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INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the ____ day of ___________, 199_, by and
between IDS Life Special Income Fund, Inc. (the "Fund"), a
Minnesota corporation, and IDS Life Insurance Company ("IDS Life"),
a Minnesota corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Fund 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 Fund 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 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 Fund's
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
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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 it acts 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 Fund agrees to pay to IDS Life, and IDS Life
covenants and agrees to accept from the Fund 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.
Asset Charge
Assets Annual Rate at
(Billions) Each Asset Level
First $1 0.610%
Next $1 0.595
Next $1 0.580
Next $3 0.565
Next $3 0.550
Over $9 0.535
(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.
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(3) The fee provided for hereunder shall be paid in cash by
the Fund to IDS Life within five business days after the last day
of each month.
Part Three: ALLOCATION OF EXPENSES
(1) The Fund agrees to pay:
(a) Fees payable to IDS Life for the latter's services
under 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 Fund 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 Funds.
(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 Funds' shareholders.
(e) All fees and expenses paid to directors of the
Funds; 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.
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(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 consents 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 IDS 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.
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(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 until _________,
199_, 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
Fund's 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 of the Fund 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 of the Fund or by a vote of the majority of the outstanding
voting shares of the Fund. The vote of the majority of the
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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.
IDS LIFE SPECIAL INCOME FUND, INC.
By
Vice President
IDS LIFE INSURANCE COMPANY
By
Vice President
