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 Emerging Opportunity 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 is divided
into separate series, each representing an interest in a separate portfolio of
investments (such series initially being the INVESCO Emerging Growth Fund); 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, 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;
(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 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 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 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, 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 of the Fund or by the custodian, co-custodian or
sub-custodian of the Fund'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, 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 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 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 4 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, 1991, which was approved on April 24, 1991, 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 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 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;
(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 Fund, as determined by valuations
made in accordance with the Fund's procedure 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 annual
rate of 0.75% on the first $350 million of the Fund's average daily net assets
as so determined, 0.65% of the next $350 million of the Fund's average daily net
assets, and 0.55% of the Fund's average daily net assets over $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 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 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 most
restrictive state imposed annual expense limitation, 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.
5. Avoidance of Inconsistent Positions and Compliance with Laws. In
connection with purchase or sales of securities for the investment portfolio of
the Fund, neither the Adviser not 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.
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
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 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 4 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. 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 obligation to the Fund and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund 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 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 Fund; 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 EMERGING OPPORTUNITY FUNDS, INC.
By:/s/ Xxx X. Xxxxxx
-------------------------------
President
ATTEST:
/s/ Xxxx X. Xxxxx
--------------------------------
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Xxx X. Xxxxxx
-----------------------------
Senior Vice President
ATTEST:
/s/ Xxxx X. Xxxxx
---------------------------------
Secretary
