INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 19th day of February, 1986, between VALUE LINE
AGGRESSIVE INCOME TRUST, established under the laws of the Commonwealth of
Massachusetts by Declaration of Trust dated November 12, 1985, (hereinafter
called "the Fund") and VALUE LINE, INC., a New York corporation (hereinafter
called "the Company").
WITNESSETH:
WHEREAS, the Fund desired to have the Company act as its investment adviser
and provide it with investment research, advice, supervision and management;
and
WHEREAS, the Company is willing to undertake the same upon the terms and
conditions set forth.
NOW, THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Duties. The Company shall provide the Fund with such investment
research, data, advice and supervision as the latter may from time to time
consider necessary for proper supervision of its funds. The Company shall act as
manager and investment adviser of the Fund, and, as such, shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased or sold by the Fund, and what portion of the
assets of the Fund shall be held uninvested, subject always to the provisions of
the Fund's Declaration of Trust and By-Laws, to the Fund's fundamental
investment policies as in effect from time to time, and to the control and
review by the Fund's Board of Trustees. The Company shall take, on behalf of the
Fund, all actions which it deems necessary to carry into effect the investment
policies determined as provided above, and to that end the Company may designate
a person or persons who are to be authorized by the Fund as the representative
or representatives of the Fund, to give instructions to the Custodian of the
assets of the Fund as to deliveries of securities and payments of cash for the
account of the Fund.
2. Allocation of Charges and Expenses; Brokerage. The Company shall furnish
at its own expense all administrative services, office space, equipment and
administrative, bookkeeping and clerical personnel necessary for managing the
affairs of the Fund. The Company shall also provide persons satisfactory to the
Fund's Board of Trustees to act as officers and employees of the Fund and shall
pay the salaries and wages of all officers and employees of the Fund who are
also officers and employees of the Company or of an affiliated person (as
defined in the Investment Company Act
of 1940) other than the Fund. All other costs and expenses not expressly assumed
by the Company under this Agreement, or to be paid by the Distributor or
Distributors of the shares of the Fund, shall be paid by the Fund, including (1)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities; (iii) insurance premiums for fidelity
and other coverage requisite to its operations; (iv) compensation and expenses
of its trustees other than those affiliated with the Company; (v) legal and
audit expenses; (vi) custodian and shareholder servicing agent fees and
expenses; (vii) expenses incident to the redemption of its shares; (viii)
expenses incident to the issuance of its shares against payment therefor by or
on behalf of the subscribers thereto, including printing of stock certificates;
(ix) fees and expenses incident to the registration under the Securities Act of
1933 or under any state securities laws of shares of the Fund for public sale
and fees imposed on the Fund under the Investment Company Act of 1940; (x)
expenses of printing and mailing prospectuses, reports and notices and proxy
material to shareholders of the Fund; (xi) all other expenses incidental to
holding meetings of the Fund's shareholders; (xii) a pro rata share, based on
relative net asset value of the Fund and other investment companies for which
the Company also acts as manager and investment adviser, of 50% of the fees or
dues of the Investment Company Institute and of the No Load Mutual Funds
Association, Inc.; (xiii) fees and expenses in connection with registration of
the Fund or qualification of its shares under the securities laws of states or
foreign jurisdiction; and (xiv) such non-recurring expenses as may arise,
including actions, suits or proceedings to which the Fund is a party and the
legal obligation which the Fund may have to indemnify its officers and trustees
with respect thereto.
The Company shall place purchase and sale orders for portfolio transactions
of the Fund with brokers and/or dealers including, where permitted by law, the
Fund's Distributor or affiliates thereof or of the Company, which, in the
judgment of the Company, are able to execute such orders as expeditiously as
possible and at the best obtainable price. Purchases and sales of securities
which are not listed or traded on a securities exchange shall ordinarily be
executed with primary market makers acting as principal except when it is
determined that better prices and executions may otherwise be obtained,
provided, that the Company may cause the Fund to pay a member of a securities
exchange, broker or dealer an amount of commission for effecting a purchase or
sale order for a portfolio transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for effecting
that transaction if the Company 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 member, broker, dealer, viewed in terms of that
particular transaction or the Com-
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pany's overall responsibilities. As used herein "brokerage and research
services" shall have the same meaning as in Section 28(e) (3) of the Securities
Exchange Act of 1934, as such Section may be amended from time to time, and any
rules or regulations promulgated by the Securities and Exchange Commission. It
is understood that, consistent with the Company's fiduciary duty to the Fund, it
is the intent of this agreement to allow the Company the widest discretion
permitted by law in determining the manner and means by which portfolio
securities' transactions can be affected in the best interests of the Fund.
3. Compensation. (a) For its services and for the facilities to be
furnished, as provided herein, the Fund shall pay to the Company a monthly
advisory fee equal to one-twelfth of 3/4 of 1% on the first $100 million of the
Fund's average daily net assets during the year and 1/2 of 1% on average net
assets in excess thereof, prorated for any portion of a year that this agreement
is in effect. For this purpose, the value of the Fund's net assets shall be
determined in the same manner as for the purchase and redemption of Fund shares
as described in the Fund's current Prospectus.
(b) If the Fund's Distributor receives fees in connection with the tender
of portfolio securities of the Fund, the gross amount of the advisory fee
computed in accordance with the preceding paragraph 3(a) shall be reduced by the
amount of tender fees received; if the amount of such tender fees exceeds the
amount of advisory fees computed in accordance with paragraph 3(a), the excess
shall be paid by the Company to the Fund.
(c) In the event that the total expenses of the Fund, excluding interest,
taxes, brokerage commissions and extraordinary expenses, exceed in any fiscal
year the lowest applicable percentage limitation prescribed by any state in
which shares of the Fund are sold, the compensation of the Company, computed in
accordance with the preceding two paragraphs 3(a) and 3(b), shall be reduced by
the amount of such excess.
4. Duration and Termination of Agreement. This Agreement shall become
effective on the date set forth above and will continue in effect for a period
of two years and from year to year thereafter only so long as such continuance
is specifically approved at least annually in accordance with the Investment
Company Act of 1940. This Agreement may be terminated on sixty days written
notice by either party. This Agreement shall terminate automatically in the
event of its assignment as defined in the Investment Company Act of 1940.
5. Name of Fund. The Company consents to the use by the Fund of the name
"Value Line Aggressive Income Trust" so long, and only so long, as this
Agreement (or any agreement with any
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organization which has succeeded to the business of the Company) or any
extension, renewal or amendment thereof, remains in effect. The Fund agrees that
if and when no such agreement is in effect, (a) it will cease to use said name
or any name indicating or suggesting that the Fund is advised by or otherwise
connected with the Company and (b) it will not thereafter refer to the former
association between the Company and the Fund.
6. Nothing herein contained shall limit the freedom of the Company or any
affiliated person of the Company to render investment supervisory and corporate
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, and to
engage in other business activities.
7. Amendment to Agreement. This Agreement may not be amended except
pursuant to a direction given by the vote of the holders of a majority (as
defined in the Investment Company Act of 1940) of the outstanding shares of the
Fund.
8. The Company shall not be liable for any error of judgment, or mistake of
law, or any loss suffered by the Fund, in connection with the matters to which
this agreement relates, except for loss resulting in the performance of its
duties or from reckless disregard by the Company of its obligations and duties
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date and year first above
written.
VALUE LINE AGGRESSIVE INCOME TRUST
By /s/ [ILLEGIBLE]
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VALUE LINE, INC.
By /s/ XXXXXX X. XXXXXX
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