SUB-ITEM 77Q1(e)
TAX-FREE INVESTMENTS CO.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 1st day of June , 2000, by and between
Tax-Free Investments Co., a Maryland corporation (the "Company") with respect
to its series of shares shown on the Schedule A attached hereto, as the same
may be amended from time to time, and A I M Advisors, Inc., a Delaware
corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "l940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), as an investment advisor and engages
in the business of acting as an investment advisor;
WHEREAS, the Company's Articles of Incorporation (the "Charter")
authorizes the Board of Directors of the Company (the "Board of Directors") to
create separate series of shares of common stock of the Company, and as of the
date of this Agreement, the Board of Directors has created one series portfolio
(such portfolio and any other portfolios hereafter added to the Company being
referred to collectively herein as the "Funds"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for investment advisory services to the Funds upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the Funds
and shall, in such capacity, supervise all aspects of the Funds' operations,
including the investment and reinvestment of cash, securities or other
properties comprising the Funds' assets, subject at all times to the policies
and control of the Board of Directors. The Advisor shall give the Company and
the Funds the benefit of its best judgment, efforts and facilities in rendering
its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Funds, and whether concerning the individual issuers whose securities
are included in the assets of the Funds or the activities in which
such issuers engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Funds' assets;
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(c) determine which issuers and securities shall be represented
in the Funds' investment portfolios and regularly report thereon to the
Board of Directors;
(d) formulate and implement continuing programs for the purchases
and sales of the securities of such issuers and regularly report
thereon to the Board of Directors; and
(e) take, on behalf of the Company and the Funds, all actions
which appear to the Company and the Funds necessary to carry into
effect such purchase and sale programs and supervisory functions as
aforesaid, including but not limited to the placing of orders for the
purchase and sale of securities for the Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure
that securities loans are effected in accordance with the Advisor's
instructions and with procedures adopted by the Board of Directors; (d) prepare
appropriate periodic reports for, and seek appropriate approvals from, the
Board of Directors with respect to securities lending activities; (e) respond
to Agent inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in
connection with securities lending activities of each Fund, a lending Fund
shall pay the Advisor a fee equal to 25% of the net monthly interest or fee
income retained or paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in
accordance with the 1940 Act, the Advisers Act, and rules and regulations
thereunder, as such statutes, rules and regulations are amended from time to
time or are interpreted from time to time by the staff of the Securities and
Exchange Commission ("SEC"), and if applicable, exemptive orders or similar
relief granted by the SEC and upon receipt of approval of such sub-advisors by
the Board of Directors and by shareholders (unless any such approval is not
required by such statutes, rules, regulations, interpretations, orders or
similar relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company in any way or otherwise be deemed to be an agent of the
Company.
6. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors.
7. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
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(a) all applicable provisions of the 1940 Act and the Advisers
Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company,
as the same may be amended from time to time under the Securities Act
of 1933 and the 1940 Act;
(c) the provisions of the Charter, as the same may be amended
from time to time;
(d) the provisions of the by-laws of the Company, as the same may
be amended from time to time; and
(e) any other applicable provisions of state, federal or foreign
law.
8. Broker-Dealer Relationships. The Advisor is responsible for decisions
to buyand sell securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and the
difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of
the Funds on a continuing basis. Accordingly, the price to the Funds
in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by
other aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Directors may from
time to time determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Funds to pay a
broker or dealer that provides brokerage and research services to the
Advisor an amount of commission for effecting a fund investment
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the
Advisor 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 broker or dealer, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities
with respect to a particular Fund, other Funds of the Company, and to
other clients of the Advisor as to which the Advisor exercises
investment discretion. The Advisor is further authorized to allocate
the orders placed by it on behalf of the Funds to such brokers and
dealers who also provide research or statistical material, or other
services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor
shall determine and the Advisor will report on said allocations
regularly to the Board of Directors indicating the brokers to whom
such allocations have been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor
does not delegate trading responsibility to one or more sub-advisors,
in making decisions
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regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to
provide investment research or advisory services in connection with
the Funds, and may take into consideration any research services
provided to such sub-advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the 1940
Act, the Securities Exchange Act of 1934, and rules and regulations
thereunder, as such statutes, rules and regulations are amended from
time to time or are interpreted from time to time by the staff of the
SEC, any exemptive orders issued by the SEC, and any other applicable
provisions of law, the Advisor may select brokers or dealers with
which it or the Funds are affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Schedule B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of preparing share certificates, custodian, transfer and shareholder service
agent costs, expenses of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
directors and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by
the Company on behalf of the Funds in connection with membership in investment
company organizations and the cost of printing copies of prospectuses and
statements of additional information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Company understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Company has no objection to the Advisor
so acting, provided that whenever the Company and one or more other investment
companies or accounts managed or advised by the Advisor have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each company and
account. The Company recognizes that in some cases this procedure may adversely
affect the size of the positions obtainable and the prices realized for the
Funds.
12. Non-Exclusivity. The Company understands that the persons employed by the
Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Company
further understands and agrees that officers or directors of the Advisor may
serve as officers or directors of the Company, and that officers or directors
of the Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or Directors of any other firm or Company, including other investment advisory
companies.
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13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Schedule A attached hereto.
If soapproved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, and may be continued from year to year thereafter,
provided that the continuation of the Agreement is specifically approved at
least annually:
(a) (i) by the Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as
defined in Section 2(a)(42) of the 0000 Xxx); and
(b) by the affirmative vote of a majority of the directors who
are not parties to this Agreement or "interested persons" (as defined
in the 0000 Xxx) of a party to this Agreement (other than as Company
directors), by votes cast in person at a meeting specifically called
for such purpose.
14. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Board of Directors or by vote of a majority of the outstanding
voting securities of the applicable Fund, or by the Advisor, on sixty (60)
days' written notice to the other party. The notice provided for herein may be
waived by the party entitled to receipt thereof. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for purposes of this paragraph having the meaning defined in Section 2(a)(4) of
the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless
it is in writing and signed by the party against which enforcement of the
amendment is sought.
16. Liability of Advisor and Fund. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. Any
liability of the Advisor to one Fund shall not automatically impart liability
on the part of the Advisor to any other Fund. No Fund shall be liable for the
obligations of any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are
binding only upon the assets and property of the Company and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as shareholders of private
corporations for profit.
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company and that of the Advisor shall be 00 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
19. Questions of Interpretation. Any question of interpretation of any
term orprovision of this Agreement having a counterpart in or otherwise derived
from a term or
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provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said Acts. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. Subject to the foregoing, this Agreement shall be governed by and
construed in accordance with the laws (without reference to conflicts of law
provisions) of the State of Texas.
20. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
Tax-Free Investments Co.
(a Maryland corporation)
Attest:
/s/ Xxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------ ------------------------
Assistant Secretary Senior Vice President
(SEAL)
Attest: A I M Advisors, Inc.
/s/Xxxx X. Xxxx By: /s/Xxxxx X. Xxxxxxx
------------------------ ------------------------
Assistant Secretary Senior Vice President
(SEAL)
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A-1
SCHEDULE A
FUNDS AND EFFECTIVE DATES
NAME of Fund Effective Date of Advisory Agreement
------------ ------------------------------------
Cash Reserve Portfolio June 1, 2000
A-1
SCHEDULE B
COMPENSATION TO THE ADVISOR
The Company shall pay the Advisor, out of the assets of a Fund, as
full compensation for all services rendered, an advisory fee for such Fund set
forth below. Such fee shall be calculated by applying the following annual
rates to the average daily net assets of such Fund for the calendar year
computed in the manner used for the determination of the net asset value of
shares of such Fund.
CASH RESERVE PORTFOLIO
Net Assets Annual Rate
---------- -----------
First $500 million............................................... 0.25%
Over $500 million ............................................... 0.20%
B-1
