AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made June 8, 1994, by and between
TAX-FREE FUND OF COLORADO (the "Fund"), a Massachusetts business
trust, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
and (the XXXXXXXXXXX, PETTIS, SMITH, POLIAN INC. (the "Adviser"),
00000 Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000,
W I T N E S S E T H :
WHEREAS, the Fund and the Adviser have previously
entered into an investment advisory agreement with respect to the
Fund; and
WHEREAS, the Fund and the Adviser now wish to amend
and restate their agreement as herein set forth, referred to
hereafter as "this Agreement";
NOW THEREFORE, in consideration of the mutual
promises and agreements herein contained and other good and
valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. In General
The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund, with respect to
the investment of the Fund's assets, and to supervise and arrange
the purchase of securities for and the sale of securities held in
the portfolio of the Fund.
2. Duties and Obligations of the Adviser With Respect To
Investment of the Assets of the Fund
(a) Subject to the succeeding provisions of
this section and subject to the direction and control of the Board
of Trustees of the Fund, the Adviser shall:
(i) Supervise continuously the investment
program of the Fund and the composition of its
portfolio;
(ii) Determine what securities shall be
purchased or sold by the Fund; and
(iii) Arrange for the purchase and the sale of
securities held in the portfolio of the Fund;
and
(iv) At its expense provide for pricing of the
Fund's portfolio daily using a pricing service
or other source of pricing information
satisfactory to the Fund and, unless otherwise
directed by the Board of Trustees, provide for
pricing of the Fund's portfolio at least
quarterly using another such source
satisfactory to the Fund.
(b) Any investment program furnished by the
Adviser under this section shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the Investment
Company Act of l940 (the "Act") and any rules or regulations in
force thereunder; (2) any other applicable laws, rules, and
regulations; (3) the Declaration of Trust and By-Laws of the Fund
as amended from time to time; (4) any policies and determinations
of the Board of Trustees of the Fund; and (5) the fundamental
policies of the Fund, as reflected in its registration statement
under the Act, or as amended by the shareholders of the Fund.
(c) The Adviser shall give the Fund the benefit
of its best judgment and effort in rendering services hereunder,
but the Adviser shall not be liable for any loss sustained by
reason of the adoption of any investment policy or the purchase,
sale, or retention of any security, whether or not such purchase,
sale, or retention shall have been based upon (i) its own
investigation and research or (ii) investigation and research made
by any other individual, firm, or corporation, if such purchase,
sale, or retention shall have been made and such other individual,
firm, or corporation shall have been selected in good faith by the
Adviser. Nothing herein contained shall, however, be construed to
protect the Adviser against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
(d) Nothing in this Agreement shall prevent the
Adviser or any affiliated person (as defined in the Act) of the
Adviser from acting as investment adviser or manager for any other
person, firm, or corporation and shall not in any way limit or
restrict the Adviser or any such affiliated person from buying,
selling, or trading any securities for its own or their own
accounts, or for the accounts of others for whom it or they may be
acting, provided, however, that the Adviser expressly represents
that it will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations to the Fund
under this Agreement. It is agreed that the Adviser shall have no
responsibility or liability for the accuracy or completeness of the
Fund's Registration Statement under the Act and the Securities Act
of 1933, except for information supplied by the Adviser for
inclusion therein. The Fund agrees to indemnify the Adviser to the
full extent permitted by the Fund's Declaration of Trust.
(e) In connection with its duties to arrange
for the purchase and sale of the Fund's portfolio securities, the
Adviser shall select such broker-dealers ("dealers") as shall, in
the Adviser's judgment, implement the policy of the Fund to achieve
"best execution," i.e., prompt, efficient, and reliable execution
of orders at the most favorable net price. The Adviser shall cause
the Fund to deal directly with the selling or purchasing principal
or market maker without incurring brokerage commissions unless the
Adviser determines that better price or execution may be obtained
by paying such commissions; the Fund expects that most transactions
will be principal transactions at net prices and that the Fund will
incur little or no brokerage costs. The Fund understands that
purchases from underwriters include a commission or concession paid
by the issuer to the underwriter and that principal transactions
placed through dealers include a spread between the bid and asked
prices. In allocating transactions to dealers, the Adviser is
authorized to consider, in determining whether a particular dealer
will provide best execution, the dealer's reliability, integrity,
financial condition and risk in positioning the securities
involved, as well as the difficulty of the transaction in question,
and thus need not pay the lowest spread or commission available if
the Adviser determines in good faith that the amount of commission
is reasonable in relation to the value of the brokerage and
research services provided by the dealer, viewed either in terms of
the particular transaction or the Adviser's overall
responsibilities as to the accounts as to which it exercises
investment discretion. If, on the foregoing bases, the transaction
in question could be allocated to two or more dealers, the Adviser
is authorized, in making such allocation, to consider (i) whether
a dealer has provided research services, as further discussed
below; and (ii) whether a dealer has sold shares of the Fund or any
other investment company or companies having the Adviser as its
investment adviser or having the same administrator or sub-adviser
as the Fund. Such research may be in written form or through
direct contact with individuals and may include quotations on
portfolio securities and information on particular issuers and
industries, as well as on market, economic, or institutional
activities. The Fund recognizes that no dollar value can be placed
on such research services or on execution services, that such
research services may or may not be useful to the Fund and/or other
accounts of the Adviser, and that research received by such other
accounts may or may not be useful to the Fund.
3. Allocation of Expenses
The Adviser agrees that it will furnish the Fund, at
the Adviser's expense, all office space, facilities, equipment, and
clerical personnel necessary for carrying out its duties under this
Agreement. The Adviser agrees that it will supply, or cause to be
supplied, to any administrator or sub-adviser of the Fund all
necessary information in connection with such administrator's or
sub-adviser's duties under any agreement between such administrator
or sub-adviser and the Fund. The Adviser will also pay all
compensation of the Fund's officers, employees, and Trustees, if
any, who are affiliated persons of the Adviser. The Fund agrees to
bear the costs of preparing and setting in type its prospectuses,
statements of additional information, and reports to its
shareholders, and the costs of printing or otherwise producing and
distributing copies of such prospectuses, statements of additional
information, and reports sent to its shareholders. All costs and
expenses not expressly assumed by the Adviser under this Agreement
or by such administrator or sub-adviser or by the Fund's principal
underwriter shall be paid by the Fund, including, but not limited
to (i) interest and taxes; (ii) brokerage commissions; (iii)
insurance premiums; (iv) compensation and expenses of its Trustees
other than those affiliated with the Adviser or such administrator
or sub-adviser; (v) legal and audit expenses; (vi) custodian and
transfer agent, or shareholder servicing agent, fees and expenses;
(vii) expenses incident to the issuance of its shares (including
issuance on the payment of, or reinvestment of, dividends); (viii)
fees and expenses incident to the registration under Federal or
State securities laws of the Fund or its shares; (ix) expenses of
preparing, printing, and mailing reports and notices and proxy
material to shareholders of the Fund; (x) all other expenses
incidental to holding meetings of the Fund's shareholders; and (xi)
such non-recurring expenses as may arise, including litigation
affecting the Fund and the legal obligations for which the Fund may
have to indemnify its officers and Trustees.
4. Compensation of the Adviser
(a) The Fund agrees to pay the Adviser, and the
Adviser agrees to accept as full compensation for all services
rendered by the Adviser as such, a management fee payable monthly
and computed on the net asset value of the Fund as of the close of
business each business day at the annual rate of .20 of 1% of such
net asset value, provided, however, that for any day that the Fund
pays or accrues a fee under the Distribution Plan of the Fund based
upon the assets of the Fund, the annual management fee shall be
payable at the annual rate of 0.20 of 1% of such net asset value up
to $250 million and at the annual rate of 0.16 of 1% of such net
asset value above that amount.
(b) The Adviser agrees that the fee under (a)
above shall be reduced, but not below zero, by an amount equal to
its pro-rata portion (based upon the aggregate fees of the Adviser
and the Administrator) of the amount, if any, by which the total
expenses of the Fund in any fiscal year, exclusive of taxes,
interest, and brokerage fees, shall exceed the lesser of (i) 2.5%
of the first $30 million of average annual net assets of the Fund
plus 2% of the next $70 million of such assets and 1.5% of its
average annual net assets in excess of $100 million, or (ii) 25% of
the Fund's total annual investment income. The payment of the fee
under (a) above at the end of any month will be reduced or
postponed so that at no time will there be any accrued but unpaid
liability under this expense limitation, subject to readjustment
during the year.
5. Duration and Termination
(a) This Amended and Restated Investment
Advisory Agreement shall become effective upon approval by
shareholders of the Fund and shall, unless terminated as
hereinafter provided, continue in effect until the 30th of April
next preceding the second anniversary of the effective date of this
Agreement, and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually (1) by
a vote of the Fund's Board of Trustees, including a vote of a
majority of the Trustees who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party,
with votes cast in person at a meeting called for the purpose of
voting on such approval, or (2) by a vote of the holders of a
"majority" (as so defined) of the outstanding voting securities of
the Fund and by such a vote of the Trustees.
(b) This Agreement may be terminated by the
Adviser at any time without penalty upon giving the Fund sixty
days' written notice (which notice may be waived by the Fund) and
may be terminated by the Fund at any time without penalty upon
giving the Adviser sixty days' written notice (which notice may be
waived by the Adviser), provided that such termination by the Fund
shall be directed or approved by a vote of a majority of its
Trustees in office at the time or by a vote of the holders of a
majority (as defined in the Act) of the voting securities of the
Fund outstanding and entitled to vote. This Agreement shall
automatically terminate in the event of its assignment (as defined
in the Act).
6. Disclaimer of Shareholder Liability
The Adviser understands that the obligations of
this Agreement are not binding upon any shareholder of the Fund
personally, but bind only the Fund's property; the Adviser
represents that it has notice of the provisions of the Fund's
Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Fund.
7. Notices of Meetings
The Fund agrees that notice of each meeting of
the Board of Trustees of the Fund will be sent to the Adviser and
that the Fund will make appropriate arrangements for the attendance
(as persons present by invitation) of such person or persons as the
Adviser may designate.
IN WITNESS WHEREOF, the parties hereto have
caused the foregoing instrument to be executed by their duly
authorized officers and their seals to be hereunto affixed, all as
of the day and year first above written.
ATTEST: TAX-FREE FUND OF COLORADO
/s/ Xxxxxxx X. XxxXxxxxxx /s/Xxxx X. Xxxxxxxx
________________________ By:___________________________________
Xxxxxxx X. XxxXxxxxxx Xxxx X. Xxxxxxxx
Assistant Secretary President and Chairman
ATTEST: XXXXXXXXXXX, PETTIS,
SMITH, POLIAN INC.
________________________ By:___________________________________
