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EXHIBIT 5(a)(2)
AIM EQUITY FUNDS, INC.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 18th day of October, 1993, by and between
AIM Equity 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, consisting of multiple series of investment portfolios;
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 charter authorizes 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 four series of shares representing interests in
four investment portfolios: AIM Aggressive Growth Fund, AIM Charter Fund, AIM
Constellation Fund and AIM Xxxxxxxxxx Fund (such portfolios 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 investment advisory services to the Company 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 whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Advisory Services. The Advisor shall act as investment
advisor for each Portfolio and shall, in such capacity, supervise all aspects
of the Portfolios' operations, including the investment and reinvestment of the
cash, securities or other properties comprising the Portfolios, subject at all
times to the policies and control of the Company's Board of Directors. The
Advisor shall give the Company and the Portfolios 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
Portfolios;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether
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affecting the economy generally or the Portfolios, and whether
concerning the individual issuers whose securities are included in the
Portfolios or the activities in which such issuers engage, or with
respect to securities which the Advisor considers desirable for
inclusion in the Portfolios;
(c) determine which issuers and securities shall be
represented in the Portfolios 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 Portfolios, all actions which appear
to the Company and the Portfolios 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 of the
Portfolios.
3. Delegation of Responsibilities. Subject to the approval of
the Board of Directors and the shareholders of the Portfolios, the Advisor may
delegate to a Sub-Advisor certain of its duties enumerated in Section 2 hereof,
provided that the Advisor shall continue to supervise the performance of any
such Sub-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 Portfolios, shall at all
times be subject to any directives of the Board of Directors of the Company.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, 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, 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 corporate charter 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 or federal
law.
6. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Portfolios, broker-dealer
selection, and negotiation of brokerage commission rates. The Advisor's
primary consideration in effecting a security transaction will be execution at
the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the
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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 difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Portfolios on a continuing basis. Accordingly, the price to the
Portfolios 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
Portfolios 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
Advisor's overall responsibilities with respect to the Portfolios, 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 Portfolios to such brokers and dealers who also provide research or
statistical material, or other services to the Portfolios, 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 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 any Sub-Advisor appointed to provide
investment research or advisory services in connection with the Portfolios, and
may take into consideration any research services provided to such Sub-Advisor
by broker-dealers.
7. Compensation. The Company shall pay the Advisor as
compensation for services rendered hereunder an annual fee, payable monthly, as
set forth in Appendix A to this Agreement. The Company acknowledges that the
Advisor may from time to time pay a fee to any sub-advisor engaged pursuant to
Section 3 of this Agreement, according to a fee schedule set forth in the
applicable sub-advisory agreement.
The average daily net asset value of the Portfolios shall be
determined in the manner set forth in the corporate charter and registration
statement of the Portfolios, as amended from time to time.
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 Portfolios which are not required by this Agreement. Such
services will be performed on behalf of the Portfolios and the Advisor may
receive from the Portfolios such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between 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 Portfolios and their shareholders. Payment or assumption by the Advisor of
any Portfolio 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 Portfolios nor obligate the Advisor to pay or assume any
similar Portfolio expense on any subsequent occasions. Such services may
include, but are not limited to:
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(a) the services of a principal financial officer of the
Company (including applicable office space, facilities and equipment)
whose normal duties consist of maintaining the financial accounts and
books and records of the Company and the Portfolios, including the
review and calculation of daily net asset value and the preparation of
tax returns; the services (including applicable 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 shares; supervising the
operations of the custodian, transfer agent(s) or dividend disbursing
agent(s) for the Portfolios; or otherwise providing services to
shareholders of the Portfolios; and
(c) such other administrative services as may be furnished
from time to time by the Advisor to the Company or the Portfolios at
the request of the Company's Board of Directors.
9. Expenses of the Portfolios. All of the ordinary business
expenses incurred in the operations of the Portfolios and the offering of their
shares shall be borne by the Portfolios unless specifically provided otherwise
in this Agreement. These expenses borne by the Portfolios include but are not
limited to brokerage commissions, taxes, legal, 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 Portfolios in connection with
membership in investment company organizations and the cost of printing copies
of prospectuses and statements of additional information distributed to the
Portfolios' shareholders.
10. Expense Limitation. If, for any fiscal year, the total of all
ordinary business expenses of the Portfolios, including all investment advisory
fees, but excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses, such as litigation, would exceed the applicable expense
limitations imposed by state securities regulations in any state in which the
Portfolios' 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.
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11. Non-Exclusivity. The services of the Advisor to the Company
and the Portfolios are not to be deemed to be exclusive, and the Advisor shall
be free to render investment advisory and administrative or other services to
others (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 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 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 Portfolios, 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
Portfolios (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.
13. Termination. This Agreement may be terminated as to the
Portfolios 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 Portfolios'
outstanding voting securities, or by the Advisor, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. 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.
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 or to the Portfolios or to any shareholder of the Portfolios 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.
15. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid 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 that of the Advisor shall be Eleven Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx, 00000.
16. Questions of Interpretation. Any question 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
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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 Securities and Exchange Commission
issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Acts 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.
17. License Agreement. The Company shall be entitled to use the
names "AIM Aggressive Growth Fund, AIM Charter Fund, AIM Constellation Fund and
AIM Xxxxxxxxxx Fund" to designate its classes of shares only so long as A I M
Advisors, Inc. serves as investment manager or advisor to the Portfolios.
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.
AIM EQUITY FUNDS, INC.
(a Maryland corporation)
Attest:
/s/ XXXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
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Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest:
/s/ XXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------------ -----------------------------------
Assistant Secretary President
(SEAL)
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APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT
OF AIM EQUITY FUNDS, INC.
The Company shall pay the Advisor as full compensation for all
services rendered and all facilities furnished hereunder, a management fee for
each Portfolio by applying the following annual rates to the average daily net
assets of each Portfolio for the calendar year, computed in the manner used for
the determination of the offering price of shares of each Portfolio.
AIM AGGRESSIVE GROWTH FUND
NET ASSETS RATE
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First $200 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50%
Next $300 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40%
Next $500 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.30%
AIM CHARTER FUND
AIM CONSTELLATION FUND
NET ASSETS RATE
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First $30 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
Over $30 million to and including $150 million . . . . . . . . . . . . . . . . . 0.75%
Over $150 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.625%
AIM XXXXXXXXXX FUND
NET ASSETS RATE
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First $30 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
Over $30 million to and including $350 million . . . . . . . . . . . . . . . . . 0.75%
Over $350 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.625%
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