INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 31st day of October 1993, Denver, Colorado, by
and between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware corporation,
and INVESCO Diversified Funds, Inc., a Maryland Corporation (the "Fund").
W I T N E S S E T H :
WHEREAS, the Fund is a corporation organized under the laws of the State
of Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified, open-end management
investment company and has one class of shares (the "Shares"), which may be
divided into additional series, each representing an interest in a separate
portfolio of investments, with the first such series being designated as the
INVESCO Small Company Fund (the "Portfolio"); and
WHEREAS, the Fund desires that the Adviser manage its investment
operations and the Adviser desires to manage said operations;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Investment Management Services. The Adviser hereby agrees to manage
the investment operations of the Fund and its Portfolio, subject to
the terms of this Agreement and to the supervision of the Fund's
directors (the "Directors"). The Adviser agrees to perform, or
arrange for the performance of, the following specific services for
the Fund:
(a) to manage the investment and reinvestment of all the assets,
now or hereafter acquired, of the Fund and the Portfolio of
the Fund;
(b) to maintain a continuous investment program for the Fund and
each Portfolio of the Fund, consistent with (i) the Fund's and
Portfolio's investment policies as set forth in the Fund's
Articles of Incorporation, Bylaws, and Registration Statement,
as from time to time amended, under the Investment Company Act
of 1940, as amended (the "1940 Act"), and in any prospectus
and/or statement of additional information of the Fund or any
Portfolio of the Fund, as from time to time amended and in use
under the Securities Act of 1933, as amended, and (ii) the
Fund's status as a regulated investment company under the
Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for
the Fund and the Portfolio, unless otherwise directed by the
Directors of the Fund, and to execute transactions
accordingly;
(d) to provide to the Fund and the Portfolio of the Fund the
benefit of all of the investment analyses and research, the
reviews of current economic conditions and trends, and the
consideration of long-range investment policy now or hereafter
generally available to investment advisory customers of the
Adviser;
(e) to determine what portion of the Fund and each Portfolio of
the Fund should be invested in common stocks, preferred
stocks, Government obligations, commercial paper, certificates
of deposit, bankers' acceptances, variable amount notes,
corporate debt obligations, and any other authorized
securities;
(f) to make recommendations as to the manner in which voting
rights, rights to consent to Fund and/or Portfolio action and
any other rights pertaining to the Fund's portfolio securities
shall be exercised; and
(g) to calculate the net asset value of the Fund and each
Portfolio, as applicable, as required by the 1940 Act, subject
to such procedures as may be established from time to time by
the Fund's Directors, based upon the information provided to
the Adviser by the Fund or by the custodian, co-custodian or
sub-custodian of the Fund's or any of the Portfolio's assets
(the "Custodian") or such other source as designated by the
Directors from time to time.
With respect to execution of transactions for the Fund and for the
Portfolio, the Adviser shall place, or arrange for the placement of,
all orders for the purchase or sale of portfolio securities with
brokers or dealers selected by the Adviser. In connection with the
selection of such brokers or dealers and the placing of such orders,
the Adviser is directed at all times to obtain for the Fund and the
Portfolio the most favorable execution and price; after fulfilling
this primary requirement of obtaining the most favorable execution
and price, the Adviser is hereby expressly authorized to consider as
a secondary factor in selecting brokers or dealers with which such
orders may be placed whether such firms furnish statistical,
research and other information or services to the Adviser. Receipt
by the Adviser of any such statistical or other information and
services should not be deemed to give rise to any requirement for
adjustment of the advisory fee payable pursuant to paragraph 3
hereof. The Adviser may follow a policy of considering sales of
shares of the Fund as a factor in the selection of broker/dealers to
execute portfolio transactions, subject to the requirements of best
execution discussed above.
The Adviser shall for all purposes herein provided be deemed to be
an independent contractor.
2. Allocation of Costs and Expenses. The Adviser shall reimburse the
Fund monthly for any salaries paid by the Fund to officers,
Directors, and full-time employees of the Fund who also are
officers, general partners or employees of the Adviser or its
affiliates. Except for such subaccounting, recordkeeping, and
administrative services which are to be provided by the Adviser to
the Fund under the Administrative Services Agreement between the
Fund and the Adviser dated April 30, 1993, which was approved on
April 21, 1993, by the Fund's board of directors, including all of
the independent directors, at the Fund's request the Adviser shall
also furnish to the Fund, at the expense of the Adviser, such
competent executive, statistical, administrative, internal
accounting and clerical services as may be required in the judgment
of the Directors of the Fund. These services will include, among
other things, the maintenance (but not preparation) of the Fund's
accounts and records, and the preparation (apart from legal and
accounting costs) of all requisite corporate documents such as tax
returns and reports to the Securities and Exchange Commission and
Fund shareholders. The Adviser also will furnish, at the Adviser's
expense, such office space, equipment and facilities as may be
reasonably requested by the Fund from time to time.
Except to the extent expressly assumed by the Adviser herein and
except to the extent required by law to be paid by the Adviser, the
Fund shall pay all costs and expenses in connection with the
operations and organization of the Fund. Without limiting the
generality of the foregoing, such costs and expenses payable by the
Fund include the following:
(a) all brokers' commissions, issue and transfer taxes, and other
costs chargeable to the Fund and any Portfolio in connection
with securities transactions to which the Fund or any
Portfolio is a party or in connection with securities owned by
the Fund or any Portfolio;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent,
dividend reinvestment agent, transfer agent, registrar,
independent pricing services and legal counsel for the Fund or
for any Portfolio;
(c) the interest on indebtedness, if any, incurred by the Fund or
any Portfolio;
(d) the taxes, including franchise, income, issue, transfer,
business license, and other corporate fees payable by the Fund
or any Portfolio to federal, state, county, city, or other
governmental agents;
(e) the fees and expenses involved in maintaining the registration
and qualification of the Fund and of its shares under laws
administered by the Securities and Exchange Commission or
under other applicable regulatory requirements, including the
preparation and printing of prospectuses and statements of
additional information;
(f) the compensation and expenses of its Directors;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices,
prospectuses, statements of additional information and other
communications to the Fund's shareholders, as well as all
expenses of shareholders' meetings and Directors' meetings;
(h) all costs, fees or other expenses arising in connection with
the organization and filing of the Fund's Articles of
Incorporation, including its initial registration and
qualification under the 1940 Act and under the Securities Act
of 1933, as amended, the initial determination of its tax
status and any rulings obtained for this purpose, the initial
registration and qualification of its securities under the
laws of any state and the approval of the Fund's operations by
any other federal or state authority;
(i) the expenses of repurchasing and redeeming shares of the Fund;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of beneficial interest of the Fund;
(l) extraordinary expenses, including fees and disbursements of
Fund counsel, in connection with litigation by or against the
Fund or any Portfolio;
(m) premiums for the fidelity bond maintained by the Fund pursuant
to Section 17(g) of the 1940 Act and rules promulgated
thereunder (except for such premiums as may be allocated to
the Adviser as an insured thereunder);
(n) association and institute dues; and
(o) the expenses, if any, of distributing shares of the Fund paid
by the Fund pursuant to a Plan and Agreement of Distribution
adopted under Rule 12b-1 of the Investment Company Act of
1940.
3. Use of Affiliated Companies. In connection with the rendering of
the services required to be provided by the Adviser under this
Agreement, the Adviser may, to the extent it deems appropriate and
subject to compliance with the requirements of applicable laws and
regulations, and upon receipt of written approval of the Fund, make
use of its affiliated companies and their employees; provided that
the Adviser shall supervise and remain fully responsible for all
such services in accordance with and to the extent provided by this
Agreement and that all costs and expenses associated with the
providing of services by any such companies or employees and
required by this Agreement to be borne by the Adviser shall be borne
by the Adviser or its affiliated companies.
4. Compensation of the Adviser. For the services to be rendered and
the charges and expenses to be assumed by the Adviser hereunder, the
Fund shall pay to the Adviser an advisory fee which will be computed
on a daily basis and paid as of the last day of each month, using
for each daily calculation the most recently determined net asset
value of the Portfolio of the Fund, as determined by valuations made
in accordance with the Fund's procedure for calculating the
Portfolio's net asset value as described in the Fund's Prospectus
and/or Statement of Additional Information. On an annual basis the
advisory fee applicable to the Portfolio shall be computed at the
annual rate of 0.75% of the Portfolio's average net assets.
During any period when the determination of the Portfolio's net
asset value is suspended by the Directors of the Fund, the net asset
value of a share of the Portfolio as of the last business day prior
to such suspension shall, for the purpose of this Paragraph 4, be
deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee
shall be paid to the Adviser with respect to any assets of the Fund
or any Portfolio thereof which may be invested in any other
investment company for which the Adviser serves as investment
adviser. The fee provided for hereunder shall be prorated in any
month in which this Agreement is not in effect for the entire month.
If, in any given year, the sum of the Portfolio's expenses exceeds
the most restrictive state imposed annual expense limitation, the
Adviser will be required to reimburse the Portfolio for such excess
expenses promptly. Interest, taxes and extraordinary items such as
litigation costs are not deemed expenses for purposes of this
paragraph and shall be borne by the Fund or Portfolio in any event.
Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable
to investment companies, are accounted for as capital items and
shall not be deemed to be expenses for purposes of this paragraph.
5. Avoidance of Inconsistent Positions and Compliance with Laws.
In connection with purchases or sales of securities for the
investment portfolio of the Fund or any Portfolio, neither the
Adviser nor its officers or employees will act as a principal or
agent for any party other than the Fund or Portfolio or receive any
commissions. The Adviser will comply with all applicable laws in
acting hereunder including, without limitation, the 1940 Act; the
Investment Advisers Act of 1940, as amended; and all rules and
regulations duly promulgated under the foregoing.
6. Duration and Termination. This Agreement shall become effective as
of the date it is approved by a majority of the outstanding voting
securities of the Portfolio of the Fund, and unless sooner
terminated as hereinafter provided, shall remain in force for an
initial term ending two years from the date of execution, and from
year to year thereafter, but only as long as such continuance is
specifically approved at least annually (i) by a vote of a majority
of the outstanding voting securities of the Portfolio of the Fund or
by the Directors of the Fund, and (ii) by a majority of the
Directors of the Fund who are not interested persons of the Adviser
or the Fund by votes cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated
without the payment of any penalty, by the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of
the Fund or Portfolio, as the case may be, or by the Adviser. This
Agreement shall immediately terminate in the event of its
assignment, unless an order is issued by the Securities and Exchange
Commission conditionally or unconditionally exempting such
assignment from the provisions of Section 15(a) of the 1940 Act, in
which event this Agreement shall remain in full force and effect
subject to the terms and provisions of said order. In interpreting
the provisions of this paragraph 6, the definitions contained in
Section 2(a) of the 1940 Act and the applicable rules under the 1940
Act (particularly the definitions of "interested person,"
"assignment" and "vote of a majority of the outstanding voting
securities") shall be applied.
The Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to
evaluate the terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the
compensation described in paragraph 3 earned prior to such
termination.
7. Non-Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to
others, including, without limitation, other investment companies
with similar objectives to those of the Fund or any Portfolio of the
Fund. The Adviser may, when it deems such to be advisable,
aggregate orders for its other customers together with any
securities of the same type to be sold or purchased for the Fund or
any Portfolio in order to obtain best execution and lower brokerage
commissions. In such event, the Adviser shall allocate the shares
so purchased or sold, as well as the expenses incurred in the
transaction, in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Fund or any
Portfolio and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund or any
Portfolio or to the Fund's shareholders or creditors, for any error
of judgment, mistake of law, or for any loss arising out of any
investment, nor for any other act or omission, in the performance of
its obligations to the Fund or any Portfolio not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder.
9. Miscellaneous Provisions.
Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
Amendments Hereof. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument
in writing signed by the Fund and the Adviser, and no material
amendment of this Agreement shall be effective unless approved by
(1) the vote of a majority of the Directors of the Fund, including 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 amendment, and (2) the vote
of a majority of the outstanding voting securities of the Portfolio;
provided, however, that this paragraph shall not prevent any
immaterial amendment(s) to this Agreement, which amendment(s) may be
made without shareholder approval, if such amendment(s) are made
with the approval of (1) the Directors and (2) a majority of the
Directors of the Fund who are not interested persons of the Adviser
or the Fund.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal
or made invalid by a court decision, statute, rule or otherwise,
such illegality or invalidity shall not affect the validity or
enforceability of the remainder of this Agreement.
Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to
describe, interpret, define or limit the size, extent or intent of
this Agreement or any provision hereof.
Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Colorado and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of
Colorado, or any of the provisions herein, conflict with applicable
provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, the day and year first above written.
INVESCO DIVERSIFIED FUNDS, INC.
ATTEST:
By: /s/ Xxxx X. Xxxxxx
/s/ Xxxx X. Xxxxx ---------------------------
----------------- Xxxx X. Xxxxxx
Xxxx X. Xxxxx President
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Xxx X. Xxxxxx
/s/ Xxxx X. Xxxxx ---------------------------
----------------- Xxx X. Xxxxxx
Xxxx X. Xxxxx President
