INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, in Denver, Colorado,
by and between INVESCO FUNDS GROUP, INC. (the "Adviser"), a Delaware
corporation, and INVESCO Industrial Income Fund, Inc., a Maryland corporation
(the "Fund").
WITNESSETH:
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 currently has one class of shares (the "Shares"); and
WHEREAS, the Fund desires that the Adviser manage its investment operations
and to provide certain other services, and the Adviser desires to manage said
operations and to provide such other services;
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, 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 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 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, 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,
unless otherwise directed by the Directors of the Fund, and to execute
transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analyses
and research, the reviews of current economic conditions and of 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 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
securities shall be exercised.
With respect to execution of transactions for the Fund, the Adviser is
authorized to employ such brokers or dealers as may, in the 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 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 Adviser effects
securities transactions on behalf of the Fund may be used by the Adviser in
servicing all of its accounts, and not all such services may be used by the
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the 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 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 Adviser shall have the burden of demonstrating that
such expenditures were bona fide and for the benefit of the Fund.
2. Other Services and Facilities. The Adviser shall, in addition, supply at
its own expense all supervisory and administrative services and facilities
necessary in connection with the day-to-day operations of the Fund (except those
associated with the preparation and maintenance of certain required books and
records, and recordkeeping and administrative functions relating to employee
benefit and retirement plans, which services and facilities are provided under a
separate Administrative Services Agreement between the Fund and the Adviser).
These services shall include, but not be limited to: supplying the Fund with
officers, clerical staff and other employees, if any, who are necessary in
connection with the Fund's operations; furnishing office space, facilities,
equipment, and supplies; providing personnel and facilities required to respond
to inquiries related to shareholder accounts; conducting periodic compliance
reviews of the Fund's operations; preparation and review of required documents,
reports and filings by the Adviser's in-house legal and accounting staff
(including the prospectus, statement of additional information, proxy
statements, shareholder reports, tax returns, reports to the SEC, and other
corporate documents of the Fund), except insofar as the assistance of
independent accountants or attorneys is necessary or desirable; supplying basic
telephone service and other utilities; and preparing and maintaining the books
and records required to be prepared and maintained by the Fund pursuant to Rule
31a-1(b)(4), (5), (9), and (10) under the Investment Company Act of 1940. All
books and records prepared and maintained by the Adviser for the Fund under this
Agreement shall be the property of the Fund and, upon request therefor, the
Adviser shall surrender to the Fund such of the books and records so requested.
3. Payment of Costs and Expenses. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies reasonably
necessary to provide the services required to be provided by the Adviser under
this Agreement. The Fund shall pay all of the costs and expenses associated with
its operations and activities, except those expressly assumed by the Adviser
under this Agreement, including but not limited to:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund in connection with securities transactions to which
the Fund is a party or in connection with securities owned by the Fund;
(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;
(c) the interest on indebtedness, if any, incurred by the Fund;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund 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;
(f) the compensation and expenses of its independent Directors, and the
compensation of any employees and officers of the Fund who are not employees
of the Adviser or one of its affiliated companies and compensated as such;
(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;
(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 third parties, as insureds thereunder);
(n) association and institute dues;
(o) the expenses of distributing shares of the Fund but only if and to the
extent permissible under a plan of distribution adopted by the Fund pursuant
to Rule 12b-1 of the Investment Company Act of 1940; and
(p) all fees paid by the Fund for administrative, recordkeeping, and sub-
accounting services under the Administrative Services Agreement between the
Fund and the Adviser dated April 30, 1991.
4. 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.
5. 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 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 valuations 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 Adviser shall be computed at the following annual rates:
0.60% of the Fund's daily net assets up to $350 million; 0.55% of the Fund's
daily net assets in excess of $350 million but not more than $700 million; and
0.50% of the Fund's daily net assets in excess of $700 million. During any
period when the determination of the Fund's net asset value is suspended by the
Directors of the Fund, 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 paragraph
5, 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 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 Fund's expenses exceeds the
state-imposed annual expense limitation to which the Fund is subject, the
Adviser will be required to reimburse the Fund 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 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.
6. Avoidance of Inconsistent Positions and Compliance with Laws. In connection
with purchases or sales of securities for the investment portfolio of the Fund,
neither the Adviser nor its officers or employees will act as a principal or
agent for any party other than the Fund 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.
7. 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
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 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, 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 7, 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 5 earned prior to such termination.
8. 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. 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 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 and the Adviser's other customers.
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 orally changed or
discharged, but may only be modified by an instrument in writing signed by the
Fund and the Adviser. In addition, no amendment to 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 Fund (other than an
amendment which can be effective without shareholder approval under applicable
law).
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. 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, on the
date first above written.
INVESCO INDUSTRIAL INCOME FUND, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------
President
ATTEST:
/s/ Xxxx X. Xxxxx
---------------------------
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Senior Vice President
ATTEST:
/s/ Xxxx X. Xxxxx
-------------------------
Secretary
