INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the ____ day of August, 1999, by and between AXP
Variable Portfolio - Investment Series, Inc. (the "Corporation") on behalf of
its underlying series funds: AXP Variable Portfolio Blue Chip Advantage Fund,
AXP Variable Portfolio - Growth Fund and AXP Variable Portfolio - Small Cap
Advantage Fund (the "Fund"), a Minnesota corporation, and IDS Life Insurance
Company ("IDS Life") a Minnesota corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains IDS Life, and IDS Life 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 Fund's investment
objectives and policies, which securities in IDS Life'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 Fund all necessary research
and statistical data in connection therewith; to furnish all services of
whatever nature required in connection with the management of the Fund including
transfer agent and dividend- disbursing agent services; to furnish or pay for
all supplies, printed material, office equipment, furniture and office space as
the Fund may require; and to pay or reimburse such expenses of the Fund 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 and its underlying Fund. IDS Life agrees to maintain
(directly or through the contract described in paragraph (7) of this Part One)
an adequate organization of competent persons to provide the services and to
perform the functions herein mentioned. IDS Life agrees to meet with any persons
at such times as the Board deems appropriate for the purpose of reviewing IDS
Life's performance under this Agreement.
(2) IDS Life agrees that the investment planning and investment
decisions will be in accordance with general investment policies of the Fund as
disclosed to IDS Life from time to time by the Fund and as set forth in its
prospectuses and registration statements filed with the United States Securities
and Exchange Commission (the "SEC").
(3) IDS Life agrees that it will maintain all required records,
memoranda, instructions or authorizations relating to the acquisition or
disposition of securities for the Fund.
(4) The Fund agrees that it will furnish to IDS Life any information
that the latter may reasonably request with respect to the services performed or
to be performed by IDS Life under this Agreement.
(5) IDS Life is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund 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, IDS Life 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 IDS Life 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 ("AEFC") or IDS Life's overall responsibilities with respect to
the Fund and other funds for which they act as investment adviser.
(6) It is understood and agreed that in furnishing the Fund with the
services as herein provided, neither IDS Life, nor any officer, director or
agent thereof shall be held liable to 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 IDS Life may rely upon information furnished to it
reasonably believed to be accurate and reliable.
(7) The existence of an investment advisory agreement between IDS Life
and AEFC is specifically acknowledged and approved.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation agrees to pay to IDS Life, and IDS Life covenants
and agrees to accept from the Corporation in full payment for the services
furnished, a fee for each calendar day of each year equal to the total of
1/365th (1/366th in each leap year) of each of the respective percentages set
forth below of the net assets of the Fund; to be computed 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 Fund recorded on the books of the Fund for that day.
AXP Variable Portfolio - Blue Chip Advantage Fund
Assets Annual rate at
(billions) each asset level
---------- ----------------
First $0.25 0.540%
Next 0.25 0.515
Next 0.25 0.490
Next 0.25 0.465
Next 1.00 0.440
Next 1.00 0.410
Next 3.00 0.380
Next 6.00 0.350
AXP Variable Portfolio - Growth Fund
Assets Annual rate at
(billions) each asset level
---------- ----------------
First $1.00 0.630%
Next 1.00 0.615
Next 1.00 0.600
Next 3.00 0.585
Over 6.00 0.570
AXP Variable Portfolio - Small Cap Advantage Fund
Assets Annual rate at
(billions) each asset level
---------- ----------------
First $0.25 0.790%
Next 0.25 0.770
Next 0.25 0.750
Next 0.25 0.730
Next 1.00 0.710
Over 2.00 0.650
(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
Corporation to IDS Life within five business days after the last day of each
month.
Part Three: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Fees payable to IDS Life for the latter's services under
the terms of this Agreement.
(b) All fees, costs, expenses and allowances payable to any
person, firm or corporation for services under any agreement entered into by the
Fund covering the offering for sale, sale and distribution of the Fund's shares.
(c) All taxes of any kind payable by the Fund other than
federal original issuance taxes on shares issued by the Fund.
(d) All brokerage commissions and charges in the purchase and
sale of assets.
(2) The Corporation agrees to reimburse IDS Life or its affiliates for
the aggregate cost of the services listed below incurred by IDS Life in its
operation of the Fund.
(a) All custodian or trustee fees, costs and expenses.
(b) Costs and expenses in connection with the auditing and
certification of the records and accounts of the Fund by independent certified
public accountants.
(c) Costs of obtaining and printing of dividend checks,
reports to shareholders, notices, proxies, proxy statements and tax notices to
shareholders, and also the cost of envelopes in which such are to be mailed.
(d) Postage on all communications, notices and statements to
brokers, dealers, and the Fund's shareholders.
(e) All fees and expenses paid to directors of the Fund;
however, IDS Life will pay fees to directors who are officers or employees of
IDS Life or its affiliated companies.
(f) Costs of fidelity and surety bonds covering officers,
directors and employees of the Fund.
(g) All fees and expenses of attorneys who are not officers or
employees of IDS Life or any of its affiliates.
(h) All fees paid for the qualification and registration for
public sales of the securities of the Fund under the laws of the United States
and of the several states of the United States in which the securities of the
Fund shall be offered for sale.
(i) Cost of printing prospectuses, statements of additional
information and application forms for existing shareholders, and any supplements
thereto.
(j) Any losses due to theft and defalcation of the assets of
the Fund, or due to judgments or adjustments not covered by surety or fidelity
bonds, and not covered by agreement or obligation.
(k) Expenses incurred in connection with lending portfolio
securities of the Fund.
(l) Expenses properly payable by the Fund, approved by the
Board.
Part Four: MISCELLANEOUS
(1) IDS Life 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 Fund.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Fund recognizes that AEFC and IDS Life now render 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 Fund and that AEFC and IDS Life manage their
own investments and/or those of their subsidiaries. AEFC and IDS Life shall be
free to render such investment advice and other services and the Fund hereby
consent 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 Fund are or may be interested in
AEFC or IDS Life or any successor or assignee thereof, as directors, officers,
stockholders or otherwise; that directors, officers, stockholders or agents of
AEFC or IDS Life are or may be interested in the Fund as directors, officers,
shareholders, or otherwise; or that AEFC or IDS Life or any successor or
assignee, is or may be interested in the Fund as shareholder or otherwise,
provided, however, that neither
AEFC or IDS Life, nor any officer, director or employee thereof or of the Fund,
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.
(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) IDS Life agrees that no officer, director or employee of IDS Life
will deal for or on behalf of the Fund 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 IDS Life from having a
financial interest in the Fund or in IDS Life.
(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 IDS Life, 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 Fund by a broker-dealer affiliate of
IDS Life as may be allowed by rule or order of the SEC, and if made pursuant to
procedures adopted by the Fund's Board.
(7) IDS Life agrees that, except as herein otherwise expressly provided
or as may be permitted consistent with the use of a broker-dealer affiliate of
IDS Life 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.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for two years from the date
of this Agreement, or until a new agreement is approved by a vote of the
majority of the outstanding shares of the Fund and by vote of the 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 Fund 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 Fund or IDS Life 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 the 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 VARIABLE PORTFOLIO - INVESTMENT SERIES, INC.
AXP Variable Portfolio - Blue Chip Advantage Fund
AXP Variable Portfolio - Growth Fund
AXP Variable Portfolio - Small Cap Advantage Fund
By
Xxxxxx X. Xxx
Vice President
IDS LIFE INSURANCE COMPANY
By
Xxxxxx X. Xxxxx
Executive Vice President, Variable Assets
