SUBADVISORY AGREEMENT
Agreement made as of the ____ day of ____________, 2001, by and between
American Express Financial Corporation, a Delaware corporation ("AEFC"), and
________________, a __________ ("Subadvisor").
RECITALS
1. 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").
2. AEFC has entered into an Investment Management Services Agreement dated
______ __, 2001 (the "Advisory Agreement") with the Fund pursuant to which
AEFC provides investment advisory services to the Fund.
3. Adviser and the Fund each desire to retain Subadvisor to provide
investment advisory services to the Fund, and Subadvisor is willing to
render such investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Subadvisor's Duties.
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(a) Portfolio Management. Subject to supervision by AEFC and the Fund's
Board of Directors, Subadvisor shall manage the investment operations
and the composition of that portion of assets of the Fund which is
allocated to Subadvisor from time to time by AEFC (which portion may
include any or all of the Fund's assets), including the purchase,
retention, and disposition thereof, in accordance with the Fund's
investment objectives, policies, and restrictions, and subject to the
following understandings:
(i) Investment Decisions. Subadvisor shall determine from time to
time what investments and securities will be purchased,
retained, or sold by the Fund, and what portion of such assets
will be invested or held uninvested as cash.
(ii) Investment Limits. In the performance of its duties and
obligations under this Agreement, --------------------------
Subadvisor shall act in conformity with applicable limits and
requirements, as amended from time to time, as set forth in
the (A) Fund's, Prospectus and Statement of Additional
Information ("SAI"); (B) instructions and directions of AEFC
and of the Board of Directors of the Fund; (C) requirements of
the 1940 Act, the Internal Revenue Code of 1986, as amended,
as applicable to the Fund, and all other applicable federal
and state laws and regulations; and (D) the procedures and
standards set forth in, or established in accordance with, the
Advisory Agreement.
(iii) Portfolio Transactions.
(A) Trading. With respect to the securities and other
investments to be purchased or sold for the Fund,
Subadvisor shall place orders with or through such
persons, brokers, dealers, or futures commission
merchants (including, but not limited to, broker-dealers
that are affiliated with AEFC or Subadvisor) selected by
Subadvisor; provided, however, that such orders shall be
consistent with the brokerage policy set forth in the
Fund's Prospectus and SAI, or approved by the Fund's
Board of Directors; conform with federal securities
laws; and be consistent with securing the most favorable
price and efficient execution. Within the framework of
this policy, Subadvisor may consider the research,
investment information, and other services provided by,
and the financial responsibility of, brokers, dealers,
or futures commission merchants who may effect, or be a
party to, any such transaction or other transactions to
which Subadvisor's other clients may be a party.
(B) Aggregation of Trades. On occasions when Subadvisor
deems the purchase or sale of a security or futures
contract to be in the best interest of the Fund as well
as other clients of Subadvisor, Subadvisor, to the
extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased
in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such
event, allocation of the securities or futures contracts
so purchased or sold, as well as the expenses incurred
in the transaction, will be made by Subadvisor in the
manner Subadvisor considers to be the most equitable and
consistent with its fiduciary obligations to the Fund
and to such other clients.
(iv) Records and Reports. Subadvisor shall maintain such books and
records required under the 1940 Act as shall be agreed upon
from time to time by the parties hereto, shall render to the
Fund's Board of Directors such periodic and special reports as
the Board of Directors of the Fund or AEFC may reasonably
request, and shall meet with any persons at the request of
AEFC or the Board for the purpose of reviewing Subadvisor's
performance under this Agreement at reasonable times and upon
reasonable advance written notice.
(v) Transaction Reports. Subadvisor shall provide the Fund's
custodian on each business day with information relating to
all transactions concerning the Fund's assets and shall
provide AEFC with such information upon AEFC's request.
(b) Subadvisor's Partners, Officers, and Employees. Subadvisor shall
authorize and permit any of its partners, officers, and employees who
may be elected as Directors or officers of the Fund to serve in the
capacities in which they are elected. Services to be furnished by
Subadvisor under this Agreement may be furnished through any such
partners, officers, or employees.
(c) Maintenance of Records. Subadvisor shall timely furnish to AEFC all
information relating to Subadvisor's services hereunder which are
needed by AEFC to maintain the books and records of the Fund required
under the 1940 Act. Subadvisor agrees that all records which it
maintains for the Fund are the property of the Fund and Subadvisor
will surrender promptly to the Fund any of such records upon the
Fund's request; provided, however, that Subadvisor may retain a copy
of such records. Subadvisor further agrees to preserve for the
periods prescribed under the 1940 Act any such records as are
required to be maintained by it pursuant to paragraph 1(a) hereof.
(d) Fidelity Bond and Code of Ethics. Subadvisor will provide the Fund
with reasonable evidence that, with respect to its activities on
behalf of the Fund, Subadvisor is maintaining (i) adequate fidelity
bond insurance, and (ii) an appropriate Code of Ethics and related
reporting procedures.
2. Adviser's Duties. AEFC shall continue to have responsibility for all other
services to be provided to the Fund pursuant to the Advisory Agreement and
shall oversee and review Subadvisor's performance of its duties under this
Agreement. AEFC shall also retain direct portfolio management
responsibility with respect to any assets of the Fund which are not
allocated by it to the portfolio management of Subadvisor as provided in
paragraph 1(a) hereof.
3. Documents Provided to Subadvisor. AEFC has delivered or will deliver to
Subadvisor current copies and supplements thereto of each of the
Prospectus and SAI pertaining to the Fund, and will deliver to it all
future amendments and supplements, if any.
4. Compensation of Subadvisor. For the services provided and the expenses
assumed pursuant to this Agreement, AEFC will pay to Subadvisor, effective
from the date of this Agreement, a fee which shall be accrued daily and
paid monthly, on or before the last business day of the next succeeding
calendar month, from the Fund's assets at the annual rates as a percentage
of the Fund's average daily net assets set forth in the attached Schedule
A, which Schedule can be modified from time to time to reflect changes in
annual rates [subadvisor of more than one fund: or the addition or
deletion of a Fund from the terms of this Agreement], subject to
appropriate approvals required by the 1940 Act, if any. If this Agreement
becomes effective or terminates before the end of any month, the fee for
the period from the effective date to the end of the month or from the
beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion that such month bears to the
full month in which such effectiveness or termination occurs.
5. Liability of Subadvisor. Subadvisor agrees to perform faithfully the
services required to be rendered to the Fund under this Agreement, but
nothing herein contained shall make Subadvisor or any of its officers,
partners, or employees liable for any loss sustained by the Fund or its
officers, Directors, or shareholders, or any other person on account of
the services which Subadvisor may render or fail to render under this
Agreement; provided, however, that nothing herein shall protect Subadvisor
against liability to the Fund or to any of its shareholders, to which
Subadvisor would otherwise be subject, by reason of its willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement. Nothing in this Agreement shall protect
Subadvisor from any liabilities which it may have under the 1933 Act or
the 1940 Act.
6. Representations of Subadvisor. Subadvisor represents and warrants as
follows:
(a) Subadvisor (i) is registered as an investment advisor under the
Advisers Act of 1940 (the "Advisers Act") and will continue to be so
registered for so long as this Agreement remains in effect; (ii) is
not prohibited by the 1940 Act or the Advisers Act from performing
the services contemplated by this Agreement, (iii) has met and will
seek to continue to met for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the
services contemplated by this Agreement; (iv) has the authority to
enter into and perform the services contemplated by this Agreement;
and (v) will promptly notify Advisor of the occurrence of any event
that would disqualify Subadvisor from serving as an investment
advisor of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
(b) Subadvisor has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide
Advisor with a copy of the code of ethics, together with evidence of
its adoption. Within 45 days of the end of the last calendar quarter
of each year that this Agreement is in effect, a duly authorized
officer of Subadvisor shall certify to Advisor that Subadvisor has
complied with the requirements of Rule 17j-1 during the previous
year and that has been no material violation of Subadvisor's code of
ethics or, if such a violation has occurred, that appropriate action
was taken in response to such violation. Upon the written request of
Advisor, Subadvisor shall permit Advisor, its employees, or its
agents to examine the reports required to be made to Subadvisor by
Rule 17j-1(c)(1) and all other records relevant to Subadvisor's code
of ethics.
(c) Subadvisor has provided Advisor with a copy of its Form ADV, which
as of the date of this Agreement is its Form ADV as most recently
filed with the Securities and Exchange Commission ("SEC") and
promptly will furnish a copy of all amendments to Advisor at least
annually.
(d) Subadvisor will promptly notify Advisor of any changes in the
controlling shareholder, in the key personnel who are either the
portfolio manager(s) responsible for the Fund or senior management
of Subadvisor, or if there is otherwise an actual change in control
or management of Subadvisor.
(e) Subadvisor agrees that neither it nor any of its affiliates will in
any way refer directly or indirectly to its relationship with the
Fund or Advisor, or any of their respective affiliates in offering,
marketing, or other promotional materials without the prior written
consent of Advisor.
7. Liability and Indemnification.
(a) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, Subadvisor, any of its affiliates and any of
the officers, directors, employees, consultants, or agents thereof
shall not be liable for any losses, claims, damages, liabilities, or
litigation (including legal and other expenses) incurred or suffered
by AEFC or the Fund as a result of any error of judgment or mistake
of law by Subadvisor with respect to the Fund, except that nothing
in this Agreement shall operate or purport to operate in any way to
exculpate, waive, or limit the liability of Subadvisor for, and
Subadvisor shall indemnify and hold harmless the Fund, AEFC, all
affiliated persons thereof (within the meaning of Section 2(a)(3) of
the 0000 Xxx) and all controlling persons (as described in Section
15 of the Securities Act of 1933, as amended ("1933 Act"))
(collectively, "AEFC Indemnitees") against any and all losses,
claims, damages, liabilities, or litigation (including reasonable
legal and other expenses) to which any of the AEFC Indemnitees may
become subject under the 1933 Act, the 1940 Act, the Advisers Act,
or under any other statute, at common law, or otherwise arising out
of or based on (i) any willful misconduct, bad faith, reckless
disregard, or gross negligence of Subadvisor in the performance of
any of its duties or obligations hereunder; (ii) any untrue
statement of a material fact contained in the Prospectus and SAI,
proxy materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund or the omission to state therein a
material fact known to Subadvisor which was required to be stated
therein or necessary to make the statements therein not misleading,
if such statement or omission was made in reliance upon information
furnished to AEFC or the Fund by the Subadvisor Indemnitees (as
defined below) for use therein; or (iii) any violation of federal or
state statutes or regulations by Subadvisor. It is further
understood and agreed that Subadvisor may rely upon information
furnished to it by AEFC that it reasonably believes to be accurate
and reliable. The federal securities laws impose liabilities in
certain circumstances on persons who act in good faith, and
therefore nothing herein shall in any way constitute a waiver of
limitation of any rights which AEFC may have under any securities
laws.
(b) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, AEFC and the Fund shall not be liable for
any losses, claims, damages, liabilities, or litigation (including
legal and other expenses) incurred or suffered by Subadvisor as a
result of any error of judgment or mistake of law by AEFC with
respect to the Fund, except that nothing in this Agreement shall
operate or purport to operate in any way to exculpate, waive, or
limit the liability of AEFC for, and AEFC shall indemnify and hold
harmless Subadvisor, all affiliated persons thereof (within the
meaning of Section 2(a)(3) of the 0000 Xxx) and all controlling
persons (as described in Section 15 of the 1933 Act) (collectively,
"Subadvisor Indemnitees") against any and all losses, claims,
damages, liabilities, or litigation (including reasonable legal and
other expenses) to which any of the Subadvisor Indemnitees may
become subject under the 1933 Act, the 1940 Act, the Advisers Act,
or under any other statute, at common law, or otherwise arising out
of or based on (i) any willful misconduct, bad faith, reckless
disregard, or gross negligence of AEFC in the performance of any of
its duties or obligations hereunder; (ii) any untrue statement of a
material fact contained in the Prospectus and SAI, proxy materials,
reports, advertisements, sales literature, or other materials
pertaining to the Fund or the omission to state therein a material
fact known to AEFC which was required to be stated therein or
necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon information
furnished to AEFC or the Fund by a Subadvisor Indemnitee for use
therein, or (iii) any violation of federal or state statutes or
regulations by AEFC or the Fund.
(c) After receipt by AEFC or Subadvisor, its affiliates, or any partner,
officer, director, employee, or agent of any of the foregoing,
entitled to indemnification as stated in (a) or (b) above
("Indemnified Party") of notice of the commencement of any action,
if a claim in respect thereof is to be made against any person
obligated to provide indemnification under this section
("Indemnifying Party"), such Indemnified Party shall notify the
Indemnifying Party in writing of the commencement thereof as soon as
practicable after the summons or other first written notification
giving information of the nature of the claim has been served upon
the Indemnified Party; provided that the failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any
liability under this section, except to the extent that the omission
results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is damaged solely as a result of the failure
to give such notice. The Indemnifying Party, upon the request of the
Indemnified Party, shall retain counsel satisfactory to the
Indemnified Party to represent the Indemnified Party in the
proceeding, and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Party unless (1) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of
such counsel, or (2) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party and representation by both parties
by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party
shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment.
8. Duration and Termination.
(a) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for a period of more than two years from the date
written above only so long as such continuance is specifically
approved at least annually in conformity with the requirements of
the 1940 Act. Thereafter, if not terminated, this Agreement shall
continue automatically for successive periods of 12 months each,
provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Fund's directors who are
not parties to this Agreement or interested persons (as defined in
the 0000 Xxx) of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Fund's
Board of Directors or by a vote of the holders of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the
Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Fund's Board of
Directors or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund on 60 days'
written notice to Subadvisor. This Agreement may also be terminated,
without the payment of any penalty, by Advisor (i) upon 60 days'
written notice to Subadvisor; (ii) upon material breach by
Subadvisor of any representations and warranties set forth in this
Agreement, if such breach has not been cured within 20 days after
written notice of such breach; or (iii) immediately if, in the
reasonable judgment of Advisor, Subadvisor becomes unable to
discharge its duties and obligations under this Agreement, including
circumstances such as the insolvency of Subadvisor or other
circumstances that could adversely affect the Fund. Subadvisor may
terminate this Agreement at any time, without payment of any
penalty, on 60 days' written notice to Advisor. This Agreement shall
terminate automatically in the event of its assignment (as defined
in the 0000 Xxx) or upon the termination of the Advisory Agreement.
9. Subadvisor's Services Are Not Exclusive. Nothing in this Agreement shall
limit or restrict the right of any of Subadvisor's partners, officers, or
employees who may also be a director, officer, or employee of the Fund to
engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any business, whether of a
similar or a dissimilar nature, or limit or restrict Subadvisor's right to
engage in any other business or to render services of any kind to any
other corporation, firm, individual, or association.
10. References to Subadvisor. During the term of this Agreement, AEFC agrees
to furnish to Subadvisor at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to sales personnel, shareholders of the Fund or
the public, which refer to Subadvisor or its clients in any way, prior to
use thereof and not to use such material if Subadvisor reasonably objects
in writing five business days (or such other time as may be mutually
agreed upon) after receipt thereof. Sales literature may be furnished to
Subadvisor hereunder by first-class or overnight mail, facsimile
transmission, or hand delivery.
11. Notices. 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.
Subadvisor:
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AEFC:
Vice President, Investment Administration
American Express Financial Corporation
53600 AXP Financial Center Xxxxxxxxxxx, XX 00000
fax: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx
Vice President and Group Counsel
American Express Financial Advisors Inc.
50606 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
12. Amendments. This Agreement may be amended by mutual consent, subject to
approval by the Fund's Board of Directors and the Fund's shareholders to
the extent required by the 1940 Act.
13. Assignment. No assignment (as defined in the 0000 Xxx) shall be made by
Advisor without the prior written consent of the Fund and AEFC.
Notwithstanding the foregoing, no assignment shall be deemed to result
from any changes in the directors, officers, or employees of Advisor
except as may be provided to the contrary in the 1940 Act or the rules and
regulations thereunder.
14. Governing Law. This Agreement shall be governed by the laws of the State
of Minnesota, without giving effect to the conflicts of laws principles
thereof, or any applicable provisions of the 1940 Act. To the extent that
the laws of the State of Minnesota, or any of the provision of this
Agreement, conflict with applicable provisions of the 1940 ACT, the latter
shall control.
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
16. Severability. Should any part of this Agreement be held invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
17. Interpretation. Any questions of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term
or provision of the 1940 Act shall be resolved by reference to such term
or provision in the 1940 Act and to interpretation thereof, if any, by the
federal courts or, in the absence of any controlling decision of any such
court, by rules, regulations, or orders of the SEC validly issued pursuant
to the 1940 Act. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation, or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation, or order.
18. Headings. The headings in this Agreement are intended solely as a
convenience and are not intended to modify any other provision herein.
19. Authorization. Each of the parties represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action by such party and when so executed and
delivered, this Agreement will be the valid and binding obligation of such
party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
American Express Financial Corporation [Subadvisor]
By: _____________________________ By: _______________________________
SUBADVISORY AGREEMENT
SCHEDULE A
Compensation pursuant to Paragraph 4 of Subadvisory Agreement shall be
calculated in accordance with the following schedule:
Average Daily Net Assets* Rate
Dated: _____________________, 2001
*Applies to average daily net assets that are subject to the Subadvisor's
investment discretion.
