INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, Denver, Colorado, by
and between INVESCO FUNDS GROUP, INC. (the "Adviser"), a Delaware corporation,
and INVESCO Variable Investment Funds, 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 has one class of shares (the "Shares"), which is di-
vided into four series, each representing an interest in a separate portfolio
of investments (such series initially being the INVESCO VIF-Industrial Income
Portfolio, INVESCO VIF-Total Return Portfolio, INVESCO VIF-High Yield Portfo-
lio and INVESCO VIF-Utilities Portfolio (the "Portfolios")); 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 cove-
nants and agreements hereinafter contained, the parties hereto agree as fol-
lows:
1. Investment Management Services. The Adviser hereby agrees to manage the
investment operations of the Fund and its Portfolios, subject to the terms of
this Agreement and to the supervision of the Fund's directors (the "Direc-
tors"). 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 the Portfolios of the Fund;
(b) to maintain a continuous investment program for the Fund and each
Portfolio of the Fund, consistent with (i) the Fund's and each Portfolio's
investment policies as set forth in the Fund'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 addi-
tional information of the Fund or any Portfolio 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 In-
ternal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund and its Portfolios, unless otherwise directed by the Directors of the
Fund, and to execute transactions accordingly;
(d) to provide to the Fund and the Portfolios of the Fund the benefit of
all of the investment analyses and research, the reviews of current eco-
nomic conditions and trends, and the consideration of long-range invest-
ment policy now or hereafter generally available to investment advisory
customers of the Adviser;
(e) to determine what portion of the Fund and each Portfolio 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 and/or Portfolio 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 and each Portfolio, 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 by the Fund or by the custodian, co-
custodian or sub-custodian of the Fund's or any of the Portfolios' 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 and for the Portfo-
lios, 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 and the Portfolios 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 a second-
ary 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 re-
quirement for adjustment of the advisory fee payable pursuant to paragraph 4
hereof. The Adviser may follow a policy of considering sales of variable annu-
ity or variable life insurance contracts for which the Fund serves as an in-
vestment vehicle as a factor in the selection of broker/dealers to execute
portfolio transactions, subject to the requirements of best execution dis-
cussed above.
The Adviser shall for all purposes herein provided be deemed to be an inde-
pendent 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 employ-
ees of the Adviser or its affiliates. Except for such sub-accounting, record-
keeping, 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 October 20, 1993, which was approved on October 20, 1993, 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, inter-
nal 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 Com-
mission and Fund shareholders. The Adviser also will furnish, at the Adviser's
expense, such office space, equipment and facilities as may be reasonably re-
quested 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 ex-
penses payable by the Fund include the following:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund and any Portfolio in connection with securities
transactions to which the Fund or any Portfolio is a party or in connec-
tion with securities owned by the Fund or any Portfolio;
(b) the fees, charges and expenses of any independent public accoun-
tants, custodian, depository, dividend disbursing agent, dividend rein-
vestment agent, transfer agent, registrar, independent pricing services
and legal counsel for the Fund or for any Portfolio;
(c) the interest on indebtedness, if any, incurred by the Fund or any
Portfolio;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund or any Portfolio 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, 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 share-
holders' 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 or-
ganization 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 regis-
tration 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 repre-
senting 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 or any Port-
folio;
(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 thereun-
der);
(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 Ad-
viser may, to the extent it deems appropriate and subject to compliance with
the requirements of applicable laws and regulations, and upon receipt of writ-
ten approval of the Fund, make use of its affiliated companies and their em-
ployees; provided that the Adviser shall supervise and remain fully responsi-
ble 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 each Portfolio of the Fund, as de-
termined by valuations made in accordance with the Fund's procedure for calcu-
lating the Portfolios' net asset value as described in the Fund's Prospectus
and/or Statement of Additional Information. On an annual basis the advisory fee
ap- plicable to each Portfolio shall be as follows: For the INVESCO
VIF-Industrial Income Portfolio and the INVESCO VIF-Total Return Portfolio, the
advisory fee is computed at the annual rate of 0.75% of the first $500 million
of the Port- folio's average net assets; 0.65% of the next $500 million of the
Portfolio's average net assets; and 0.55% of the Portfolio's average net assets
in excess of $1 billion. For the INVESCO VIF-High Yield Portfolio and the
INVESCO VIF- Utilities Portfolio, the advisory fee is computed at the annual
rate of 0.60% of the first $500 million of the Portfolio's average net assets;
0.55% of the next $500 million of the Portfolio's average net assets; and 0.45%
of the Portfolio's average net assets in excess of $1 billion.
During any period when the determination of the Portfolios' net asset value
is suspended by the Directors of the Fund, the net asset value of a share of
the Portfolios 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 or any Portfolio thereof 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 a Portfolio's expenses exceeds the most
restrictive state imposed annual expense limitation (if, and to the extent
that, any such limitation is applicable to the Fund), the Adviser will be re-
quired to reimburse the Portfolio 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 or such Portfo-
lio in any event. Expenditures, including costs incurred in connection with
the purchase or sale of portfolio securities, which are capitalized in accor-
dance 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 connec-
tion with purchases or sales of securities for the investment portfolio of the
Fund or any Portfolio, neither the Adviser nor its officers or employees will
act as a principal or agent for any party other than the Fund or any Portfolio
or receive any commissions. The Adviser will comply with all applicable laws
in acting hereunder including, without limitation, the 1940 Act; the Invest-
ment 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
Portfolios 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 contin-
uance is specifically approved at least annually (i) by a vote of a majority
of the outstanding voting securities of the Portfolios 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. In the event
of the disapproval of this Agreement, or of the continuation hereof, by the
shareholders of a particular Portfolio (or by the Directors of the Fund as to
a particular Portfolio), the parties intend that such disapproval shall be ef-
fective only as to such Portfolio, and that such disapproval shall not affect
the validity or effectiveness of the approval of this Agreement, or of the
continuation hereof, by the shareholders of any other Portfolio (or by the Di-
rectors, including a majority of the disinterested Directors) as to such other
Portfolio; in such case, this Agreement shall be deemed to have been validly
approved or continued, as the case may be, as to such other Portfolio.
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 or, with respect to a
particular Portfolio, by a majority of the outstanding voting se- curities of
that Portfolio, as the case may be, or by the Adviser. This Agree- ment shall
immediately terminate in the event of its assignment, unless an or- der is
issued by the Securities and Exchange Commission conditionally or un-
conditionally 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 para-
graph 4 earned prior to such termination.
7. Non-Exclusive Services. The Adviser shall, during the term of this Agree-
ment, be entitled to render investment advisory services to others, including,
without limitation, other investment companies with similar objectives to
those of the Fund or any Portfolio 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 or any
Portfolio 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
or any Portfolio and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund or any Portfo-
lio 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 or
any Portfolio 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 ma-
jority of the outstanding voting securities of any Portfolio of the Fund af-
fected by such amendment; 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. In the event of the
disapproval of an amendment of this Agreement by the shareholders of a partic-
ular Portfolio (or by the Directors of the Fund as to a particular Portfolio),
the parties intend that such disapproval shall be effective only as to such
Portfolio, and that such disapproval shall not affect the validity or effec-
tiveness of the approval of the amendment by the shareholders of any other
Portfolio (or by the Directors, including a majority of the disinterested Di-
rectors) as to such other Portfolio; in such case, this Agreement shall be
deemed to have been validly amended as to such other Portfolio.
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 VARIABLE INVESTMENT FUNDS,
INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Senior Vice President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Secretary