SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO ASSET MANAGEMENT
LIMITED, a United Kingdom corporation ("the Sub-Adviser").
WITNESSETH:
WHEREAS, INVESCO SPECIALTY 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 two such series being designated the INVESCO European Small
Company Fund and INVESCO Latin American Growth Fund, (collectively the "Funds");
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, the Sub-Adviser is a member of the Investment Management Regulatory
Organization Limited ("IMRO") in the United Kingdom and as such is regulated by
IMRO in the conduct of its business; further the Sub-Adviser shall provide
services to INVESCO as a "Business Investor" as defined under the Rules of IMRO
and as such certain rules designed for the protection of private customers shall
not apply; 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 Funds, and to execute all purchases and sales of
portfolio securities;
(b) to maintain a continuous investment program for the Funds, consistent
with (i) the Funds investment policies as set forth in the Company'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 Funds, 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
Funds, unless otherwise directed by the Directors of the Company or INVESCO,
and to execute transactions accordingly;
(d) to provide to the Funds 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 Funds should be invested in the
various types of securities authorized for purchase by the Funds; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Funds action and any other rights pertaining to the
Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, 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
Funds, 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 Funds 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 Funds. 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 Funds 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 Funds.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with all
instructions of INVESCO in connection therewith such instructions may be given
by letter, telex, telephone or facsimile by any Director or Officer of INVESCO
or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
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 Funds.
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 a 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 Funds, 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 0.375% of the Fund's daily net assets up to $500 million; 0.325% of the
Fund's daily net assets in excess of $500 million but not more than $1 billion;
and 0.275% of the Fund's daily net assets in excess of $1 billion. During any
period when the determination of the Funds' net asset value is suspended by the
Directors of the Fund, the net asset value of a share of the Funds 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 Funds 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
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Funds 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 IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Funds 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 Funds as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Funds, 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 Funds 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; the Rules and Regulations of
IMRO; and all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
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 of the Company, unless
sooner terminated, as hereinafter provided. Thereafter, this Agreement shall
remain in force for an initial term of two years from the date of execution, and
from year to year thereafter until its termination in accordance with this
Article VI, 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 Funds, 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 Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, 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 VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care in
carrying out its duties under this Agreement provided however that the
Sub-Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or
the funds advised in connection with the subject matter of this Agreement unless
such loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub-Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the
Sub-Adviser for which it is responsible pursuant to Article I hereof provided
always that the Sub-Adviser shall send to INVESCO as soon as possible all
claims, letters, summonses, writs or documents which it receives from third
parties and provide whatever information and assistance INVESCO may require and
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
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 Funds (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
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
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.
By: /s/ Xxx X. Xxxxxx
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President
ATTEST:
/s/ Xxxx X. Xxxxx
-----------------
Secretary
INVESCO ASSET MANAGEMENT LIMITED
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------
Chief Executive Officer
ATTEST:
/s/ Xxxxxx X. Xxxxxxx
---------------------
Secretary
