the direction and control of
the Board of Directors of the Fund (the "Board"), the officers of the Fund and
AEFC. Sub-Advisor agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions described in this
Agreement.
(2) Sub-Advisor represents and warrants that it is and will remain registered as
an investment adviser under the Advisers Act, unless exempt from registration.
(3) 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
Sub-Advisor with information concerning those procedures and standards, and
Sub-Advisor will maintain records to assure that transactions have been executed
in accordance with those procedures and standards.
(4) Books and Records.
(a) Sub-Advisor agrees to maintain all required books and records,
including accounts, records, memoranda, instructions or authorizations relating
to the acquisition or disposition of investments for the Fund and to provide
copies of such documents to AEFC or the Fund upon request.
(b) Upon reasonable advance notice, Sub-Advisor agrees to provide
accounting or other data concerning the Fund's investment activities to the Fund
or its custodian or administrator to assist the Fund in preparing and filing all
periodic financial reports or other documents required to be filed with the SEC
and any other regulatory entity and to assist in calculating, each business day,
the net asset value of the shares of the Fund in accordance with applicable law.
(c) Sub-Advisor agrees that all books and records it maintains for the
Fund are the property of the Fund and to surrender them promptly upon the Fund's
request. In the event of termination of this Agreement, all books, records or
other information shall be returned to the Fund free from any claim or assertion
of rights by Sub-Advisor.
(5) On occasions when Sub-Advisor deems the purchase or sale of a security to be
in the best interest of the Fund as well as other clients of Sub-Advisor,
Sub-Advisor may, to the extent permitted by applicable laws and regulations, but
will not be obligated to, aggregate the securities to be purchased or sold for
other clients in order to obtain favorable execution and lower brokerage
commissions or prices. In that event, allocation of the securities purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Sub-Advisor in accordance with any written procedures maintained by Sub-Advisor,
or if there are no such written procedures, in the manner Sub-Advisor considers
to be the most equitable and consistent with its fiduciary obligations to the
Fund and to its other clients.
(6) Unless the Fund or AEFC gives written instructions to the contrary, the Fund
shall vote all proxies solicited by or with respect to the issuers of securities
in which assets of the Fund may be invested.
(7) Sub-Advisor agrees that the investment planning and investment decisions
will be in accordance with investment policies and strategies of the Fund as
disclosed to Sub-Advisor from time to time by the Fund and as set forth in the
current prospectus and statement of additional information filed with the
Securities and Exchange Commission (the "SEC") copies of which shall be provided
to the subadvisor as soon as available.
(8) AEFC agrees that it will furnish to Sub-Advisor any information that the
latter may reasonably request with respect to the services performed or to be
performed by Sub-Advisor under this Agreement.
(9) Sub-Advisor agrees to provide the Board and AEFC with information and
reports regarding its activities as may reasonably be requested by AEFC or the
Board and to meet with any persons at the request of the AEFC or the Board for,
the purpose of reviewing Sub-Advisor's performance under this Agreement at
reasonable times and upon reasonable advance written notice.
(10) It is understood and agreed that in furnishing the Fund with advisory
services, neither Sub-Advisor, 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 Sub-Advisor may rely upon information furnished to it
reasonably believed to be accurate and reliable and that, except as provided
above, Sub-Advisor 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 Sub-Advisor, its officers, directors or agents.
Part Two: Compensation and Allocation of Expenses.
(1) As compensation for Sub-Advisor's services, AEFC will pay Sub-Advisor a fee
as described in Exhibit A. AEFC will pay this fee to Sub-Advisor on a monthly
basis in cash within 15 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.
(2) Sub-Advisor will pay all of its own expenses incurred by it in connection
with its activities under this Agreement.
Part Three: Miscellaneous
(1) Sub-Advisor 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 and the Funds agree that Sub-Advisor 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, provided that these activities do not
impair Sub-Advisor'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 Sub-Advisor or any
successor or assignee, as directors, officers, stockholders or otherwise; that
directors, officers, stockholders or agents of Sub-Advisor are or may be
interested in the Fund as directors, officers, shareholders, or otherwise; or
that Sub-Advisor or any successor or assignee, is or may be interested in the
Fund as shareholder or otherwise, provided, however, that neither Sub-Advisor,
nor any officer, director or employee thereof, 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 as provided below
or to another address as either party may designate in writing to the other.
All notices to be given to the Sub-Advisor shall be mailed to:
Xxxxx X. Xxxxxxx, Principal
RS Investment Management, L.P.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
All notices to be given to AEFC shall be mailed to:
Vice President, Investment Administration
American Express Financial Corporation
200 AXP Financial Center
Xxxxxxxxxxx, XX 00000
(5) Sub-Advisor agrees that no officer, director or employee of Sub-Advisor 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; provided that the foregoing shall not prohibit:
(a) Officers, directors or employees of Sub-Advisor from having a
financial interest in the Fund or in Sub-Advisor;
(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 Sub-Advisor, provided such transactions are handled in the capacity of broker
only and provided commissions charged do not exceed customary brokerage charges
for such services; and
(c) Transactions with the Fund by a broker-dealer affiliate of
Sub-Advisor as may be allowed by rule or order of the SEC, and if made pursuant
to procedures adopted by the Fund's Board;
provided further that nothing in this paragraph shall limit the ability of
Sub-Advisor to engage in any activity consistent with the 1940 Act, and the
rules and regulations thereunder, including no-action or similar positions of
the SEC.
(6) Sub-Advisor agrees that, except as herein otherwise expressly provided or as
may be permitted consistent with the use of a broker-dealer affiliate of
Sub-Advisor 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) Sub-Advisor and AEFC each agree to protect the confidentiality of any
non-public information provided to it by the other party or by the Fund.
(8) This Agreement shall be governed by the laws of the state of Minnesota.
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 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
or by vote of the holders of a majority of the Fund's outstanding shares, on 60
days' written notice to AEFC or to Sub-Advisor.
(3) AEFC or Sub-Advisor may terminate this Agreement at any time by giving 60
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.
Sub-Advisor agrees to notify AEFC and the Fund as soon as possible of any change
in ownership or control of Sub-Advisor that could cause an assignment of this
Agreement. In the case of a voluntary assignment, notice will be provided at
least 90 days prior to the voluntary assignment.
In witness thereof, the parties have executed this Agreement as of the day and
year first above written.
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxx
-----------------------------
Xxxxx Xxxxx
Vice President - Mutual Funds
By: /s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx Xxxxx
Chief Financial Officer
EXHIBIT A
With respect to the Fund's assets allocated to Sub-Advisor, AEFC will pay
Sub-Advisor a fee at the following annual rate:
Fund Fee (as a percent of average daily net assets)
---- -----
AXP Small Cap Growth Fund 0.60% of the first $250 million
0.55% of the next $150 million
0.50% thereafter
AEFC agrees to pay Sub-Advisor a minimum of $600,000 per year for managing the
fund. This minimum will be reduced to $0 for the first 12 months of this
Agreement.
