SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of May, 1998, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Capital Management,
Inc., a Delaware corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO COMBINATION STOCK & BOND FUNDS, INC. (the "Company")
is engaged in business as a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (hereinafter
referred to as the "Investment Company Act") and has one class of shares (the
"Shares"), which is divided into series, each representing an interest in a
separate portfolio of investments, with one such series being designated the
INVESCO Total Return Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering
investment advisory services and are registered as investment advisers under the
Investment Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser to
the Company and to furnish the investment advisory services described below,
subject to the broad supervision of INVESCO and Board of Directors of the
Company, for the period and on the terms and conditions set forth in this
Agreement. The Sub-Adviser hereby accepts such assignment and agrees during such
period, at its own expense, to render such services and to assume the
obligations herein set forth for the compensation provided for herein. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized herein, shall
have no authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
The Sub-Adviser hereby agrees to manage the investment operations of
the Fund, subject to the supervision of the Company's directors (the
"Directors") and INVESCO. Specifically, the Sub-Adviser agrees to perform the
following services:
(a) to manage the investment and reinvestment of all the
assets, now or hereafter acquired, of the Fund, and to
execute all purchases and sales of portfolio
securities;
(b) to maintain a continuous investment program for the
Fund, consistent with (i) the Fund's investment
policies as set forth in the Company's 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, as from time to
time amended and in use under the Securities Act of
1933, as amended, and (ii) the Company'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, unless otherwise directed by the
Directors of the Company or INVESCO, and to execute
transactions accordingly;
(d) to provide to the Fund the benefit of all of the
investment analysis 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 Sub-Adviser;
(e) to determine what portion of the Fund should be
invested in the various types of securities authorized
for purchase by the Fund; and
(f) to make recommendations as to the manner in which
voting rights, rights to consent to Fund action and any
other rights pertaining to the Fund's portfolio
securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub-Adviser
is authorized to employ such brokers or dealers as may, in the Sub-Adviser's
best judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub-Adviser effects
securities transactions on behalf of the Fund may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the
Sub-Adviser in connection with the Fund. The Sub-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. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub-Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub-Adviser herein and except to the extent required by law to be
paid by the Sub-Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed
by the Sub-Adviser, INVESCO shall pay to the Sub-Adviser an annual fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Fund, as
determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rate of 0.30% of the first $500 million of the Fund's
average net assets, 0.26% of the Fund's average net assets in excess of $500
million but not more than $1 billion, 0.20% of the Fund's average net assets in
excess of $1 billion but not more than $2 billion, 0.18% of the Fund=s average
net assets in excess of $2 billion but not more than $4 billion, 0.16% of the
Fund=s average net assets in excess of $4 billion but not more than $6 billion,
0.15% of the Fund=s average net assets in excess of $6 billion but not more than
$8 billion and 0.14% on the Fund=s average net assets in excess of $8 billion.
During any period when the determination of the Fund's net asset value is
suspended by the Directors of the Company, the net asset value of a share of the
Fund as of the last business day prior to such suspension shall, for the purpose
of this Article III, 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 Sub-Adviser with respect to any assets of the Fund which may be
invested in any other investment company for which the Sub-Adviser serves as
investment adviser or sub-adviser. The fee provided for hereunder shall be
prorated in any month in which this Agreement is not in effect for the entire
month. The Sub-Adviser shall be entitled to receive fees hereunder only for such
periods as the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
LIMITATION OF LIABILITY OF SUB-ADVISER
The Sub-Adviser shall not be liable for any error of judgment, mistake
of law or for any loss arising out of any investment or for any act or omission
in the performance of sub-advisory services rendered with respect to the Company
or the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations and duties hereunder. As used in this Article IV, "Sub-Adviser"
shall include any affiliates of the Sub-Adviser performing services contemplated
hereby and directors, officers and employees of the Sub-Adviser and such
affiliates.
ARTICLE V
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Fund are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common control
with the Sub-Adviser (for purposes of this Article V referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Company are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, INVESCO and their affiliates are or may
become interested in the Company as directors, officers and employees.
ARTICLE VI
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub-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.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by
a majority of the outstanding voting securities of the Fund, and shall remain in
force for an initial term expiring May 29, 2001, and from year to year
thereafter until its termination in accordance with this Article VII, but only
so long as such continuance is specifically approved at least annually by (i)
the Directors of the Company, or by the vote of a majority of the outstanding
voting securities of the Fund, and (ii) a majority of those 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.
This Agreement may be terminated at any time, without the payment of
any penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company 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
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub-Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
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 Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
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.
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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST: /s/ Xxxx X. Xxxxxxxxxx
By: __________________________________
/s/ Xxxx X. Xxxxx Xxxx X. Xxxxxxxxxx
__________________________________ President
Xxxx X. Xxxxx
Secretary
INVESCO CAPITAL MANAGEMENT, INC.
ATTEST:
By: __________________________________
__________________________________ President
Secretary
