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 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 March 31,
2003 and shall continue from year to year thereafter
unless and until terminated by either party as hereinafter
provided, except that such continuance after March 31,
2003 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
