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EXHIBIT 5(b)
AIM INTERNATIONAL FUNDS, INC.
(AIM INTERNATIONAL EQUITY FUND SERIES)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 18th day of October, 1993, by and
between AIM International Funds, Inc., a Maryland corporation (the "Company"),
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 "1940 Act"), as an open-end diversified management
investment company; and
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; and
WHEREAS, the Company's Articles of Incorporation authorize the Board of
Directors of the Company to classify or reclassify authorized but unissued
shares of the Company and, as of the date of this Agreement, the Company's
Board of Directors has authorized the issuance of one (1) series of shares
representing interests in a single investment portfolio: AIM International
Equity Fund (such portfolio and any other portfolios hereafter added to the
Company being referred to collectively herein as the "Portfolios"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement
to provide for management and investment advisory services to the Company's AIM
International Equity Fund series (the "Fund") upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Advisor further contemplate that certain
duties of the Advisor will be delegated to Nationale-Nederlanden International
Investment Advisors B.V. ("NNIA"), pursuant to a sub-advisory agreement;
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 hereto agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor
for the Fund and shall, in such capacity, supervise all aspects of the Fund's
operations, including the investment and reinvestment of the cash, securities
or other properties comprising the Fund's assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall
give the Company and the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor hereunder.
2. Investment Analysis and Implementation. In carrying out its
duties under paragraph 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Fund;
(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 Fund, and whether concerning the individual issuers
whose securities are included in the assets of the Fund or the
activities in which such issuers engage, or with respect to securities
which the Advisor considers desirable for inclusion in the Fund;
(c) determine which issuers and securities shall be
represented in the Fund's investment portfolio and regularly report
thereon to the Company's Board of Directors; and
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers, and regularly
report thereon to the Company's Board of Directors;
and take, on behalf of the Company and the Fund, all actions which appear to
the Company and the Fund 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 Fund.
3. Engagement of Sub-Advisor. Subject to the approval of the Board
of Directors of the Company and the shareholders of the Fund, the Advisor may,
pursuant to the Sub-Advisory Agreement, of even date herewith, by and among the
Company, the Advisor and NNIA (the "Sub-Advisory Agreement"), engage NNIA as
investment sub-
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advisor to the Fund. In such capacity NNIA shall provide the
Advisor with such economic research and securities analyses as the Advisor may
from time to time consider necessary or advisable in connection with the
Advisor's performance of its duties hereunder. NNIA's duties under the
Sub-Advisory Agreement shall consist of reviewing the Fund's assets and
investments, consulting with the Advisor and making recommendations as to (a)
which securities should be purchased, sold or exchanged by the Fund, (b) the
appropriate portion of the Fund's assets to be invested in particular countries
or geographic regions, and (c) foreign (non-United States) currency matters,
the use of foreign exchange contracts, and the manner in which voting rights,
rights to consent to corporate action and other rights pertaining to the Fund's
investments should be exercised. Nevertheless, all final investment decisions
for the Fund, and the ordering or directing of execution of securities
transactions on behalf of the Fund, shall solely be the responsibility of the
Advisor.
4. 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 Fund, shall at all time be subject
to any directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In performing its
duties hereunder, the Advisor shall at all times conform to:
(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 relating to the Fund, 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 Articles of Incorporation of the
Company, 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.
6. Broker-Dealer Relationships. The Advisor shall be responsible
for all decisions to buy and sell securities for the Fund, broker-dealer
selection, and negotiation of brokerage commission rates. The Advisor's
primary consideration in effecting a security transaction shall be to obtain
execution at the most favorable price. In selecting a broker-dealer to execute
each particular transaction, the Advisor shall take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund 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 portfolio execution services offered.
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 Fund to pay a broker or dealer that provides brokerage
and research services to the Advisor an amount of commission for effecting a
portfolio 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 overall responsibilities of the Advisor or NNIA with respect to the
Fund, other Portfolios of the Company, and 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 Fund to brokers
and dealers who also provide research or statistical material, or other
services to the Fund, the Advisor, or NNIA. Such allocation shall be in such
amounts and proportions as the Advisor shall determine, and the Advisor shall
report on said allocations regularly to the Board of Directors of the Company,
indicating the brokers to whom such allocations have been made and the basis
therefor. In making decisions regarding broker-dealer relationships, the
Advisor may take into consideration the recommendations of NNIA, and may take
into consideration any research services provided to NNIA by broker-dealers.
7. Compensation. The Company shall pay the Advisor, as compensation
for services rendered hereunder, an annual fee, payable monthly, based upon the
following average daily net assets of the Fund:
NET ASSETS RATE
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First $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.95%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
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The average daily net assets of the Fund shall be determined in the
manner set forth in the Company's Articles of Incorporation and registration
statement relating to the Fund, as amended from time to time. For so long as
the Sub-Advisory Agreement is in effect, the Company acknowledges on behalf of
the Fund that the Advisor will pay to NNIA, as compensation for acting as
Sub-Advisor to the Fund, the fee(s) specified in the Sub-Advisory Agreement.
8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform (or arrange for the performance of) certain
accounting, shareholder servicing or other administrative services on behalf of
the Fund which are not required by this Agreement. Such services will be
performed on behalf of the Fund, and the Advisor may receive from the Fund such
reimbursement for costs or reasonable compensation for such services as may be
agreed upon by the Advisor and the Company's Board of Directors, based on a
finding by the Board of Directors that the provision of such services by the
Advisor is in the best interests of the Fund and its shareholders. Payment or
assumption by the Advisor of any Fund expense that the Advisor is not otherwise
required to pay or assume under this Agreement shall not relieve the Advisor of
any of its obligations to the Fund nor obligate the Advisor to pay or assume
any similar Fund expense on any subsequent occasion. Such additional services
may include, but are not limited to:
(a) the services of a principal financial officer of the
Company (including related office space, facilities and equipment)
whose normal duties consist of maintaining the financial accounts and
books and records of the Company and the Fund, including the review
and calculation of daily net asset value and the preparation of tax
returns; and the services (including related office space, facilities
and equipment) of any of the personnel operating under the direction
of such principal financial officer;
(b) the services of staff to respond to shareholder
inquiries concerning the status of their accounts; providing
assistance to shareholders in exchanges among the mutual funds managed
or advised by the Advisor; changing account designations or changing
addresses; assisting in the purchase or redemption of Fund shares;
supervising the operations of the custodian, transfer agent(s) or
dividend disbursing agent(s) for the Fund; or otherwise providing
services to shareholders of the Fund; and
(c) such other administrative services as may by furnished
from time to time by the Advisor to the Company or the Fund at the
request of the Company's Board of Directors.
9. Expenses of the Fund. All of the ordinary business expenses
incurred in the operations of the Fund and the offering of its shares shall be
borne by the Fund unless otherwise specifically provided in this Agreement.
These expenses borne by the Fund include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing or governmental fees, the cost
of preparing share certificates, custodian, transfer agent and shareholder
service agent costs, expenses of issue, sale, redemption and repurchase of Fund
shares, expenses of registering and qualifying shares for sale, expenses
relating to directors and shareholders 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 Fund in connection with membership in
investment company organizations and the cost of printing copies of
prospectuses and statements of additional information distributed to the Fund's
shareholders.
10. Expense Limitation. If, for any fiscal year of the Company,
the total of all ordinary business expenses of the Fund, including all
investment advisory fees (and sub-advisory fees), but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses, such as
litigation costs, would exceed the applicable expense limitations imposed by
state securities regulations in any state in which the Fund's shares are
qualified for sale, as such limitations may be raised or lowered from time to
time, the aggregate of all such investment advisory fees shall be reduced by the
amount of such excess. The amount of any such reduction to be borne by the
Advisor shall be deducted from the monthly investment advisory fee otherwise
payable to the Advisor during such fiscal year. If required pursuant to such
state securities regulations, the Advisor will, not later than the last day of
the first month of the next succeeding fiscal year, reimburse the Portfolios for
any such annual operating expenses (after reduction of all investment advisory
fees in excess of such limitation). For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the current fiscal year which shall
have elapsed prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination of this
Agreement. The application of expense limitations shall be applied to each
Portfolio of the Company separately, unless the laws or regulations of any state
shall require that the expense limitations be imposed with respect to the
Company as a whole.
11. Non-Exclusivity. The services of the Advisor to the Company
and the Fund are not to be deemed exclusive, and the Advisor shall be free to
render investment advisory and administrative or other services to others
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(including other investment companies) and to engage in other activities. It
is understood and agreed 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 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 trustees of any other firm or trust, including other investment advisory
companies.
12. Term and Approval. This Agreement shall become effective if
approved by the shareholders of the Fund, and if so approved, this Agreement
shall thereafter continue in force and effect until June 30, 1994, 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 Company's Board of Directors or (ii) by the vote
of "a majority of the outstanding voting securities" of the Fund (as
defined under Section 2(a)(42) of the 0000 Xxx); and
(b) by the affirmative vote of a majority of the directors
of the Company who are not parties to this Agreement or "interested
persons" (as defined under 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.
13. Termination. This Agreement may be terminated as to the Fund
at any time, without the payment of any penalty, by vote of the Company's Board
of Directors or by vote of a majority of the Fund's outstanding voting
securities, or by the Advisor, on sixty (60) days' written notice to the other
party. The notice herein provided for may be waived by the party entitled to
receipt thereof. This Agreement shall automatically terminate in the event of
its "assignment" (as defined under Section 2(a)(4) of the Act).
14. Liability of Advisor and Indemnification. 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, the Fund or any shareholder of the Fund 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.
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
officer, director or employee of the Advisor, the Company hereby agrees to
indemnify and hold the Advisor harmless from and against all claims, actions,
suits, and proceedings at law or in equity, whether brought or asserted by a
private party or a governmental agency, instrumentality or entity of any kind,
relating to the sale, purchase, pledge of, advertisement of, or solicitation of
sales or purchases of any security (whether of the Fund or otherwise) by the
Company, its officers, directors, employees or agents in alleged violation of
applicable federal, state or foreign laws, rules or regulations.
15. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered by hand, telecopied or mailed, postage
prepaid, to the other party at such address as such other 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 Fund, and that of the Advisor, shall
be Eleven Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
16. Questions of Interpretation. Questions of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or 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 Courts of the United States,
or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission 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 Securities and Exchange Commission, 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.
17. License Agreement. The Company shall be entitled to use the
name "AIM International Equity Fund" to designate a series of its shares for
only so long as A I M Advisors, Inc. serves as investment manager or advisor to
the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective duly authorized officers on the
day and year first written above.
AIM INTERNATIONAL FUNDS, INC.
(a Maryland corporation)
on behalf of its
AIM INTERNATIONAL EQUITY FUND SERIES
Attest:
/s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
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Assistant Secretary President
A I M ADVISORS, INC.
Attest:
/s/ XXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------- -------------------------------------
Assistant Secretary President
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