INVESTMENT ADVISORY AND SERVICES AGREEMENT
BY AND BETWEEN
AMERICAN EXPRESS CERTIFICATE COMPANY
AND
AMERICAN EXPRESS FINANCIAL CORPORATION
This Agreement made as of March 6, 2002, between American Express Certificate
Company (formerly IDS Certificate Company), a Delaware Corporation, hereinafter
called "Company", and American Express Financial Corporation, a Delaware
corporation, hereinafter called "AEFC".
Part One: INVESTMENT ADVICE AND OTHER SERVICES
(1) AEFC agrees during the period of this Agreement, subject to the
terms and conditions herein set forth,
(a) to provide to the Company at its request investment advice,
statistical data and recommendations with respect to the
Company's investments in securities;
(b) to recommend and approve securities for purchase and sale by
the Company;
(c) to keep the Company advised on recommendations respecting
the retention or sale of securities owned by the Company,
provided that AEFC will purchase and sell short-term
investments such as treasury bills and commercial paper on
behalf of Company in accordance with authority delegated by
Company;
(d) to provide to the Company all administrative, accounting,
clerical, statistical and corporate services;
(e) to provide all customer, collection and other services of
whatever nature required in connection with the
administration of the affairs of Company;
(f) to provide or pay for all office equipment, furniture, and
office space as Company may require, and
(g) to pay all other expenses incurred by or on behalf of
Company except as provided in Part Three hereof and provided
that the foregoing shall not cover advice, services or
management contracted for by Company in other agreements
dealing with real estate mortgages, real estate, and home
improvement loans or dealing with transfer agency services
AEFC agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions
herein mentioned, such services and functions being subject
always to the direction and control of the Board of Directors,
the Executive Committee, and the authorized officers of Company.
(2) AEFC agrees that the investment planning, investment advice and
management it provides to the Company will be in accordance with
general investment policies of Company as set forth from time to
time by Company in its prospectuses and registration statements
filed with the United States Securities and Exchange Commission.
Part Two: COMPENSATION TO INVESTMENT ADVISER
(1) Company agrees to pay to AEFC and AEFC agrees to accept from Company
in full payment for:
(a) all investment advice, management, material and other services
provided,
(b) the use of all facilities and equipment, and
(c) all expenses paid or reimbursed by AEFC as herein provided, a fee
for each calendar month of each year equal to the total of 1/12th
of each of the respective percentages set forth below of the net
assets of Company, to be computed for each such month on the
basis of book value of assets as of the close of business on the
last full business day of the preceding month:
On the first $250 million of total book value of assets of Company......... .75%
On the next $250 million of total book value of assets of Company.......... .65%
On the next $250 million of total book value of assets of Company.......... .55%
On the next $250 million of total book value of assets of Company.......... .50%
On the total book value of assets of Company in excess of $1 billion...... .107%
provided that in computing total book value of assets of Company,
there shall be excluded therefrom, the book value of real estate
mortgages, real estate, property improvement loans, and any other
assets on which Company pays or with respect to which is paid an
advisory, service, or management fee other than as herein
provided.
Loans originated by banks or investment banks shall be excluded
from the computation of total book value of assets for purposes
of the previous calculation and, instead, the fee for managing
and servicing those loans shall be 0.35%. The fee shall be
payable monthly and shall equal 1/12th of 0.35%, computed for
each month on the basis of book value of the loans as of the
close of business on the last full business day of the preceding
month.
(2) The fee provided for hereunder shall be paid in cash by Company to
AEFC within five (5) business days after the last day of each month.
Part Three: ALLOCATION OF EXPENSES
(1) AEFC agrees to pay, cause to be paid or reimburse Company for all its
expenses during the period of this contract except:
(a) Fees payable to AEFC for the latter's services under this
Agreement.
(b) Fees, costs, expenses and allowances payable to any person, firm
or corporation for services under any agreement entered into by
Company covering the offering for sale, sale and distribution of
face-amount certificates issued by Company.
(c) Fees, costs, expenses and allowances payable or incurred by
Company in connection with the acquisition, management, servicing
or disposition
of real estate mortgages, real estate, or property improvement
loans.
(d) Taxes of any kind payable by Company.
(e) Depositary and custodian fees incurred by Company.
(f) Brokerage commissions and charges in the purchase and sale of
Company assets.
(g) Fees and expenses for services not covered by other agreements
and provided to Company at its request, or by requirement, by
attorneys, auditors, examiners, and professional consultants who
are not officers or employees of AEFC.
(h) Fees and expenses of directors of Company who are not officers or
employees of AEFC.
(i) Provisions for certificate reserves.
(j) Expenses of customer settlements not attributable to sales
function.
(k) Transfer agency fees and expenses.
Part Four: MISCELLANEOUS
(1) AEFC shall be deemed to be an independent contractor and, except as
expressly provided or authorized in the contract shall have no
authority to act for or represent Company.
(2) Company recognizes that AEFC now renders and may continue to render
investment advice and other services to other investment companies
which may or may not have investment policies and investments similar
to those of Company and that AEFC manages its own investments and
those of other subsidiaries. AEFC shall be free to render such
investment advice and other services and Company hereby consents
thereto.
(3) Neither this contract nor any transaction made pursuant thereto shall
be invalidated or in anywise affected by the fact that directors,
officers and agents of Company are or may be interested in AEFC or any
successor assignee thereof as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of AEFC
are or may be interested in Company as directors, officers, or
otherwise; or that AEFC is interested in Company as stockholder or
otherwise.
(4) Any notice under this contract shall be given in writing, addressed
and delivered, or mailed postpaid to the party to this Agreement
entitled to receive such at 200 AXP Financial Center, Minneapolis,
Minnesota, or to such other address as either party may designate in
writing mailed to the other.
(5) 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 Section 15(f) of the Investment Company Act of 1940 and
other 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 securities
issued by the Company) or other assets by or for the Company.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect through December 31, 2002 and
shall continue from year to year thereafter unless and until
terminated by either party as hereinafter provided, except that such
continuance after December 31, 2002 shall be specifically approved at
least annually (1) by the Board of Directors of Company or by a vote
of the majority of the outstanding voting securities of Company and
(2) 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.
(2) This Agreement may be terminated by either Company or AEFC at any time
by giving the other party at least sixty days' previous written notice
of such intention to terminate; provided that any such termination
shall be made without the payment of any penalty, and provided further
that such termination may be effected either by the Board of Directors
of Company or by a vote of the majority of the outstanding voting
securities of Company.
(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 Investment Company Act of 1940.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing agreement as
of the day and year first above written.
American Express Certificate American Express Financial
Company Corporation
/s/ Xxxxx X. Xxxxx /s/ Xxxxxxxx X. Xxxx
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Xxxxx X. Xxxxx Xxxxxxxx X. Xxxx
President Vice President
