EXHIBIT 5(b)
SHORT-TERM INVESTMENTS CO.
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 18th day of October, 1993, by and between
Short-Term Investments Co., 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 two series of shares representing interests in two
investment portfolios: the Prime Portfolio and the Liquid Assets Portfolio (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.
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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 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
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(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
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
Company, as amended from time to time.
8. Additional Services. Upon the request of the Company's Board of
Directors, the Advisor may perform 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
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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:
(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
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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
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 00 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx,
00000.
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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 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 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.
17. License Agreement. The Company shall be entitled to use the names
"Prime Portfolio" and "Liquid Assets Portfolio" 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.
SHORT-TERM INVESTMENTS CO.
(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
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Assistant Secretary President
(SEAL)
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APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT
OF
SHORT-TERM INVESTMENTS CO.
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 the Portfolio.
PRIME PORTFOLIO
NET ASSETS RATE
First $100 million ............................................ 0.20%
Over $100 million to $200 million ............................. 0.15%
Over $200 million to $300 million ............................. 0.10%
Over $300 million to $1.5 billion ............................. 0.06%
Over $1.5 billion ............................................. 0.05%
LIQUID ASSETS PORTFOLIO
NET ASSETS RATE
All assets .................................................... 0.15%
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