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 Tax-Free Income 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 which currently consists of two
series (the "Shares"), such series initially being the INVESCO Tax-Free Long-
Term Bond Fund and the INVESCO Tax-Free Intermediate Bond Fund (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
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 and its Portfolios, 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 the Portfolios of the Fund;
(b) to maintain a continuous investment program for the Fund and the
Portfolios of the Fund, consistent with (i) the Fund's and the Portfolios'
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 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 Internal 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 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 and the Portfolios of the Fund
should be invested in the various types of securities authorized for purchase
by the Fund;
(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 Portfolio'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 and for the Portfolios
of 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 and the Portfolios of 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 a 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 sub-accounting, 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, 1993, which was approved on April 23, 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, 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 and any Portfolio of the Fund in connection with
securities transactions to which the Fund or the Portfolios is a party or in
connection with securities owned by the Fund or the Portfolios of 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 or for the Portfolios of the Fund;
(c) the interest on indebtedness, if any, incurred by the Fund or the
Portfolios of the Fund;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund or the Portfolios of
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, including the preparation and printing of prospectuses and
statements of additional information;
(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 or the
Portfolios of 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 Portfolios of the Fund, as determined
by valuations made in accordance with the Fund's procedure for calculating 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
applicable to the INVESCO Tax-Free Long-Term Bond Fund shall be as follows:
0.55% on the first $300 million of the Portfolio's average net assets as so
determined, 0.45% of the Portfolio's average net assets in excess of $300
million but not more than $500 million, and 0.35% of the Portfolio's average net
assets in excess of $500 million. The advisory fee applicable to the INVESCO
Tax-Free Intermediate Bond Fund shall be 0.50% of the first $300 million of the
Portfolio's average net assets; 0.40% of the next $200 million of the
Portfolio's average net assets; and 0.30% of the Portfolio's average net assets
over $500 million.
During any period when the determination of any Portfolio's net asset value
is suspended by the Directors of the Fund, the net asset value of a share of the
Portfolio 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 the
Portfolios 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 any Portfolio's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser will be
required 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 the Portfolios
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 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 the Portfolios of 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
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
continuance 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.
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 the Portfolios 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 or the Portfolios 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 the Portfolios of 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 or the Portfolios of the Fund and the Adviser's other
customers.
8. Liability. The Adviser shall have no liability to the Fund or any
Portfolios of 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
or any Portfolios of 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, discharged
or terminated orally, but only by an instrument in writing signed by the Fund
and the Adviser. In addition, 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 Portfolios 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. 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 TAX-FREE INCOME FUNDS, 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
