INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 13th day of November, 1996, by and between IDS
Tax-Exempt Bond Fund, Inc. (the "Corporation"), a Minnesota corporation, on
behalf of its underlying series fund: IDS Intermediate Tax-Exempt Fund (the
"Fund"); and American Express Financial Corporation, a Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains American Express Financial
Corporation, and American Express Financial Corporation 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 American Express Financial Corporation'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 other services of
whatever nature required in connection with the management of the Fund as
provided under this agreement; and to pay such expenses 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. American Express Financial Corporation agrees to maintain an
adequate organization of competent persons to provide the services and to
perform the functions herein mentioned. American Express Financial Corporation
agrees to meet with any persons at such times as the Board deems appropriate for
the purpose of reviewing American Express Financial Corporation's performance
under this agreement.
(2) American Express Financial Corporation agrees that the investment
planning and investment decisions will be in accordance with general investment
policies of the Fund as disclosed to American Express Financial Corporation from
time to time by the Fund and as set forth in the Fund's current Prospectus and
Registration Statement filed with the United States Securities and Exchange
Commission (the "SEC").
(3) American Express Financial Corporation 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 Corporation agrees that it will furnish to American Express
Financial Corporation any information that the latter may reasonably request
with respect to the services performed or to be performed by American Express
Financial Corporation under this agreement.
(5) American Express Financial Corporation 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, American
Express Financial Corporation 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 American Express Financial
Corporation 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
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 American Express Financial Corporation, nor
any officer, director or agent thereof shall be held liable to the Corporation
or 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
American Express Financial Corporation may rely upon information furnished to it
reasonably believed to be accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Corporation, on behalf of the Fund, agrees to pay to American
Express Financial Corporation, and American Express Financial Corporation
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 the amount computed as shown below.
The computation shall be made 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.
The asset charge shall be based on the net assets of the Fund as set
forth in the following table.
Asset Charge
Assets Annual Rate at
(Billions) Each Asset Level
First $1.0 0.450%
Next 1.0 0.425
Next 1.0 0.400
Next 3.0 0.375
Over 6.0 0.350
(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 pro rated 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 to American
Express Financial Corporation 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 American Express Financial Corporation for its
services under the terms of this agreement;
(b) Taxes;
(c) Brokerage commissions and charges in connection with the purchase
and sale of assets;
(d) Custodian fees and charges;
(e) Fees and charges of its independent certified public accountants
for services the Corporation requests;
(f) Premium on the bond required by Rule 17g-1 under the Investment
Company Act of 1940;
(g) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the Corporation, its
directors and officers, (ii) it employs in conjunction with a claim asserted by
the Board against American Express Financial Corporation, except that American
Express Financial Corporation shall reimburse the Corporation for such fees and
expenses if it is ultimately determined by a court of competent jurisdiction, or
American Express Financial Corporation agrees, that it is liable in whole or in
part to the Corporation (and/or the Fund), and (iii) it employs to assert a
claim against a third party;
(h) Fees paid for the qualification and registration for public sale
of the securities of the Fund under the laws of the United States and of the
several states in which such securities shall be offered for sale;
(i) Fees of consultants employed by the Corporation;
(j) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension, profit sharing,
and all other benefits paid to or provided for directors, officers and
employees, directors and officers liability insurance, errors and omissions
liability insurance, worker's compensation insurance and other expenses
applicable to the directors, officers and employees, except the Corporation will
not pay any fees or expenses of any person who is an officer or employee of
American Express Financial Corporation or its affiliates;
(k) Filing fees and charges incurred by the Corporation in connection
with filing any amendment to its articles of incorporation, or incurred in
filing any other document with the State of Minnesota or its political
subdivisions;
(l) Organizational expenses of the Fund;
(m) Expenses incurred in connection with lending portfolio securities
of the Fund; and
(n) Expenses properly payable by the Corporation, on behalf of the
Fund, approved by the Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this agreement.
Further, American Express Financial Corporation agrees that if, at the end of
any month, the expenses of the Fund under this agreement and any other agreement
between the Fund and American Express Financial Corporation, but excluding those
expenses set forth in (1)(b) and (1)(c) of this Part Three, exceed the most
restrictive applicable state expenses limitation, the Fund shall not pay those
expenses set forth in (1)(a) and (d) through (n) of this Part Three to the
extent necessary to keep the Fund's expenses from exceeding the limitation, it
being understood that American Express Financial Corporation will assume all
unpaid expenses and xxxx the Fund for them in subsequent months but in no event
can the accumulation of unpaid expenses or billing be carried past the end of
the Fund's fiscal year.
Until November 12, 1997, American Express Financial Corporation has agreed to
waive certain fees and to absorb certain fund expenses under this agreement. If,
at the end of any month, the fees and expense of the Fund's Class A Common
Stock, $0.01 par value per share (the "Class A Shares"), under this agreement
and any other agreement between the Fund and American Express Financial
Corporation exceed 0.90%, the Fund shall not pay fees or expenses under this
agreement to the extent necessary to keep the expense ratio from exceeding the
limitation. In any month that fees and expenses of Class A Shares exceed 0.90%,
all management fees and expenses in excess of that limit will be returned to the
Fund. Any fee waiver or elimination of expenses will apply to each class on a
pro rata basis.
Part Four: MISCELLANEOUS
(1) American Express Financial Corporation 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 of the
Corporation.
(3) The Corporation recognizes that American Express Financial
Corporation now renders 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
American Express Financial Corporation manages its own investments and/or those
of its subsidiaries. American Express Financial Corporation shall be free to
render such investment advice and other services and the Corporation 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
American Express Financial Corporation or any successor or assignee thereof, as
directors, officers, stockholders or otherwise; that directors, officers,
stockholders or agents of American Express Financial Corporation are or may be
interested in the Fund as directors, officers, shareholders, or otherwise; or
that American Express Financial Corporation or any successor or assignee, is or
may be interested in the Fund as shareholder or otherwise, provided, however,
that neither American Express Financial Corporation, 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) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will deal for or
on behalf of the Fund with himself or herself as principal or agent, or with any
corporation or partnership in which he or she may have a financial interest,
except that this shall not prohibit:
(a) Officers, directors or employees of American Express Financial
Corporation from having a financial interest in the Fund or in American Express
Financial Corporation.
(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 American Express Financial Corporation, 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 American
Express Financial Corporation as may be allowed by rule or order of the SEC, and
if made pursuant to procedures adopted by the Board.
(7) American Express Financial Corporation agrees that, except as
herein otherwise expressly provided or as may be permitted consistent with the
use of a broker-dealer affiliate of American Express Financial Corporation 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 Nov. 12, 1998, 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 Corporation or
American Express Financial Corporation 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.
IDS TAX-EXEMPT BOND FUND, INC.
IDS INTERMEDIATE TAX-EXEMPT FUND
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Vice President
