(File Nos. 33-17425 and 811-07957)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
GT GLOBAL FLOATING RATE FUND, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined): 4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
________________________________
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2) Form, Schedule or Registration Statement No.:
________________________________
3) Filing Party:
________________________________
4) Date Filed:
________________________________
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PRELIMINARY COPY
GT GLOBAL
A World of Opportunity
GT GLOBAL FLOATING RATE FUND, INC.
50 CALIFORNIA STREET
27TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
MARCH XX, 1998
DEAR FELLOW SHAREHOLDER:
As you may be aware, the financial industry has seen many mergers and
acquisitions over the last few years. A number of well-known, high profile
organizations recently have been involved in such endeavors, with the net result
of building even stronger companies with even greater resources. In this same
vein is the pending acquisition of GT Global and its sister divisions - LGT
Asset Management and Chancellor LGT Asset Management, collectively known as the
Asset Management Division (AMD) of Liechtenstein Global Trust - by AMVESCAP PLC,
the parent corporation of A I M Management Group and INVESCO. A special meeting
of GT Global Floating Rate Fund Shareholders regarding the acquisition will be
held on May 20, 1998.
Attached is the Notice and Proxy Statement for the Special Meeting which
describe a number of matters on which you, the Shareholder, are being asked to
vote: (i) election of the Fund's Board of Directors; (ii) approval of a new
investment management and administration agreement and sub-advisory and
sub-administration agreements for the Fund; (iii) approval of changes to the
fundamental investment restrictions of the Fund; (iv) approval of the conversion
of the Fund and Floating Rate Portfolio to "interval fund" status; (v) approval
of an agreement and plan of conversion and termination for the Fund; and (vi)
ratification of the selection of independent public accountants. THE FUND'S
BOARD UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THESE PROPOSALS.
The proposed acquisition of the AMD by AMVESCAP offers the following
opportunities for the Fund's Shareholders:
. Continuity of the Fund's objectives, policies and procedures.
. An extended family of funds, including both U.S.-based and global products.
. Expanded investment team strength to manage your investments.
. siness synergies between the two organizations, including increased product
diversification, global brand enhancement and broadened geographic
coverage.
Your vote is important. Please take a moment now to sign and return your proxy
card in the enclosed postage-paid envelope. If we do not hear from you after a
reasonable amount of time, you may receive a telephone call from our proxy
solicitor, Shareholder Communications Corporation, reminding you to vote your
shares. If you have any questions concerning the proposals to be considered at
the special meeting of GT Global Floating Rate Fund Shareholders on May 20,
1998, please contact GT Global Client Services at 1-800-223-2138.
Sincerely,
WILLIAM J. GUILFOYLE
Chairman Of The Board
and President
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IMPORTANT NEWS FOR GT GLOBAL SHAREHOLDERS
We encourage you to read the attached proxy statement in full; however, the
following questions and answers represent some typical concerns that
shareholders might have regarding this proxy statement.
WHY HAVE I BEEN SENT THIS PROXY STATEMENT?
As you may know, AMVESCAP, the parent corporation of AIM Management Group Inc.
and INVESCO Plc., has entered into an agreement with Liechtenstein Global Trust
("LGT") pursuant to which AMVESCAP will acquire LGT's Asset Management Division,
which includes Chancellor LGT Asset Management, Inc. and GT Global, Inc. In
connection with this acquisition, certain changes are being recommended with
respect to the Fund which may only be implemented if approved by shareholders.
WHAT AM I BEING ASKED TO VOTE ON?
The proposals you are being asked to vote on are:
1. Election of the Board of Directors
2. Approval of a new investment management and administration agreement
and new sub-advisory and sub-administration agreements
3. Approval of changes to the fundamental investment restrictions of the
Fund
4. Approval of the conversion of the Fund and Floating Rate Portfolio to
"interval fund" status
5. Reorganization of the Fund into a Delaware business trust
6. Ratification of the selection of independent public accountants
HOW WILL THE ACQUISITION OF LGT'S ASSET MANAGEMENT DIVISION BY AMVESCAP AFFECT
ME?
The Board of the Fund believes that the acquisition will be beneficial to
shareholders of the Fund for a number of reasons, including:
. AIM's performance record as an investment manager and reputation in
the industry
. Access to a wider selection of investment choices for shareholders,
including approximately 55 funds in the AIM group
. The additional shareholder service support provided by the larger
organization
WILL THE INVESTMENT OBJECTIVES OF THE FUND CHANGE?
The investment objective of the Fund will not change.
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WHAT IS THE BENEFIT OF REORGANIZING THE FUND AS A DELAWARE BUSINESS TRUST?
The reorganization is being proposed primarily to modernize the organizational
document under which the Fund operates; the reorganization will not
substantially affect the way the Fund operates. The Board of the Fund believes
that the Delaware business trust form of organization offers a number of
advantages over the Fund's current form of organization, including greater
flexibility to conduct business without expensive proxy solicitations to
shareholders and limitation of potential shareholder liability. Also, since many
AIM Funds are organized as Delaware business trusts, administrative efficiencies
and consistency among the Funds would be achieved.
HOW WILL THE EXPENSES FOR THE FUND BE AFFECTED?
The fees and expenses payable by the Fund are not expected to increase as a
result of any of the changes you are voting on.
HOW DOES THE BOARD OF THE FUND RECOMMEND THAT I VOTE?
The Board recommends that you vote FOR all of the proposals on the enclosed
proxy card.
HOW DO I VOTE?
You may indicate your vote on the enclosed proxy card and return it in the
postpaid envelope provided
OR
You may fax the proxy card to (Shareholder Communications fax number)
You may call in your vote to Shareholder Communications at (SC 800 number)
WHEN IS THE DEADLINE FOR VOTING?
All votes must be received by May 20, the date of the Shareholder Meeting.
However, to prevent additional costs from being incurred, it is important that
you cast your vote as soon as possible. If we do not hear from you, you may
receive a call from our proxy solicitor, Shareholder Communications Corporation,
requesting that you vote your shares.
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PRELIMINARY COPY
GT GLOBAL FLOATING RATE FUND, INC.
50 California Street
27th Floor
San Francisco, California 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
May 20, 1998
TO THE SHAREHOLDERS:
Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of GT Global Floating Rate Fund, Inc. (the "Fund") will be
held at 50 California Street, 27th Floor, San Francisco, California, on May 20,
1998, at [ ] a.m., Pacific time, for the following purposes:
(1) To elect the Fund's Board of Directors;
(2) To approve a new investment management and administration agreement
and new sub-advisory and sub-administration agreements with respect
to the Floating Rate Portfolio (the "Portfolio");
(3) To approve changes to the fundamental investment restrictions of the
Fund;
(4) To approve the conversion of the Fund and the Portfolio to "interval
fund" status;
(5) To approve an agreement and plan of conversion and termination for
the Fund;
(6) To ratify the selection of Coopers & Lybrand L.L.P. as the Fund's
independent public accountants; and
(7) To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 17, 1998, are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Proxy Statement. Whether or not you attend the
Special Meeting, we urge you to PROMPTLY COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, so that a quorum will be present and a maximum number of shares may
be voted.
By Order Of The Board Of Directors,
HELGE KRIST LEE
Secretary
San Francisco, California
March 31, 1998
- --------------------------------------------------------------------------------
YOUR VOTE IS VERY IMPORTANT. BY PROMPTLY COMPLETING, SIGNING AND RETURNING THE
ENCLOSED PROXY CARD, YOU WILL HELP THE FUND AVOID THE SUBSTANTIAL ADDITIONAL
EXPENSES OF MAKING FURTHER SOLICITATIONS.
- --------------------------------------------------------------------------------
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DRAFT 3/20/98
PROXY STATEMENT
GT GLOBAL FLOATING RATE FUND, INC.
50 California Street
27th Floor
San Francisco, California 94111
---------------------
SPECIAL MEETING OF SHAREHOLDERS
To Be Held On
May 20, 1998
---------------------
This Proxy Statement is being furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors of GT Global Floating Rate
Fund, Inc. (the "Fund"). These proxies are to be used at the Special Meeting of
Shareholders and at any adjournment thereof (the "Special Meeting" or "Meeting")
to be held at the offices of the Fund, 50 California Street, 27th Floor, San
Francisco, California 94111, on May 20, 1998, at ______a.m., Pacific time. Only
shareholders of record at the close of business on March 17, 1998
("Shareholders"), are entitled to notice of and to vote at the Meeting. Copies
of this Proxy Statement and the accompanying materials will first be mailed to
Shareholders on or about March 31, 1998.
If the accompanying proxy card is properly executed and returned by a
Shareholder in time to be voted at the Special Meeting, the shares covered
thereby will be voted in accordance with the instructions marked thereon by the
Shareholder. Executed proxies that are unmarked will be voted in favor of the
nominees for the Fund's Directors; in accordance with the recommendation of the
Board of Directors as to all other proposals described in this Proxy Statement;
and, at the discretion of the proxyholders, on any other matter that may
properly have come before the Special Meeting or any adjournments thereof. Any
proxy given pursuant to this solicitation may be revoked at any time before its
exercise by giving written notice to the Secretary of the Fund or by the
issuance of a subsequent proxy. To be effective, such revocation must be
received by the Secretary of the Fund prior to the Special Meeting. In addition,
a Shareholder may revoke a proxy by attending the Meeting and voting in person.
The solicitation of proxies will be made primarily by mail but also may be made
by telephone, telegraph, telecopy and personal interviews. Authorization to
execute proxies may be obtained by telephonic or electronically transmitted
instructions.
The presence in person or by proxy of Shareholders entitled to cast a
majority of all the votes entitled to be cast at the Meeting shall constitute a
quorum at the Meeting. If a quorum is not present at the Meeting or if a quorum
is present but sufficient votes to approve any of the proposals described in the
Proxy Statement are not received, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. A Shareholder vote may
be taken on one or more of the proposals in this Proxy Statement prior to any
such adjournment if sufficient votes have been received and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as shares present
for purposes of determining whether a quorum is present, but will not be voted
for or against any adjournment or proposal or for or against any adjournment to
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permit further solicitation of proxies. Accordingly, abstentions and broker
non-votes effectively will be a vote against adjournment or against any proposal
where the required vote is a percentage of the shares present or outstanding.
Abstentions and broker non-votes will not be counted, however, as votes cast for
purposes of determining whether sufficient votes have been received to approve a
proposal.
As of the record date, March 17, 1998 ("Record Date"), there were
__________ outstanding shares of the Fund. To the knowledge of the Fund's
management, as of the record date, there are no owners of 5% or more of the
outstanding shares of the Fund[, except ____________________].
PROPOSAL NO. 1: ELECTION OF THE FUND'S BOARD OF DIRECTORS
It is the intention of each proxyholder named on the accompanying proxy
card to vote FOR the election of the nominees listed below unless the
Shareholder specifically indicates on his or her proxy card a desire to withhold
authority to vote for any nominee. The Board of Directors does not contemplate
that any of the nominees who have consented to being nominated will be unable to
serve as a Director for any reason, but if that should occur prior to the
Meeting, the proxies will be voted for such other nominee(s) as the Board may
recommend. If elected, each nominee will hold office until his/her successor is
duly elected and qualified. Each nominee has served as a Director for the Fund
(and a Trustee for the Floating Rate Portfolio (the "Portfolio")) since their
commencement of operations on May 1, 1997.
INFORMATION REGARDING NOMINEES FOR ELECTION AT THE SPECIAL MEETING
NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION(S) WITH THE
PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND
- -----------------------------------------------------------------------
William J. Guilfoyle, Age 39* Director and Chairman of the
Mr. Guilfoyle is President, GT Global, Board
Inc. ("GT Global") since 1995; Director,
GT Global since 1991; Senior Vice
President and Director of Sales and
Marketing, GT Global from May 1992 to
April 1995; Vice President and Director of
Marketing, GT Global from 1987 to 1992;
Director, Liechtenstein Global Trust AG
(holding company of the various
international LGT companies) Advisory
Board since January 1996; Director, G.T.
Global Insurance Agency ("G.T. Insurance")
since 1996; President and Chief Executive
Officer, G.T. Insurance since 1995; Senior
Vice President and Director, Sales and
Marketing, G.T. Insurance from April 1995
to November 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director
or trustee of each of the other investment
companies registered under the 1940 Act
that is managed or administered by
Chancellor LGT.
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NAME, AGE, BUSINESS EXPERIENCE DURING THE POSITION(S) WITH THE
PAST FIVE YEARS AND OTHER DIRECTORSHIPS FUND
- -----------------------------------------------------------------------
C. Derek Anderson, Age 56 Director
Mr. Anderson is President, Plantagenet
Capital Management, LLC (an investment
partnership); Chief Executive Officer,
Plantagenet Holdings, Ltd. (an investment
banking firm); Director, Anderson Capital
Management, Inc., since 1988; Director,
PremiumWear, Inc. (formerly Munsingwear,
Inc.) (a casual apparel company); and
Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a
director or trustee of each of the other
investment companies registered under the
1940 Act that is managed or administered
by Chancellor LGT.
Frank S. Bayley, Age 58 Director
Mr. Bayley is a partner of the law firm of
Baker & McKenzie; and Director and
Chairman, C.D. Stimson Company (a private
investment company). Mr. Bayley also is a
director or trustee of each of the other
investment companies registered under the
1940 Act that is managed or administered
by Chancellor LGT.
Arthur C. Patterson, Age 54 Director
Mr. Patterson is a Managing Partner, Accel
Partners (a venture capital firm). He also
serves as a director of Viasoft and
PageMart, Inc. (both public software
companies), as well as several other
privately held software and communications
companies. Mr. Patterson also is a
director or trustee of each of the other
investment companies registered under the
1940 Act that is managed or administered
by Chancellor LGT.
Ruth H. Quigley, Age 62 Director
Miss Quigley is a private investor. From
1984 to 1986, she was President of Quigley
Friedlander & Co., Inc. (a financial
advisory services firm). Miss Quigley also
is a director or trustee of each of the
other investment companies registered
under the 1940 Act that is managed or
administered by Chancellor LGT.
*Mr. Guilfoyle is deemed to be an "interested person" of the Fund, as defined in
the Investment Company Act of 1940, as amended ("1940 Act"), by virtue of his
association with GT Global and Chancellor LGT Asset Management, Inc.
("Chancellor LGT"), the Fund's administrator, or their affiliates.
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The above information provides each Director's business experience during
at least the past five years. Corresponding information with respect to the
executive officers of the Fund is provided below. See "Other Information --
Executive Officers of the Fund."
To the knowledge of the Fund's management, as of the Record Date, the
Directors and officers of the Fund owned, as a group, less than 1% of the
outstanding shares of the Fund, except [add current GT Global ownership data
attributable to Bill Guilfoyle].
There were five meetings of the Board held during the Fund's fiscal year
ended December 31, 1997, and during the Portfolio's fiscal year ended December
31, 1997. The Board has an Audit Committee comprised of Miss Quigley and Messrs.
Anderson, Bayley, and Patterson. The purpose of the Audit Committee is to
oversee the annual audit of the Fund and review the performance of the Fund's
independent accountants. During the Fund's last completed fiscal year, the Audit
Committee met once. Each Director of the Fund attended at least 75% of the total
number of meetings of the Board and the Audit Committee.
Each Director serves in total as a director or trustee of 12 registered
investment companies with 42 series managed or administered by Chancellor LGT,
the administrator of the Fund and parent of Chancellor LGT Senior Secured
Management, Inc. ("Chancellor SSM"), the Portfolio's investment manager. The
Fund pays each Director, who is not a director, trustee, officer or employee of
Chancellor SSM, or any affiliated company, an annual fee plus a meeting fee for
each Board or committee meeting attended by such Director and reimburses travel
and other out-of-pocket expenses incurred in connection with attending such
meetings. The Directors do not receive any compensation from the Portfolio. The
table below summarizes the compensation of the Directors for the fiscal year
ended December 31, 1997.
COMPENSATION TABLE
Compensation Total Compensation from
Name of Person(1) From the Fund the Fund and the Complex(2)
- ----------------- ------------- ---------------------------
C. Derek Anderson........... $7,587.63 $103,653.66
Frank S. Bayley............. $7,608.98 $106,555.73
Arthur C. Patterson......... $7,100.00 $ 89,700.00
Ruth H. Quigley............. $7,400.00 $ 98,037.50
(1) Mr. Guilfoyle received no compensation from the Fund.
(2) The Directors do not receive any pension or retirement benefits as
compensation for their services to the Fund.
REQUIRED VOTE. A plurality of all the votes cast at the meeting is required
to elect each nominee.
THE FUND'S BOARD RECOMMENDS THAT YOU VOTE "FOR" THE DIRECTORS LISTED IN
PROPOSAL 1.
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PROPOSAL NO 2: APPROVAL OF INVESTMENT MANAGEMENT AND
ADMINISTRATION AGREEMENT AND SUB-ADVISORY AND SUB-ADMINISTRATION
AGREEMENTS
BACKGROUND. On January 30, 1998, Liechtenstein Global Trust, AG ("LGT"),
the indirect parent organization of Chancellor LGT, Chancellor LGT Senior
Secured Management, Inc. ("Chancellor SSM") and GT Global, Inc. (collectively,
"GT Global") and LGT Holding (International) AG, Zurich, entered into an
agreement (the "Purchase Agreement") with AMVESCAP PLC ("AMVESCAP") and AMD
Acquisition Corp., pursuant to which AMVESCAP will acquire LGT's Asset
Management Division, which includes GT Global and certain other affiliates. In
connection with this transaction (the "Purchase"), and as required by the 1940
Act, shareholders of the Fund are being asked to approve a new Investment
Management and Administration Agreement (the "New Management Agreement") and new
Sub-Advisory and Sub-Administration Agreements (the "New Sub-Advisory
Agreements") (the New Management Agreement and the New Sub-Advisory Agreements
are collectively referred to as the "New Agreements"). Under the New Agreements,
A I M Advisors, Inc. ("AIM"), a wholly owned subsidiary of AMVESCAP, would serve
as investment manager and administrator to the Portfolio, Chancellor SSM (whose
name would be changed following consummation of the Purchase) would serve as
sub-adviser and sub-administrator to the Portfolio, and Chancellor LGT (whose
name would also be changed following consummation of the Purchase) would serve
as sub-sub-adviser and sub-sub-administrator with respect to certain assets of
the Portfolio. See "Information Concerning AMVESCAP, AIM, Chancellor SSM and
Chancellor LGT." Forms of each of the New Agreements are attached hereto as
Exhibits A, B and C. The Boards of the Portfolio and the Fund have approved the
New Management Agreement and New Sub-Advisory Agreements with respect to the
Portfolio, subject to the approval of the Fund's shareholders.
Under a structure commonly referred to as "master-feeder," the Fund
invests all of its investable assets in the Portfolio. The Portfolio directly
acquires securities and the Fund acquires an indirect interest in those
securities. Under this arrangement, investment management and sub-advisory
services are rendered to the Portfolio and not the Fund, but shareholders of the
Fund are afforded the same rights to vote on the New Management Agreement and
New Sub-Advisory Agreements of the Portfolio as they would have if the Fund
invested directly in portfolio securities.
Chancellor SSM, which is a subsidiary of Chancellor LGT, has served and
currently serves as investment manager to the Portfolio, and Chancellor LGT has
served and currently serves as investment sub-adviser to the Portfolio, pursuant
to an investment management and administration contract and sub-advisory and
sub-administration contract, respectively (the "Current Management Contracts").
Chancellor LGT currently serves as investment manager to a total of __
investment company portfolios with approximately $__ billion in assets as of
_______, 1998. As a result of the Purchase, the Current Management Contracts
will automatically terminate. See "Information Concerning AMVESCAP, AIM,
Chancellor SSM and Chancellor LGT."
At a meeting held on March __, 1998, the Boards of the Fund and the
Portfolio, including a majority of the members of the Boards who would not be
"interested persons" (as defined in the 1940 Act) ("Independent Board Members"),
approved, subject to shareholder approval, the New Agreements. A description of
the New Agreements is provided below under "Terms of the New Agreements." Such
description is only a summary and is qualified by reference to the attached
Exhibits A, B and C. A summary of the Boards' considerations is provided below
under "Board Considerations."
In approving the New Agreements, the Boards took into account that, except
for the change in the investment manager and the establishment of modified
sub-advisory relationships, there are no material differences between the
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provisions of the Current Management Contracts and the New Agreements. Further,
based on the representations of AIM, Chancellor SSM and Chancellor LGT regarding
their intentions, the Boards do not anticipate currently that there will be
substantial changes in the way in which the Fund and the Portfolio are managed
or operated, except as noted below. Following the Closing Date, AIM intends to
carefully study the investment performance of each of the GT Global Funds, as
well as the combined resources of AMVESCAP and Chancellor LGT, in order to
determine what steps, if any, may be taken to ensure strong investment
performance of the Funds into the future. It is anticipated that as a result of
such study, AIM may recommend, among other things, various actions such as
reorganizations or mergers involving certain Funds, as well as changes in or
adjustments to the investment personnel assigned to manage certain Funds. Any
proposals along these lines would be presented to the Boards for their approval.
Moreover, implementation of certain of these proposals may require shareholder
approval.
If the conditions set forth in the Purchase Agreement are not met or
waived or if the Purchase Agreement is terminated, the Purchase will not be
consummated, and the Current Management Contracts will remain in effect. If the
New Agreements are approved, and the Purchase is thereafter consummated, the New
Agreements will be executed and become effective on or about the Closing Date,
as defined below.
SHAREHOLDER APPROVAL REQUIREMENTS. Approval of the New Management
Agreement and New Sub-Advisory Agreements requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund, which for this
purpose means the affirmative vote of the lesser of (i) more than 50% of the
outstanding shares of the Fund or (ii) 67% or more of the shares of the Fund
present at the meeting if more than 50% of the outstanding shares of the Fund
are represented at the meeting in person or by proxy. Because approvals of the
New Management Agreement and each New Sub-Advisory Agreement are completely
contingent upon the approval of all, they are to be considered as a single
Proposal by shareholders. If the New Agreements are not approved and the
Purchase is consummated, the Boards of the Fund and the Portfolio will determine
what further action to take. Because the Purchase is not contingent on the
approval of the New Agreements, it is possible that the Purchase will be
consummated even if the Fund does not approve the New Agreements. In such case,
GT Global (including Chancellor LGT and Chancellor SSM) would be acquired by
AMVESCAP and the Current Management Contracts would automatically terminate. As
a result, the Boards of the Fund and the Portfolio would need to make new
arrangements for obtaining advisory services. Such steps could include the
hiring of AIM and GT Global to provide services on an interim basis, and
AMVESCAP has indicated its willingness to permit AIM and GT Global to provide
such services if so requested.
Under the master-feeder structure, on behalf of the Fund as an
interestholder in the applicable Portfolio, the Board will vote the Fund's
interest in the same proportion as shareholders of the Fund cast their votes at
the shareholder meeting. In order for the New Agreements to be approved, a
"majority of the interests in the Portfolio" must approve the agreement. For
this purpose, a "majority of the interests in the Portfolio" requires the
affirmative vote of the lesser of (i) more than 50% of the outstanding interests
of the Portfolio or (ii) 67% of the interests of the Portfolio present or
represented at an interestholders meeting at which the holders of more than 50%
of the outstanding interests of the Portfolio are represented at the meeting in
person or by proxy.
In the interests of simplicity and clarity, references herein to the
"Fund" include, where appropriate, the "Portfolio."
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PURCHASE OF LGT'S ASSET MANAGEMENT DIVISION BY AMVESCAP. On January 30,
1998, LGT and LGT Holding (International) AG, Zurich (together, the "Sellers")
entered into the Purchase Agreement with AMVESCAP and AMD Acquisition Corp., a
wholly owned subsidiary of AMVESCAP (the "Buyer"), pursuant to which the Buyer
will purchase the global asset management business of the Sellers by acquiring
all of the issued and outstanding shares of LGT Holding Luxembourg SA, LGT (UK
Holdings) PLC and LGT Bank in Liechtenstein Ltd. (Cayman) and equity interests
in LGT Verwaltungs GmbH (together with their respective subsidiaries, the
"Transferred Companies"). Under the Purchase Agreement, the Buyer shall pay the
Sellers $1.3 billion, which shall be (i) reduced (or increased) to the extent
that the closing tangible net worth of the Transferred Companies at closing is
less than (or greater than) zero, (ii) reduced to the extent that annualized
asset management fees (without giving effect to market and currency
fluctuations) of the Transferred Companies at closing, in respect of which
client consents have been obtained, are less than 92.5% of base investment
management fees and (iii) adjusted in respect of certain transaction-related
fees and expenses (including, among other things, mutual fund shareholder and
other client consent costs). Thus, failure by Shareholders of the Companies to
approve the New Agreements may result in the Buyer paying, and the Sellers
receiving, a lower amount for the sale of the Transferred Companies, but will
not necessarily preclude a closing of the Purchase.
The closing is expected to occur on or about May 29, 1998 (the "Closing
Date") subject to the satisfaction or waiver of certain conditions that include,
among other things: (i) the annualized asset management fees (without giving
effect to market and currency fluctuations) being at least 60% of base
management fees; (ii) approval of the Purchase by AMVESCAP shareholders; (iii)
certain governmental approvals and other third party consents having been
received; (iv) representations and warranties made by the parties being true and
correct in all material respects at the closing; and (v) no party being subject
to any order prohibiting the consummation of the Purchase.
The Purchase Agreement may be terminated at any time prior to the Closing
Date (i) by the mutual consent of the Buyer and LGT; (ii) by written notice by
any party after September 30, 1998; (iii) by the Sellers if, by a specified
date, AMVESCAP's shareholders have not approved the transaction; or (iv) under
the other circumstances set forth in the Purchase Agreement.
BOARD CONSIDERATIONS. At a series of meetings with the Boards of the Fund
and the Portfolio, representatives of AMVESCAP, INVESCO Funds Group, Inc.
("INVESCO") (a wholly owned subsidiary of AMVESCAP), AIM, Chancellor SSM,
Chancellor LGT and GT Global, Inc. discussed with the Boards the anticipated
effects of the Purchase on the advisory, sub-advisory and related relationships
with the Fund. At meetings in person held in February and March 1998, these
representatives provided information to the Boards concerning the specific terms
of the Purchase Agreement, the anticipated advisory and sub-advisory
relationships with the Fund, and the proposed plans for ongoing management,
distribution and operation of the Fund. Throughout this period, the Boards and
their counsel requested and received additional information from AIM, GT Global
and their counsel, and held telephone conferences regarding the Purchase and its
potential impact on the Fund and its shareholders.
In connection with their review, the Boards obtained substantial
information regarding: the management, financial position and business of
AMVESCAP and AIM and their affiliates, including INVESCO; the history of AIM's
and its affiliates' business and operations; the performance of the investment
companies and private accounts advised by AIM, INVESCO and their respective
affiliates; the impact of the Purchase on the Fund and its shareholders; the
plans of AMVESCAP and its affiliates with respect to GT Global and the Fund;
performance and financial information about the Fund; and information about
other funds and their fees and expenses. The Boards also received information
regarding the terms of the Purchase and comprehensive financial information
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including: AMVESCAP's plans for financing the Purchase; the impact of the
financing on AIM, as investment adviser; AIM's plans for the compensation and
retention of personnel currently employed by GT Global and the Transferred
Companies who currently provide services to the Fund, including an employee
stabilization plan being implemented at GT Global; and information concerning
employment contracts with senior management of GT Global.
In connection with their deliberations, the Boards evaluated the
above-referenced information and considered, among other things, the following
factors:
(1) the expectation that the investment objectives, policies and
management strategies of the Fund after the Purchase will not materially change;
(2) the expectation that substantially the same investment teams and
management personnel will manage the Fund on a day-to-day basis through
Chancellor SSM as sub-adviser, and Chancellor LGT as sub-sub-adviser to the
Fund, which will be supported where appropriate by investment and other
personnel of AMVESCAP, INVESCO, AIM and their affiliates who are experienced in
managing and administering similar investment products;
(3) the expectation that the investment expertise available to the Fund
will be enhanced by the combined AMVESCAP/Chancellor SSM/Chancellor LGT
management team;
(4) the continued employment of and retention incentives for senior
management of GT Global and the continued maintenance of investment personnel by
Chancellor LGT and its affiliates in multiple locations throughout the world;
(5) the ability of AMVESCAP to provide sufficient capital to support the
operations of AIM and GT Global and AMVESCAP's commitment to paying compensation
adequate to attract and retain top quality personnel;
(6) the fact that Fund Shareholders will have access to a more
diversified mutual fund product line through the anticipated exchange privileges
with the AIM Funds, including access to over 50 AIM Funds, which include several
types of funds not currently available to shareholders within the GT Fund
complex;
(7) the enhanced distribution potential for the Fund through AIM
Distributors' extensive sales network;
(8) the commitment of AIM to maintain the Fund's current expense caps
for at least two years and the expectation that the expense ratios of the Fund
may be reduced to the extent assets increase through increased sales;
(9) the additional administrative and shareholder services which can be
provided by a larger organization such as AIM;
(10) the overall advantages of being managed and distributed by the
AMVESCAP organization which will have approximately $250 billion under
management and operations throughout the world following the closing, especially
in light of increasingly competitive conditions in the financial services
industry, including entry into the industry of large and well-capitalized
companies which are spending substantial amounts to engage personnel and to
provide services to competing investment companies; and
(11) the continuity of experience offered by the Fund's and Portfolio's
Boards.
The Boards concluded that they could not assess the relative weight given
to each factor in making their determinations. In reaching their determinations,
the Boards also considered the fact that the new advisory and sub-advisory
relationships are intended to conform to the safe harbor provided by Section
15(f) of the 1940 Act for new advisory and other arrangements arising from the
sale of fund management businesses such as Chancellor LGT's. Under the Purchase
Agreement, AMVESCAP has agreed to conduct its business and, subject to the
fiduciary duties of the Fund, to use its reasonable best efforts to cause each
of its affiliates to conduct its business so as to assure that, insofar as is
within AMVESCAP's or its affiliates' control (i) for a period of three years
after the closing of the Purchase, at least 75% of the members of the Boards of
the Fund and Portfolio would be Independent Board Members; and (ii) for a period
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of two years after the closing of the Purchase, there would not be imposed on
the Fund an "unfair burden" (as defined in the 1940 Act) as a result of the
Purchase.
The Boards also evaluated the New Management Agreement and the New
Sub-Advisory Agreements. The Boards assured themselves that the New Agreements,
including the terms relating to the services to be provided and the fees and
expenses payable by the Fund, are not materially different from the Current
Management Contracts, except that AIM rather than Chancellor SSM will be the
investment manager and administrator for the Fund and Chancellor SSM and
Chancellor LGT will be the sub-adviser and sub-sub-adviser, respectively, for
the Fund.
At the Board meetings held throughout February and March, 1998, the Boards
received presentations by AMVESCAP, AIM, INVESCO, Chancellor SSM, Chancellor
LGT, and GT Global, Inc. and considered each of the foregoing factors. During
this time period, the Independent Board Members also met separately and
conferred with their counsel, who is not counsel to the Fund, AMVESCAP or its
affiliates or Chancellor LGT or its affiliates. Based upon these considerations,
on March 24, 1998 the Boards unanimously approved the New Management Agreement
and the New Sub-Advisory Agreements and recommended approval by the
shareholders.
TERMS OF THE NEW AGREEMENTS. If the New Agreements are approved by
shareholders as described herein, upon the closing of the Purchase, AIM will
serve as the investment manager and administrator to the Fund. With the
exception of the replacement of Chancellor SSM by AIM as the investment manager
and administrator, the New Management Agreement is substantially the same as the
Current Management Contract in all material respects, except: (1) the New
Management Agreement is governed by Delaware law, while the Current Management
Contracts are governed by California law; (2) the New Management Agreement
includes a license provision that governs the use of the "AIM" name; the Current
Management Contracts contain no such provision; (3) the provision in Current
Management Contracts addressing oversight of Fund pricing and computation of net
asset value has been deleted from the New Agreements, since AIM and Chancellor
LGT will perform these functions directly; (4) a provision has been added to the
New Agreements allowing their amendment without shareholder approval when
permitted by the 1940 Act; (5) to reflect recent changes in governing federal
and state law, the New Management Agreement removes the state expense limitation
provisions found in the Current Management Contracts; and (6) the date of
effectiveness which, assuming Shareholder approval, would be on or about the
Closing Date.
AIM will be contractually obligated to provide the same services to the
Fund as are currently provided to the Fund by Chancellor SSM, in return for the
same advisory fees as are currently in place. Currently, these advisory fees are
0.95% of daily net assets. AIM has further agreed that, for a period of two
years from the Closing Date, it will continue to limit the Fund's total expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to an annual rate of 1.50% of average daily net assets. As a result, the total
expenses incurred by Fund shareholders will remain capped at current levels for
two years following the closing of the Purchase.
Pursuant to the New Sub-Advisory Agreements, Chancellor SSM will serve as
sub-adviser and sub-administrator to the Fund upon approval of the Fund's
shareholders. Chancellor SSM would provide substantially all of the services for
the Fund that it currently provides. It would be paid sub-advisory fees by AIM,
not by the Fund. Similarly, under the proposed sub-sub-advisory relationship,
Chancellor LGT would continue to sub-advise a portion of the Fund's assets and
would be paid a sub-sub-advisory fee by Chancellor SSM, not by the Fund.
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Forms of the New Management Agreement and New Sub-Advisory Agreements are
attached hereto as Exhibits A, B and C. The descriptions of the New Agreements
set forth herein are qualified in their entirety by reference to Exhibits A, B
and C. Although the Current Management Contracts have not terminated and the New
Agreements have not become effective, the New Agreements are described below as
if they were both in effect.
Under the New Management Agreement, AIM will:
(a) subject to the supervision of the Board, provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities and investments and cash equivalents of the Fund;
(b) determine from time to time what securities and other investments
will be purchased, retained or sold by the Fund, and the brokers and dealers
through whom trades will be executed;
(c) oversee the maintenance of all books and records with respect to the
securities transactions of the Fund, and furnish the Board with such periodic
and special reports as the Board reasonably may request; and
(d) provide administrative services for the Fund subject to the
supervision of the Board. In this regard, AIM will supervise all aspects of the
operations of the Fund, including the oversight of custodial and other services.
At AIM's expense, AIM will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination of each the Fund's prospectus, proxy
statements, tax returns and required reports with or to the Fund's shareholders,
the Securities and Exchange Commission and other appropriate federal or state
regulatory authorities. AIM will provide the Fund with, or obtain for it,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
In performing its obligations under the New Management Agreement, AIM is
required to comply with all applicable laws. AIM shall not be liable and the
Fund shall indemnify AIM and its directors, officers and employees, for any
costs or liabilities arising from any error of judgment or mistake of law or any
loss suffered by the Fund in connection with the matters to which the New
Management Agreements relate except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of AIM in the performance by AIM of
its duties or from reckless disregard by AIM of its obligations and duties under
the New Management Agreement. Any person, even though also an officer, director,
employee or agent of AIM, who may be or become an officer, Board Member,
employee or agent of the Fund shall be deemed, when rendering services to the
Fund or acting with respect to any business of the Fund, to be rendering such
service to or acting solely for the Fund and not as an officer, partner,
employee, or agent or one under the control or direction of AIM even though paid
by it.
The New Management Agreement provides that all of the ordinary business
expenses not specifically assumed by AIM incurred in the operations of the Fund
shall be paid by the Fund. These expenses include but are not limited to
brokerage commissions, taxes, legal, accounting, auditing or governmental fees,
custodian, transfer agent and shareholder service agent costs. AIM will assume
the cost of any compensation for services provided to the Fund received by the
officers of the Fund and by the Trustees of the Fund who are not Independent
Board Members.
The New Management Agreement provides that, subject to the approval of the
Board and the shareholders, AIM may delegate any and all of its duties to a
sub-adviser or sub-administrator, provided that AIM shall continue to supervise
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<PAGE>
the performance of any such sub-adviser or sub-administrator. In this regard,
AIM will enter into a New Sub-Advisory Agreement with Chancellor SSM. Pursuant
to the New Sub-Advisory Agreement, AIM intends to delegate all of its duties
under the New Management Agreement to Chancellor SSM. The New Sub-Advisory
Agreement is substantially the same in all material respects to the New
Management Agreement, and the description above of the duties and services to be
performed by AIM will apply to Chancellor SSM as Sub-Adviser and
Sub-Administrator to the Fund.
The New Sub-Advisory Agreement provides that, subject to the approval of
the Board and the shareholders, Chancellor SSM may delegate any and all of its
duties to a sub-sub-adviser or sub-sub-administrator, provided that Chancellor
SSM shall continue to supervise the performance of any such sub-sub-adviser or
sub-sub-administrator. In this regard, Chancellor SSM will enter into a New
Sub-Sub-Advisory Agreement with Chancellor LGT, pursuant to which Chancellor LGT
will manage and administer certain portions of the Fund's assets. This New
Sub-Sub-Advisory Agreement is necessary to permit Chancellor LGT to manage
certain Fund investments, primarily high-yield securities, in which it has
particular expertise. The New Sub-Sub-Advisory Agreement is substantially the
same in all material respects as the New Sub-Advisory Agreement, and the
description above of the duties and services to be performed by Chancellor SSM
will apply to Chancellor LGT with respect to the sub-advised assets of the Fund.
The New Management Agreement and the New Sub-Advisory Agreements may be
terminated at any time without penalty by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Fund, on 60 days' written
notice to AIM, Chancellor SSM or Chancellor LGT, respectively, or by AIM,
Chancellor SSM or Chancellor LGT, respectively, at any time without penalty on
60 days' written notice to the Fund. Each of the New Agreements will terminate
automatically in the event of any assignment, as defined by the 1940 Act. The
New Agreements continue automatically for successive periods not to exceed
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of the Independent Board Members,
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by the Board or by vote of a majority of the outstanding voting
securities of the Fund.
ADDITIONAL SERVICES PROVIDED BY AIM AND ITS AFFILIATES. In addition to
AIM's investment management and administrative responsibilities under the New
Management Agreement, it is anticipated that a number of AIM affiliates will
provide services to the Fund if this Proposal 2 is approved by shareholders.
A I M Distributors, Inc. ("AIM Distributors"), a wholly owned subsidiary
of AIM, would serve as the principal underwriter for the Fund and would, if
Proposal 2 is approved by shareholders, offer Shares of the Fund. Existing
shareholders would continue to pay any applicable Early Withdrawal Charges to
AIM Distributors for shares that were sold by or attributable to the
distribution efforts of GT Global.
The agreement pursuant to which GT Global, Inc. serves as principal
underwriter for the Fund will terminate as a result of the Purchase. The Board
has approved a new agreement, consistent with the description above, pursuant to
which AIM Distributors would serve as principal underwriter for the Fund's
Shares. Under the 1940 Act, such agreement does not require the approval of
shareholders before it becomes effective. Such agreements will become effective
on or about the Closing Date if this Proposal 2 is approved by Shareholders.
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It is currently anticipated that during September, 1998, A I M Fund
Services, Inc. ("AIM Services"), a wholly owned subsidiary of AIM, would
commence serving as transfer agent for the Fund. GT Global Investor Services,
Inc. will continue to serve as transfer agent for the Fund until AIM Services
assumes that role.
The agreement pursuant to which Chancellor LGT serves as accounting and
pricing agent for the Fund will also terminate as a result of the Purchase. It
is anticipated that the Board will approve a new fund accounting and pricing
agent agreements, through which AIM will serve as fund accounting and pricing
agent. AIM intends to delegate substantially all of its responsibilities as fund
accounting and pricing agent to Chancellor LGT. Under the 1940 Act, such
agreements do not require the approval of shareholders before they become
effective. Such agreements will become effective on or about the Closing Date if
this Proposal 2 is approved by Shareholders.
INFORMATION CONCERNING AMVESCAP, AIM, CHANCELLOR SSM AND CHANCELLOR LGT.
AMVESCAP, along with its subsidiaries, is one of the largest independent
investment management organizations in the world. The AMVESCAP group of
companies (through the AIM and INVESCO brand names) offers a broad array of
investment products and services to institutions and individuals. As of December
31, 1997, AMVESCAP and its subsidiaries had approximately $192 billion under
management. AMVESCAP's worldwide investment team consists of approximately 330
investment professionals located in major financial centers, and includes larger
investment teams in Atlanta, Boston, Dallas, Denver, Hong Kong, Houston, London,
Louisville, Miami, Portland (Oregon), and Tokyo. The expertise, personnel, data
and systems of AMVESCAP's worldwide investment team, as well as the ongoing
resources of Chancellor LGT, will be available to AIM, Chancellor SSM and
Chancellor LGT in their management and administration of the Fund. The corporate
headquarters of AMVESCAP are located at 11 Devonshire Square, London EC2M 4YR,
England.
AIM was organized in 1976 and, together with its affiliates, currently
advises over 50 investment company portfolios (the "AIM Funds"). As of December
31, 1997, the total assets of the AIM Funds were approximately $83 billion. AIM
is a wholly owned subsidiary of A I M Management Group Inc. ("AIM Management").
Certain of the Directors and officers of AIM are also Trustees/Directors and
executive officers of the AIM Funds. The address of AIM, all of the Directors of
AIM, AIM Distributors, AIM Services, and AIM Management, is 11 Greenway Plaza,
Suite 100, Houston, TX 77046-1173.
Chancellor LGT currently provides investment management and/or
administration services to the GT Global Funds. Chancellor LGT and its worldwide
asset management affiliates, including Chancellor SSM, have provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969. As of December 31, 1997,
Chancellor LGT and its worldwide affiliates managed approximately $54 billion in
assets. In the United States, as of December 31, 1997, Chancellor LGT managed or
administered approximately $8 billion of assets of the GT Global Funds and
several other registered investment companies, including three closed-end funds,
and sub-advised one other registered investment company. In addition to the
investment resources of its San Francisco and New York offices, Chancellor LGT
draws upon the expertise, personnel, data and systems of other investment
offices of LGT's Asset Management Division in Frankfurt, Hong Kong, London,
Singapore, Sydney, Tokyo and Toronto. In managing the GT Global Funds,
Chancellor LGT generally employs a team approach, taking advantage of its
investment resources around the world in seeking to achieve each Fund's
investment objective. The U.S. offices of Chancellor LGT are located at 50
California Street, 27th Floor, San Francisco, CA 94111 and 1166 Avenue of the
Americas, New York, NY 10036.
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Chancellor LGT, Chancellor SSM and their worldwide affiliates, including
LGT Bank in Liechtenstein, compose Liechtenstein Global Trust. Liechtenstein
Global Trust is a provider of global asset management and private banking
products and services to individual and institutional investors. Liechtenstein
Global Trust is controlled by the Prince of Liechtenstein Foundation, which
serves as the parent organization for the various business enterprises of the
Princely Family of Liechtenstein. The principal business address of the Prince
of Liechtenstein Foundation is Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
PROPOSAL NO. 3: APPROVAL OF CHANGES TO CERTAIN FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE FUND
PROPOSAL. Changes are proposed to the fundamental investment
restrictions ("fundamental restrictions") of the Fund.
REASONS FOR THE PROPOSED CHANGES. Pursuant to the 1940 Act, the Fund has
adopted certain fundamental restrictions, which may be changed only with
shareholder approval. Restrictions and policies that the Fund has not
specifically designated as being fundamental are considered to be
"non-fundamental" and may be changed by the Fund's Board without shareholder
approval.
Accordingly, the Board has approved revisions to the Fund's fundamental
restrictions in order to reduce the number of restrictions that are fundamental.
The Board believes that by reducing to a minimum those restrictions that can be
changed only by shareholder vote, the Fund will be able to avoid the costs and
delays associated with a shareholder meeting if the Board decides to make future
changes to its investment policies. Although the proposed changes in fundamental
restrictions will allow the Fund greater investment flexibility to respond to
future investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material change
in the level of investment risk associated with an investment in the Fund or the
manner in which the Fund is managed.
The Fund seeks its investment objective by investing all of its investable
assets in the Portfolio, another closed-end fund. The Fund and the Portfolio
have identical fundamental restrictions. A vote to approve changes in the
investment restrictions of the Fund also would be a vote to approve changes to
the identical investment restrictions for the Portfolio.
PROPOSED CHANGES. The following is the text and a summary description of
the proposed changes to the Fund's fundamental restrictions, together with the
text of the non-fundamental restriction that would be adopted in connection with
the elimination of one of the Fund's current fundamental restrictions. The text
below also describes those fundamental restrictions that are being eliminated
for which no corresponding non-fundamental restrictions is being proposed. Any
non-fundamental restriction may be modified or eliminated by the Board at any
future date without any further approval of shareholders. Shareholders should
refer to the Fund's Prospectus for the text of the Fund's existing fundamental
restrictions. Shareholders may request a copy of the Fund's Prospectus by
calling 800-xxx-xxxx.
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A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON SELLING SECURITIES SHORT AND
INVESTING IN PUT, CALL, STRADDLE OR SPREAD OPTIONS.
PROPOSED CHANGE: Upon the approval of Proposal 3, the existing fundamental
restriction on selling securities short and investing in put, call, straddle or
spread options for the Fund would be modified as follows:
"The Fund will not purchase or sell physical commodities, but the
Fund may purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments."
DISCUSSION: The proposed changes to this fundamental restriction regarding
options are intended to ensure that the Fund will have the maximum flexibility
to enter into hedging and other transactions utilizing financial contracts and
derivative products when doing so is permitted by the Fund's investment policy.
Furthermore, the proposed fundamental restriction would allow the Fund to
respond to the rapid and continuing development of derivative products. Although
the proposed changes to this fundamental restriction would eliminate the current
restriction on investing in put, call, straddle or spread options, the Fund has
no present intention of investing in these instruments.
The Fund is not required to have a fundamental restriction with respect to
short sales of securities. In order to maximize the Fund's flexibility in this
area, the Board believes that the Fund's restriction on short sales of
securities should be eliminated. Notwithstanding the elimination of this
fundamental restriction, the Fund expects to continue not to engage in short
sales of securities, except to the extent that the Fund contemporaneously owns
or has the right to acquire at no additional cost securities identical to those
sold short.
B. ELIMINATION OF FUNDAMENTAL RESTRICTION ON MARGIN TRANSACTIONS.
PROPOSED CHANGE: Upon the approval of Proposal 3, existing fundamental
restrictions on engaging in margin transactions for the Fund would be
eliminated, and the Fund would become subject to the following non-fundamental
restriction:
"The Fund will not purchase securities on margin, provided that the
Fund may obtain short-term credits as may be necessary for the clearance
of purchases and sales of securities; except that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments. The purchase of Corporate Loans,
Corporate Debt Securities and other investment assets with the proceeds of
a permitted borrowing or securities offering will not be deemed to be the
purchase of securities on margin."
DISCUSSION: The Fund is not required to have a fundamental restriction on
margin transactions. Accordingly, it is proposed that the Fund's existing
fundamental restriction be replaced with a non-fundamental restriction. The
proposed non-fundamental restriction makes minor changes in wording from the
existing fundamental restriction and expands the list of margin transactions
excepted from the prohibition to include margin deposits in connection with
financial options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments.
REQUIRED VOTE. Approval of each of the changes contemplated by Proposal 3
with respect to the Fund requires the affirmative vote of a "majority of the
outstanding voting securities" of the Fund, which for this purpose means the
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affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares of the Fund present at the meeting if
more than 50% of the outstanding shares of the Fund are represented at the
meeting in person or by proxy. In addition to voting "for" or "against" the
entire Proposal 3, shareholders of the Fund also may vote against the changes
proposed with respect to a specific fundamental restriction in the manner
indicated on the proxy card.
If the proposed changes are approved by shareholders of the Fund at the
Special Meeting, those changes will be effective upon appropriate disclosure
being made in the Fund's prospectus.
IF ONE OR MORE OF THE CHANGES CONTEMPLATED BY PROPOSAL 3 ARE NOT APPROVED
BY SHAREHOLDERS OF THE FUND, THE RELATED EXISTING FUNDAMENTAL RESTRICTION(S) OF
THE FUND WILL CONTINUE IN EFFECT FOR THE FUND.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3.
PROPOSAL NO. 4: APPROVAL OF CONVERSION OF FUND
AND PORTFOLIO TO INTERVAL STATUS
Under this Proposal, the Fund would convert to "interval fund" status
pursuant to Rule 23c-3 under the 1940 Act, which will ensure that shareholders
will have the opportunity on a quarterly basis to liquidate a portion of their
shares of the Fund at net asset value. This Proposal also would amend the Trust
Instrument of the Portfolio in which the Fund invests all of its investable
assets. Those amendments would convert the Portfolio as well to interval fund
status. If this Proposal is approved, the Fund would conduct quarterly
repurchase offers to its shareholders, and the Portfolio would also conduct
periodic repurchase offers to its interestholders. The implementation of the
conversions of the Fund and the Portfolio to interval fund status is dependent
upon the receipt of an exemptive order ("Exemptive Order") from the Securities
and Exchange Commission ("SEC"), as more fully described below.
BACKGROUND.
DESCRIPTION OF NON-EXCHANGE-TRADED CLOSED-END FUNDS. The common stock of
most closed-end management investment companies ("closed-end funds") is traded
on an exchange. Although exchange trading provides shareholders with liquidity,
such trades typically occur at a discount to the net asset value of the
closed-end fund. These discounts may create difficulties for investors, fund
sponsors, and funds. Investors, for example, may receive less than they invested
as a result of the discount, and funds may find it difficult to raise additional
capital because the 1940 Act generally requires closed-end funds to issue shares
at net asset value.
Unlike the stock of most closed-end funds, the Fund's common stock is not
traded on any exchange. The Fund attempts to provide liquidity to its
shareholders by considering each quarter the making of a tender offer to
repurchase all or a portion of the common stock of the Fund from shareholders at
a price per share equal to the net asset value per share of the common stock.
The Board is not obligated to authorize the making of a tender offer and does
not guarantee that in any particular quarter a tender offer will be made. If no
tender offer is made, shareholders may be unable to sell their shares. Since
there is no secondary market for the Fund's common stock, these periodic tender
offers, when offered, provide the only source of liquidity for Fund
shareholders.
Rule 23c-3, adopted by the SEC in 1993, provides that closed-end funds
that comply with the Rule's conditions may commit to making periodic and certain
discretionary repurchases of their securities at net asset value. Among the
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conditions of Rule 23c-3 is that an interval fund is required to have a
fundamental policy that it will periodically offer to repurchase a portion of
the fund's outstanding shares. Under Rule 23c-3, an interval fund is required,
except under certain extraordinary conditions, to make periodic offers to
repurchase from 5% to 25% of the fund's outstanding shares, which percentage
shall be determined by the fund's board with respect to each repurchase offer.
An interval fund may also make discretionary repurchase offers no more
frequently than once every two years. In addition, Rule 23c-3 imposes a
liquidity requirement, under which a fund must maintain, for a certain period of
time, liquid assets equal to the amount of the repurchase offer. As a result, a
fund may, during the repurchase offer period, have to reduce the percentage of
assets invested according to its investment objective. Rule 23c-3 is intended to
allow closed-end funds to provide investors with a limited ability to resell
shares to the companies at approximately net asset value.
STRUCTURE OF THE FUND AND THE PORTFOLIO. The Fund seeks to achieve its
investment objective by investing all of its investable assets in the Portfolio,
which has the same investment objective as the Fund. The Portfolio invests its
investable assets in securities in accordance with its investment objective.
Accordingly, the Fund's interest in the securities owned by the Portfolio is
indirect. In addition to the interest in the Portfolio held by the Fund, it is
anticipated that, subject to certain conditions, a second investment company, GT
Global Select Floating Rate Fund ("Select Floating Rate Fund"), will in the
future hold an interest in the Portfolio. Select Floating Rate Fund has the same
investment objective as the Fund and the Portfolio and is organized as an
interval fund. Select Floating Rate Fund will thus also conduct periodic
repurchase offers for its outstanding shares.
REASONS FOR PROPOSED CONVERSION. Under this Proposal 4, the Fund and the
Portfolio each would convert to interval fund status pursuant to Rule 23c-3, and
each would adopt a fundamental policy to make quarterly tender offers. Approval
of this Proposal 4 would provide shareholders of the Fund with greater assurance
of liquidity in their holdings of shares by guaranteeing shareholders the
ability to sell at least a portion of their shares each quarter.
Fund shareholders may realize additional benefits from converting the Fund
to interval fund status. First, SEC regulations have streamlined the procedures
for repurchase offers under Rule 23c-3. As a result, repurchase offers pursuant
to Rule 23c-3 are somewhat less expensive and time-consuming to conduct than
ordinary tender offers. Second, interval funds are permitted to file
post-effective amendments to their registration statements that become effective
automatically, which would have the effect of saving the Fund additional time
and money that would otherwise be required to obtain approval from the SEC for
each new registration statement.
Finally, there is another potential benefit, which is contingent on the
receipt of the Exemptive Order. If this Proposal is approved and the Exemptive
Order is granted, the Fund and Select Floating Rate Fund (the "Funds") would
conduct periodic repurchase offers on an alternating basis, which could reduce
costs associated with the repurchase offers. In order for the Funds to satisfy
the liquidity requirements of Rule 23c-3, the Portfolio must offer to repurchase
some of its interests (the percentage of which is discussed below in greater
detail) from the Funds. The Portfolio must also maintain liquid assets
sufficient to cover its own repurchase offers to the Funds. Staggering the
Funds' repurchase offers, however, reduces the percentage of interests that the
Portfolio must offer to repurchase at any one time and, consequently, enables
the Portfolio to remain more fully invested by minimizing its need to maintain
liquid assets. This, in turn, minimizes the need for the Portfolio either to
incur transaction costs by selling loan interests or to sell attractive
portfolio investments to meet liquidity requirements.
In order to permit the Fund and Select Floating Rate Fund to conduct their
periodic repurchase offers pursuant to Rule 23c-3 and to realize the benefits of
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interval fund status, the Portfolio must also convert to interval fund status.
This will ensure that, when the Funds conduct their periodic repurchase offers,
the Portfolio would conduct a simultaneous repurchase offer in an amount
sufficient to ensure liquidity for the Funds' repurchase offers. Thus, if the
source of funds from cash on hand and borrowing under available lines of credit
is insufficient to finance a Fund's repurchase offer, the Fund will tender a
portion of its interest in the Portfolio sufficient to maintain the necessary
liquidity under Rule 23c-3.
DESCRIPTION OF FUND'S OPERATION AS AN INTERVAL FUND. If this Proposal is
approved and the Exemptive Order described below is granted, the Fund would
become an interval fund subject to Rule 23c-3. A description of how the Fund
would operate as an interval fund is provided below.
INTERVAL REPURCHASES. Pursuant to fundamental policies, the Fund will be
required to make quarterly offers to repurchase a percentage of its outstanding
shares with redemption proceeds to be paid to participating shareholders in
cash. The percentage of outstanding shares that the Fund would offer to
repurchase must be no less than 5% nor more than 25% of the Fund's then
outstanding shares. The percentage would be established by the Board shortly
before the commencement of such offer ("offer amount"). The Board has determined
that, assuming approval of this Proposal and conversion to interval status, the
first repurchase offer by the Fund would occur no later than in the last month
of the third quarter of 1998, with subsequent repurchase offers to be made
quarterly thereafter. As described below, offers may be suspended or postponed
only under certain extraordinary circumstances, as permitted by Rule 23c-3.
FUNDAMENTAL PERIODIC REPURCHASE POLICY. The Fund will adopt the following
fundamental policies, which may be amended only by shareholder vote, regarding
periodic repurchases:
(a) The Fund will make offers to repurchase its shares at quarterly
intervals pursuant to Rule 23c-3 ("Offers"). The Board may place
such conditions and limitations on repurchase offers as may be
permitted pursuant to Rule 23c-3 or by the SEC.
(b) On or about the fourth Tuesday of the last month of each calendar
quarter, or the next business day if such day is not a business day,
will be the deadline (the "request deadline") by which the Fund must
receive repurchase requests submitted by shareholders in response to
the most recent repurchase offer.
(c) The date on which the repurchase price for shares is to be
determined (the "pricing date") will occur no later than the
fourteenth day after a repurchase request deadline, or the next
business day if such day is not a business day.
(d) Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
REPURCHASES IN EXCESS OF THE REPURCHASE OFFER AMOUNT; PRORATION. If the
acceptances by shareholders of a repurchase offer exceed the repurchase offer
amount established by the Board for the quarter, the Fund may, at its
discretion, purchase up to an additional 2% of the shares outstanding on a
repurchase request deadline. If the Fund determines not to repurchase more than
the repurchase offer amount, or if the shareholders tender shares in an amount
exceeding the repurchase offer amount plus 2% of the shares outstanding on the
repurchase request deadline, the Fund may repurchase shares on a pro rata basis,
subject to limited exceptions permitted by Rule 23c-3.
REPURCHASE PRICE; REPURCHASE FEE. The Fund will make repurchases at
approximately net asset value determined on the pricing date. An earlier pricing
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date may be used if, on or immediately following the request deadline, it
appeared that the use of an earlier pricing date is not likely to result in
significant dilution of the net asset value of either shares that are tendered
for repurchase or shares that are not tendered. Payment for any shares
repurchased pursuant to a repurchase offer must be made by seven days after the
pricing date (the "payment deadline"). The Fund may deduct from a shareholder's
proceeds a fee of up to 2% of such proceeds to offset expenses associated with
the repurchase offer. This fee would be retained by the Fund.
EARLY WITHDRAWAL CHARGE. As is currently the case with respect to the
Fund's quarterly tender offers, the Fund imposes an early withdrawal charge of
up to 3% of the proceeds of the periodic repurchase offers on certain shares.
The level of the early withdrawal charge will vary according to the length of
time for which shareholders have held their shares. Shareholders may also be
eligible for certain waivers of the early withdrawal charge.
NOTIFICATION. Shareholders will be sent notification containing specified
information at least 21 days, and no more than 42 days, before the repurchase
request deadlines. The information provided will include the repurchase offer
amount, the request deadline, the pricing date, the payment deadline, and the
applicable repurchase fee. Notification will also include the procedures for
shareholders to tender their shares, procedures for modifying or withdrawing
tenders, procedures under which the Fund may repurchase such shares on a pro
rata basis, and the circumstances under which the Fund may suspend or postpone
the offer. The Fund will provide the net asset value of the shares, which will
be computed no more than seven days before the date of notification, and the
means by which shareholders may ascertain the net asset value thereafter.
SOURCE OF FUNDS. The Fund anticipates using cash on hand and borrowings
under its available lines of credit to purchase shares acquired pursuant to the
repurchase offers. As described above, the Fund invests, and will invest,
substantially all of its assets in the Portfolio. If insufficient funds are
available from cash on hand and through borrowing to finance the repurchase of
shares in any repurchase offer, it may be necessary for the Portfolio to sell
its underlying securities and to conduct a simultaneous repurchase offer at the
Portfolio level to provide the Fund with additional liquidity. Under these
circumstances, the Fund would tender a portion of its interest in the Portfolio
sufficient to obtain the liquidity necessary to effect the repurchase offer.
WITHDRAWAL RIGHTS. Tenders made pursuant to an repurchase offer will be
irrevocable after the request deadline. However, shareholders may modify the
number of shares being tendered or withdraw shares tendered at any time up to
the request deadline.
SUSPENSION AND POSTPONEMENT OF OFFERS. The Fund may suspend or postpone a
repurchase offer by vote of a majority of the Board (including a majority of the
members of the Board who are not "interested persons," as that term is defined
in the 1940 Act, of the Fund), but only (1) if the repurchases would impair the
Fund's status as a regulated investment company under the Internal Revenue Code;
(2) for any period during which the NYSE or any other market in which the
securities owned by the Portfolio are principally traded is closed, other than
customary week-end and holiday closings, or during which trading in such market
is restricted; (3) for any period during which an emergency exists as a result
of which disposal by the Fund of securities owned by it is not reasonably
practicable, or during which it is not reasonably practicable for the Fund
fairly to determine its net asset value; or (4) for such other periods as the
SEC may by order permit for the protection of shareholders of the Fund.
If a repurchase offer is suspended or postponed, the Fund will provide
notice thereof to its shareholders. If the Fund renews a suspended offer or
reinstitutes a postponed offer, the Fund will send a new notification to its
shareholders.
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FEDERAL INCOME TAX CONSEQUENCES OF OFFERS. The conversion of the Fund to
interval fund status will not alter the potential tax consequences of a tender
of shares. The following discussion summarizes the federal income tax
consequences of a tender of shares pursuant to a repurchase offer by the Fund.
You should consult your own tax adviser regarding specific tax consequences,
including state and local tax consequences, of such a tender by you.
SPECIAL RISK CONSIDERATIONS. Shareholders should be aware of the
following special risk considerations associated with periodic interval
repurchases:
. In the event of an oversubscription of a repurchase offer, shareholders may
be unable to liquidate a certain portion of their shares during the
repurchase period. Under Rule 23c-3, the Fund may not offer to repurchase in
any quarter more than 25% of the Fund's outstanding shares. The quarterly
tender offers currently considered by the Fund's Board are not subject to
such a percentage limitation. The interval repurchase structure therefore
presents the possibility that, in any given quarter, the ability of
shareholders to have the Fund repurchase all of their shares may be more
limited than under the current tender offer structure.
. Pursuant to Rule 23c-3, from the time the Fund notifies its shareholders of
a repurchase offer until the pricing date, the Portfolio will be required to
maintain liquid assets in an amount equal to 100% of the repurchase offer
amount, and portfolio management techniques may be modified accordingly. This
requirement may result in the Portfolio's investments in interests in
corporate loans and corporate debt securities temporarily falling below 80%
of its total assets and may, although it is not anticipated to, affect the
ability of the Fund and Portfolio to achieve their investment objective.
Furthermore, there may be an increase in portfolio turnover and a
corresponding increase in transaction costs. In addition, since shares of the
Fund are repurchased on a quarterly basis, the concurrent reduction in the
Fund's asset value may decrease the investment opportunities and will
increase the expense ratio.
. There is a risk of decline in net asset value as a result of the delay
between the request deadline and the repurchase pricing date, due to
declines, among other things, in prices of securities held by the Fund and
fluctuations in the currencies in which such securities are denominated
relative to the U.S. dollar.
SEC EXEMPTIVE ORDER. Because the conversion to interval fund status in the
context of a Fund/Portfolio structure raises novel questions under the 1940 Act,
the Fund and the Portfolio have filed with the Commission a request for
exemptive relief from certain provision of Rule 23c-3. The Fund's ability to
adopt and implement an interval fund structure on terms appropriate to its
proposed method of operations is dependent upon receipt from the Commission of
such an exemptive order.
REQUIRED VOTE. The affirmative vote of the holders of a majority of the
Fund's shares entitled to vote at the meeting is required for approval of
Proposal 4. SHAREHOLDERS SHOULD NOTE THAT THE IMPLEMENTATION OF PROPOSAL 4 IS
DEPENDENT ON RECEIPT FROM THE COMMISSION OF THE EXEMPTIVE ORDER GRANTING THE
FUND AND THE PORTFOLIO RELIEF FROM CERTAIN PROVISIONS OF RULE 23C-3. If the SEC
does not grant the Exemptive Order, Proposal 4 will NOT be implemented.
THE FUND'S BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4.
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PROPOSAL NO. 5: APPROVAL OF AN AGREEMENT AND PLAN
OF CONVERSION AND TERMINATION
BACKGROUND. The Fund currently is organized as a Maryland corporation. The
Board of the Company has approved an Agreement and Plan of Conversion and
Termination ("Plan"), which provides for a series of transactions (collectively,
a "Reorganization") to convert the Fund to a newly created closed-end management
investment company organized as a business trust ("Trust") under the Delaware
Business Trust Act ("Delaware Act"). Under the Plan, the Fund will transfer all
its assets to a Trust in exchange solely for voting shares of beneficial
interest in the Trust and the Trust's assumption of all the Fund's liabilities.
Attached to this Proxy Statement as Exhibit D is a form of the Plan relating to
the proposed Reorganization.
The Reorganization is being proposed primarily to modernize the
organizational documents under which it operates. As noted above, Chancellor
LGT, AIM, and the Board believe that a number of benefits will be available to
the Fund and its shareholders once these documents conform to those of the AIM
Funds. The operations of the Trust following the Reorganization will be
substantially similar to those of the Fund, except that the Trust's advisory
arrangements will conform to the changes proposed in Proposal 2; the fundamental
and non-fundamental restrictions of the Trust will conform to the changes
proposed in Proposal 3; and the Trust Instrument of the Trust will include
provisions requiring the Trust to make periodic repurchase offers for a portion
of its shares in accordance with Rule 23c-3, as described in Proposal 4.
Finally, as described below, the Trust Instrument for the Trust will differ from
the Articles of Incorporation of the Fund in certain respects that are expected
to improve the Fund's operations.
REASONS FOR THE PROPOSED REORGANIZATION. The Reorganization is being
proposed because, as noted above, Chancellor LGT, AIM, and the Board believe
that the Delaware business trust form of organization offers a number of
advantages over the Maryland corporate form of organization. As a result of
these advantages, the Delaware business trust form of organization has been
increasingly used by mutual funds, including many AIM Funds.
The Delaware business trust form of organization offers greater
flexibility than the Maryland corporate form. A Maryland corporation is governed
by the detailed requirements imposed by Maryland corporate law and by the terms
of its Articles of Incorporation. A Delaware business trust is subject to fewer
statutory requirements. The Trust will be governed primarily by the terms of an
Agreement and Declaration of Trust, which is its trust instrument ("Trust
Instrument"). The Trust Instrument will be substantially in the form of Trust
Instrument that is attached to this Proxy Statement as Exhibit E. In particular,
the Trust will have greater flexibility to conduct business without the
necessity of engaging in expensive proxy solicitations to shareholders. For
example, under Maryland corporation law, amendments to the charter of the Fund
would typically require shareholder approval. Under Delaware law, unless the
Trust Instrument provides otherwise, amendments to the Trust Instrument of a
Delaware business trust may be made without first obtaining shareholder
approval. In addition, unlike Maryland corporation law, which restricts the
delegation of a board of directors' functions, Delaware law permits the board of
trustees of a Delaware business trust to delegate certain of its
responsibilities. For example, the board of trustees of a Delaware business
trust may delegate the responsibility of declaring dividends to duly empowered
committees of the board or to appropriate officers. Finally, Delaware law
permits the trustees to adapt a Delaware business trust to future contingencies.
For example, the trustees may, without a shareholder vote, change the Delaware
business trust's domicile or form of organization. Any exercise of this
authority by the Fund's Board would require shareholder approval.
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The Reorganization will also have certain other effects on the Fund, its
shareholders, and management, which are described below under "Certain
Comparative Information about the Fund and the Trust."
SUMMARY OF THE PLAN. To accomplish the Reorganization, the Trust will be
formed as a Delaware business trust pursuant to a Trust Instrument. On the
closing date of the Reorganization ("Closing Date"), the Fund will transfer all
of its assets and liabilities to the Trust in exchange solely for a number of
full and fractional shares of the Trust equal to the number of full and
fractional shares of common stock of the Fund then outstanding. Immediately
thereafter, the Fund will distribute the shares of the Trust to its shareholders
in complete liquidation of the existing Fund and will, as soon as practicable
thereafter, be dissolved. Upon completion of the Reorganization, each
shareholder of the Fund will be the owner of full and fractional shares of the
Trust equal in number and aggregate net asset value to the shares he or she held
in the Fund.
The Plan authorizes the Fund to acquire a share of the Trust and, as the
sole initial shareholder prior to the Reorganization: (1) to elect the directors
of the Fund as the trustees of the Trust to serve without limit in time, except
as they may resign or be removed by action of the trustees or shareholders; (2)
to approve an investment management and administration agreement that will be
substantially identical to the agreement described in Proposal 2; (3) to approve
a sub-advisory and sub-administration agreements that will be substantially
identical to the agreements described in Proposal 2; (4) to approve such
fundamental policies as are required to convert the Fund to "interval fund"
status, as described in Proposal 3; and (5) to ratify the selection of Coopers &
Lybrand L.L.P., the Fund's present auditors, as the Trust's independent
certified public accountants.
Assuming approval of this Proposal by shareholders, it is currently
contemplated that the Reorganization will become effective on May 29, 1998.
However, the Closing Date for the Reorganization may be another date if
circumstances warrant.
The obligations of the Fund and the Trust under the Plan are subject to
various conditions as stated therein. To provide against unforeseen events, the
Plan may be terminated or amended at any time prior to the closing of the
Reorganization by action of the Board of the Fund, notwithstanding the approval
of the Plan by the shareholders of the Fund. However, no amendments may be made
that materially adversely affect the interests of the shareholders of the Fund.
The Fund and the Trust may at any time waive compliance with any of the
covenants and conditions contained in the Plan, provided that such waiver does
not materially adversely affect the interests of the shareholders of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENT. The Plan authorizes
the Fund, as sole shareholder of the Trust prior to the Reorganization, to
approve with respect to the Trust a new Investment Management and Administration
Contract ("New Management Agreement") that will be substantially identical to
the contract described in Proposal 2. Information on the New Management
Agreement, including a description of the differences between the and the
current advisory contract, is set forth above under Proposal 2. The form of the
New Management Agreement appears as Exhibit A to this Proxy Statement.
SUB-ADVISORY AND SUB-ADMINISTRATION AGREEMENTS. The Plan authorizes the
Fund, as sole shareholder of the Trust prior to the Reorganization, to approve
sub-advisory and sub-administration agreements ("New Sub-Advisory Agreements")
with respect to the Trust. Information on the New Sub-Advisory Agreements is set
forth above under Proposal 2. The forms of the New Sub-Advisory Agreements
appear as Exhibits B and C to this Proxy Statement.
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CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS. The Trust's transfer agent
will establish for each shareholder an account containing the appropriate number
of shares of the Trust. Such accounts will be identical in all respects to the
accounts currently maintained by the Fund's transfer agent for each shareholder
of the Fund. Shares held in the Fund accounts will automatically be designated
as shares of the Trust. Holders of stock certificates of the Fund will not need
to exchange them for new certificates after the Reorganization, and certificates
for Fund shares issued before the Reorganization will represent shares of the
Trust after the Reorganization. Shareholders of the Fund who are receiving
payment under a withdrawal plan with respect to Fund shares will retain the same
rights and privileges as to Trust shares under the Plan. Similarly, no further
action will be necessary in order to continue any automatic investment plan or
retirement plan currently maintained by a shareholder with respect to the Fund's
shares.
FEDERAL INCOME TAX CONSEQUENCES. The Fund and the Trust will receive an
opinion of Kirkpatrick & Lockhart LLP substantially to the effect that the
Reorganization will constitute a tax-free reorganization under section
368(a)(1)(F) of the Code. Accordingly, the Fund, the Trust, and the shareholders
of the Fund will recognize no gain or loss for federal income tax purposes as a
result of the Reorganization. Shareholders of the Fund should consult their tax
advisors regarding the effect, if any, of a Reorganization in light of their
individual circumstances and as to state and local consequences, if any, of a
Reorganization. Additional tax considerations relating to the conversion of the
Fund to interval fund status are described below.
APPRAISAL RIGHTS. Appraisal rights are not available to shareholders.
CERTAIN COMPARATIVE INFORMATION ABOUT THE FUND AND THE TRUST.
STRUCTURE OF THE TRUST. The Trust will be established pursuant to a Trust
Instrument under the laws of the State of Delaware. The Trust will have the same
investment objectives, policies, and restrictions as the Fund, except that each
of Trust's fundamental and nonfundamental restrictions will conform to the
changes proposed in Proposal 3 (assuming approval of that proposal by the
shareholders). The Trust's fiscal year will be the same as that of the Fund. The
Trust will not have any operations prior to the Reorganization. Initially, the
Fund will be the sole shareholder of the Trust.
As a Delaware business trust, the Trust's operations will be governed by
the Trust Instrument, the By-Laws of the Trust, and applicable Delaware law
rather than by the Fund's Articles of Incorporation and By-Laws and Maryland
corporation law. Certain differences between the two domiciles and forms of
organization are summarized below. The operations of the Trust will continue to
be subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
TRUSTEES AND OFFICERS OF THE TRUST. Subject to the provisions of the Trust
Instrument, the business of the Trust is managed by its trustees who serve
indefinite terms and who have all powers necessary or convenient to carry out
their responsibility. The responsibilities, powers, and fiduciary duties of the
trustees will be substantially the same as those of the Board Members of the
Fund.
The trustees of the Trust would be those persons elected at this Special
Meeting to serve as Board Members of the Fund. Information concerning the
nominees for election as Board Members of the Fund, all of whom presently serve
in such positions, is set below under Proposal 1, "Election of Board Members."
It is anticipated that the current officers of the Fund will be elected to serve
as officers of the Trust and will perform the same functions following the
Reorganization that they now perform on behalf of the Fund.
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SHARES OF THE TRUST. The beneficial interests in the Trust are represented
by transferable shares, par value $0.01 per share. Share certificates will not
be issued unless requested in writing by a shareholder. The trustees have the
power under the Trust Instrument to establish series and classes of shares; the
Fund's directors currently have a similar right. The Trust Instrument will
permit the trustees to issue an unlimited number of shares of the Trust and, if
applicable, of each class and series. The Fund is authorized to issue only the
number of shares specified in the Articles of Incorporation and may issue
additional shares only with Board approval and after payment of a fee to the
State of Maryland on any additional shares authorized.
SHAREHOLDER MEETING REQUIREMENTS. The Fund's By-Laws and Maryland law
provide that a special meeting of shareholders shall be called upon the written
request of shareholders holding 25% of the Fund's shares. The Trust's By-Laws
will provide that a special meeting of shareholders for the purpose of voting on
the removal of any trustee may be called by the holders of 10% or more of the
outstanding shares of the Trust.
The Trust, like the Fund, will operate as a closed-end management
investment company registered with the SEC under the 1940 Act (subject to the
interval fund provisions of Rule 23c-3 described in Proposal 4). Shareholders of
the Trust will therefore have the power to vote at special meetings with respect
to, among other things, changes in fundamental investment objectives and
policies of the Trust; approval of certain changes to investment advisory
contracts; and such additional matters relating to the Trust as might be
required by the 1940 Act. If, at any time, less than a majority of the Trustees
holding office have been elected by the shareholders, the Trustees then in
office will promptly call a meeting of shareholders of the Trust for the purpose
of electing a Trustee or Trustees in order to maintain a majority of Trustees
elected by shareholders.
REMOVAL OF DIRECTORS AND TRUSTEES. The Fund's Articles of Incorporation
and By-Laws permit removal of a director by the holders of more than 50% of the
shares voted in person or by proxy at a meeting at which at least 50% of the
Fund's outstanding shares are represented in person or by proxy. Under the
Trust's Trust Instrument, a trustee may be removed by two-thirds of the trustees
holding office prior to such removal or by holders of two-thirds of the
outstanding Trust's shares at a special meeting called for that purpose.
SHAREHOLDERS' RIGHTS OF INSPECTION. Maryland law provides that persons who
have been shareholders of record for six months or more and who own at least 5%
of a Fund's shares may inspect the Fund's books of account and stock ledger.
Under the Trust's Trust Instrument and By-Laws, the shareholders who have held
shares of record for at least six months and who hold at least 5% of the
outstanding shares of the Trust will be permitted, upon written request, to
inspect a list of the shareholders of the Trust.
SHAREHOLDER LIABILITY. Maryland law provides that a shareholder is not
obligated to the Fund with respect to the stock, except to the extent that (1)
the subscription price or other agreed consideration for the stock has not been
paid (subject to limited exceptions); (2) the shareholder knowingly accepted an
illegal distribution; or (3) the shareholder is subject to any liability imposed
by law upon the dissolution, voluntary or involuntary, of the Fund.
Under Delaware law, the Trust's shareholders will not be personally liable
for the obligations of the Trust. The Delaware Act provides that a shareholder
of a Delaware business trust is entitled to the same limitation of liability
extended to shareholders of private corporations for profit organized under
Delaware law. The securities regulators of some states, however, have indicated
that they may decline to apply Delaware law on this point, and it is conceivable
that, notwithstanding current laws, courts in other states may decline to apply
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Delaware law on this point. As a result, to the extent that the Trust or a
shareholder will be subject to the jurisdiction of courts in those states, there
is a risk that such courts might not apply Delaware law and could thereby
subject Trust shareholders to liability. The Board and management of the Fund
believe this risk to be remote. To guard against this risk, the Trust's Trust
Instrument (i) will contain an express disclaimer of shareholder liability for
acts or obligations of the Trust and (ii) will provide for indemnification out
of Trust property of any shareholder held personally liable for the obligations
of the Trust. Moreover, the Trust's Trust Instrument requires that every written
agreement, obligation, or other undertaking made or issued by the Trust contain
a provision to the effect that New Fund shareholders are not personally liable
thereunder. Thus, the risk of a Trust shareholder incurring financial loss
beyond the shareholder's investment because of shareholder liability would be
limited to circumstances in which (i) a court refused to apply Delaware law or
otherwise failed to give full effect to the Trust Instrument or contractual
provisions limiting shareholder liability (or no contractual limitation of
liability was in effect) and (ii) the Trust itself was unable to meet its
obligations. In light of Delaware law, the nature of the Trust's business, and
the nature of its assets, the Board believes that the risk of personal liability
to a Trust shareholder is extremely remote.
LIABILITY OF DIRECTORS AND TRUSTEES. Under the Articles of Incorporation,
the Fund indemnifies its present and past directors, officers, employees, and
agents, and persons who are serving or have served at the Fund's request in
similar capacities for other entities, to the maximum extent permitted by
applicable law (including Maryland law and the 1940 Act). In the event of any
litigation or other proceeding against a director or officer of the Fund,
Maryland law permits the Fund to indemnify a director or officer for certain
expenses and to advance money for such expenses unless (a) it is established
that the act or omission of the director was material to the matter giving rise
to the proceeding, and the act or omission was committed in bad faith or was the
result of active and deliberate dishonesty; (b) the director actually received
an improper personal benefit in money, property or services; or (c) in the case
of any criminal proceeding, the director had reasonable cause to believe the act
or omission was unlawful.
The Trust's Trust Instrument will provide indemnification for current and
former trustees, officers, and employees to the fullest extent permitted by
Delaware law and other applicable law. Trustees may be personally liable for
acts, omission, or obligations of the Trust for reasons of willful misfeasance,
bad faith, or gross negligence in the performance of their duties or by reason
of reckless disregard of their obligations and duties as trustees.
AMENDMENT OF ARTICLES OF INCORPORATION AND TRUST INSTRUMENT. Under the
Fund's Articles of Incorporation and Maryland law, the Articles of Incorporation
may be amended upon adoption by the board of directors of a resolution setting
forth the proposed amendment and declaring that such amendment is advisable and
approval of such resolution by the holders of a majority of the Fund's
outstanding shares. The Trust's Declaration of Trust may be amended by a
majority of the trustees without any shareholder vote, except that the
shareholders will have the right to vote on any amendment that affects their
voting rights, that alters the provisions governing amendments to the Trust
Instrument, that is required to have shareholder approval by law or by the
Trust's registration statement, or that is submitted to the shareholders by the
trustees.
The foregoing is only a summary of certain differences between and among
the Fund's Articles of Incorporation and By-Laws and Maryland law, and the
Trust's Trust Instrument and By-Laws and Delaware law. It is not a complete list
of the differences. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of the
Articles of Incorporation and By-Laws of the Fund, and of the Trust's Trust
Instrument and By-Laws are, or will be, available to shareholders without charge
upon written request to the Fund or the Trust, when it shall have come into
existence.
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REQUIRED VOTE. The affirmative vote of the holders of a majority of the
Fund's shares entitled to vote at the meeting is required for approval of
Proposal 5. If Proposal 5 is not approved, the Fund will continue to operate as
a Maryland corporation.
THE FUND'S BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 5.
PROPOSAL NO. 6: RATIFICATION OF THE SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
PROPOSAL. At a meeting called for the purpose of such selection, the firm
of Coopers & Lybrand L.L.P. was selected by the Fund's Board, including the
Independent Board Members, as the independent accountants to audit the books and
the accounts of the Fund for its fiscal year and to include its opinion in
financial statements filed with the SEC. The Board has directed the submission
of this selection to the shareholders for ratification. Coopers & Lybrand L.L.P.
has advised the Board that it has no financial interest in any Company. For the
most recent fiscal year, the professional services rendered by Coopers & Lybrand
L.L.P. included the issuance of an opinion on the financial statements of the
Fund and an opinion on other reports of the Fund filed with the SEC.
Representatives of Coopers & Lybrand L.L.P. are not expected to be present at
the Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
REQUIRED VOTE. The ratification of the selection of Coopers & Lybrand
L.L.P. requires the affirmative vote of a majority of the votes cast thereon
at the Meeting.
THE FUND'S BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 6.
OTHER INFORMATION
EXECUTIVE OFFICERS AND DIRECTORS OF AIM
[TO BE ADDED.]
EXECUTIVE OFFICERS AND DIRECTORS OF CHANCELLOR LGT
The Directors and Executive Officers of Chancellor LGT are listed below.
NAME, POSITION(S) WITH PRINCIPAL OCCUPATIONS AND BUSINESS
CHANCELLOR LGT AND ADDRESS EXPERIENCE FOR PAST FIVE YEARS(1)
- -------------------------- ------------------------------------
Paul J. Loach, 46 Chairman of the Board of Directors of
Chairman of the Board of Directors Chancellor LGT since August 1997;
1166 Avenue of the Americas Director and Managing Director of LGT
New York, NY 10036 Asset Management PLC (London) since
October 1994; Group Manager and Director
of Framlington Group from May 1988 to
October 1994.
___________________________
1 On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Ms. Lesavoy, Ms. Riley and Mr. Young held positions only with
Chancellor Capital.
29
<PAGE>
NAME, POSITION(S) WITH PRINCIPAL OCCUPATIONS AND BUSINESS
CHANCELLOR LGT AND ADDRESS EXPERIENCE FOR PAST FIVE YEARS(1)
- -------------------------- ------------------------------------
Prince Philipp von und zu Director of Chancellor LGT since
Liechtenstein, 51 November 1996; Vice Chairman of
Director Supervisory Board of LGT Bank in
Herrengasse 12, P.O. Box 85 Liechtenstein (Deutschland) GmbH
FL-9490 Vaduz, Liechtenstein (Frankfurt) since 1992; Chairman of the
Board of Directors and CEO of
Liechtenstein Global Trust (Vaduz)
since 1990; Vice Chairman of the Board
of Directors of LGT Bank in
Liechtenstein since 1981.
John G. Greenwood, 51 Chief Economist and Director of
Director Chancellor LGT since November 1997;
50 California Street, 27th Floor Chief Economist of Chancellor LGT from
San Francisco, CA 94111 February 1994 to October 1996; Chief
Economist of LGT Asset Management,
Limited (Hong Kong) from September 1974
to January 1994.
Nina Lesavoy, 40 Director and Head of North American
Director and Head of North Institutional Distribution for
American Institutional Distribution Chancellor LGT since November 1996;
1166 Avenue of the Americas Director and Head of Client Service and
New York, NY 10036 Sales for Chancellor LGT from March
1990 to October 1996.
Donald H. Young, 59 Director and Head of the Structured
Director Products Group for Chancellor LGT since
1166 Avenue of the Americas November 1996; Director and Head of
New York, NY 10036 Global Asset Allocation for Chancellor
LGT from October 1988 to October 1996.
Ken W. Chancey, 52 Senior Vice President - Mutual Fund
Senior Vice President Accounting, Chancellor LGT since 1997;
Mutual Fund Accounting Vice President - Mutual Fund
50 California Street, 27th Floor Accounting, Chancellor LGT from 1992 to
San Francisco, CA 94111 1997; Vice President, Putnam Fiduciary
Trust Company from 1989 to 1992.
Helge K. Lee, 51 Chief Legal and Compliance Officer -
Chief Legal and Compliance North America for Chancellor LGT since
Officer and Secretary October 1997; Executive Vice President
50 California Street, 27th Floor of the Asset Management Division of
San Francisco, CA 94111 Liechtenstein Global Trust since
October 1996; Senior Vice President,
General Counsel and Secretary of
Chancellor LGT, GT Global, Inc., GT
Investor Services, Inc. and G.T.
Insurance Agency from February 1996 to
October 1996; Vice President, General
Counsel and Secretary of LGT Asset
Management, Inc., Chancellor LGT, GT
Global, Inc., GT Investor Services,
Inc. and G.T. Insurance Agency from May
1994 to February 1996; Senior Vice
President, General Counsel and
Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each
of the Strong Funds from October 1991
through May 1994.
30
<PAGE>
NAME, POSITION(S) WITH PRINCIPAL OCCUPATIONS AND BUSINESS
CHANCELLOR LGT AND ADDRESS EXPERIENCE FOR PAST FIVE YEARS(1)
- -------------------------- ------------------------------------
Margaret A. Riley, 34 Director of Chancellor LGT Venture
Chief Financial Officer Partners, Inc. since October 1997;
1166 Avenue of the Americas Managing Director and Chief Financial
New York, NY 10036 Officer of Chancellor LGT since October
1997; Managing Director and Controller
of Chancellor LGT from November 1996 to
October 1997; Managing Director of
Finance for Chancellor LGT from March
1989 to October 1996.
EXECUTIVE OFFICERS OF CHANCELLOR SSM
[TO BE ADDED]
EXECUTIVE OFFICERS OF THE FUND
The executive officers of the Fund are listed below. The business address
of each officer is 50 California Street, 27th Floor, San Francisco, California
94111.
William J. Guilfoyle, age 39, has been the President of the Fund since
February 1997. Mr. Guilfoyle is also President of GT Global, principal
distributor of the GT Global Mutual Funds. Additional information about Mr.
Guilfoyle is provided above.
Helge K. Lee, age 51, has been a Vice President and Secretary of the Fund
since _______________. Additional information about Mr. Lee is provided above.
Kenneth R. Chancey, age 52, has been a Vice President and Chief
Accounting Officer of the Fund since _________________. Additional
information about Mr. Chancey is provided above.
GENERAL INFORMATION
SOLICITATION OF PROXIES
The Fund will request broker/dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares
held of record by such persons. The Fund may reimburse such broker/dealer firms,
custodians, nominees and fiduciaries for their reasonable expenses incurred in
connection with such proxy solicitation. In addition to the solicitation of
Proxies by mail, officers of the Fund and employees of Chancellor SSM and its
affiliates, without additional compensation, may solicit Proxies in person or by
telephone. The costs associated with such solicitation and the Special Meeting
will be borne by LGT and AIM.
The Fund has retained Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist in the solicitation of proxies.
You may receive a telephone call from this firm concerning this proxy
solicitation. The Fund estimates that SCC will be paid fees of approximately
$_________ in connection with the solicitation, depending upon the nature and
extent of the services provided.
31
<PAGE>
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not know of any matters to be presented at the Meeting
other than those described in this Proxy Statement, but should any other matter
requiring a vote of Shareholders arise, the Proxyholders will vote thereon
according to their best judgment in the interests of the Fund.
REPORTS TO SHAREHOLDERS
THE FUND WILL FURNISH TO SHAREHOLDERS, WITHOUT CHARGE AND UPON REQUEST, A
COPY OF THE MOST RECENT ANNUAL REPORT AND A COPY OF THE MOST RECENT SEMI-ANNUAL
REPORT FOLLOWING SUCH ANNUAL REPORT OF THE FUND. REQUESTS FOR SUCH REPORTS MAY
BE MADE BY WRITING TO THE FUND AT 50 CALIFORNIA STREET, 27TH FLOOR, SAN
FRANCISCO, CALIFORNIA 94111, OR BY CALLING (800) 824-1580.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED,
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of
Directors,
HELGE KRIST LEE
Secretary
March 31, 1998
32
<PAGE>
PRELIMINARY PROXY STATEMENT
GT GLOBAL
A WORLD OF OPPORTUNITY
GT GLOBAL INVESTOR SERVICES
2121 NORTH CALIFORNIA BLVD.
SUITE 395
WALNUT CREEK, CA 94596-3572
GT GLOBAL FLOATING RATE FUND, INC.
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1998
This proxy is being solicited on behalf of the Board of Directors of GT Global
Floating Rate Fund, Inc. (the "Fund") and relates to the proposals with respect
to the Fund indicated below. The undersigned hereby appoints as proxies William
J. Guilfoyle, Helge K. Lee and Michael A. Silver and each of them (with power of
substitution) to vote for the undersigned all shares of common stock of the
undersigned in the Fund at the Special Meeting of Shareholders to be held at
1:00 p.m., Pacific time, on May 20, 1998, at the offices of the Company, 50
California Street, 27th Floor, San Francisco, California 94111, and any
adjournment thereof ("Meeting"), with all the power the undersigned would have
if personally present. The shares represented by this proxy will be voted as
instructed. Unless indicated to the contrary, this proxy shall be deemed to
grant authority to vote "FOR" all proposals relating to the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and return it
promptly in the enclosed envelope.
The Board of Trustees recommends that you vote FOR each of the nominees and FOR
the following proposals:
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
GTGFRF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
GT GLOBAL FLOATING RATE FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Vote On Trustees For Withhold For All To withhold authority to
All All Except vote for any individual
1. Election of five members of nominee(s), mark "For
the Company's Board of All Except" and write
Trustees to serve indefinite the nominee's number on
terms until their successors the line below.
are duly elected and
qualified; 01) William J. /_/ /_/ /_/ ____________________________
Guilfoyle; 02) C. Derek
Anderson; 03) Frank S. Bayley;
04) Arthur C. Patterson; 05)
Ruth H. Quigley
VOTE ON PROPOSALS For Against Abstain
2. Approval of a new investment management agreement and a /_/ /_/ /_/
sub-advisory agreement;
<PAGE>
3. Approval of changes to the fundamental investment
restrictions; /_/ /_/ /_/
/_/ To vote against the proposed changes to one or more of
the specific fundamental investment restrictions, but to
approve others, PLACE AN "X" IN THE BOX AT left and
indicate the number(s) (as set forth in the proxy
statement) of the investment restriction(s) you do not
want to change on the line below.
________________________________________________________
4. Approval of amendments to the Trust Instrument of the /_/ /_/ /_/
Fund and the Portfolio to convert the Fund and the
Portfolio to "interval" status;
5. Approval of an agreement and plan of conversion and /_/ /_/ /_/
termination with respect to the Fund and Floating Rate
Portfolio (the "Portfolio");
6. Ratification of the selection of Coopers & Lybrand /_/ /_/ /_/
L.L.P. as the Company's Independent Public Accountants;
</TABLE>
If shares are held jointly, each shareholder named should sign. If only one
signs, his or her signature will be binding. If the shareholder is a
corporation, the President or a Vice President should sign in his or her own
name, indicating title. If the Shareholder is a partnership, a partner should
sign in his or her own name, indicating that he or she is a "Partner".
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature (PLEASE SIGN WITHIN BOX) Date
- ----------------------------------------------- ---------------------------
- ----------------------------------------------- ---------------------------
Signature (Joint Owners) Date
<PAGE>
EXHIBIT A
[NAME OF PORTFOLIO]
MASTER INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN [PORTFOLIO]
AND A I M ADVISORS, INC.
Contract made as of ____________, 19__, between [Portfolio], a Delaware
business trust ("Portfolio"), and A I M Advisors, Inc. (the "Adviser"), a
Delaware corporation.
WHEREAS the Portfolio is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as closed-end management investment Portfolio;
and
WHEREAS the Portfolio desires to retain Adviser as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Portfolio, and Adviser is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Portfolio hereby appoints Adviser as investment
manager and administrator for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Board"), Adviser will provide a continuous investment program for the
Portfolio, including investment research and management with respect to all
securities and investments and cash equivalents of the Portfolio. Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Portfolio, and the brokers and dealers
through whom trades will be executed.
(b) Adviser agrees that in placing orders with brokers and dealers it
will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of the
Portfolio or provide the Portfolio's or Adviser's other clients with research,
analysis, advice and similar services. Adviser may pay to brokers and dealers,
in return for research and analysis, a higher commission or spread than may be
charged by other brokers and dealers, subject to Adviser's determining in good
faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of Adviser to the
Portfolio and its other clients and that the total commissions or spreads paid
by the Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. In no instance will portfolio securities be purchased from
or sold to Adviser or any affiliated person thereof except in accordance with
the federal securities laws and the rules and regulations thereunder and any
exemptive orders currently in effect. Whenever Adviser simultaneously places
orders to purchase or sell the same security on behalf of the Portfolio and one
or more other accounts advised by Adviser, such orders will be allocated as to
<PAGE>
price and amount among all such accounts in a manner believed to be equitable to
each account. The Portfolio recognizes that in some cases this procedure may
adversely affect the results obtained for the Portfolio.
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Portfolio, and will furnish the
Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
Adviser hereby agrees that all records which it maintains for the Portfolio are
the property of the Portfolio, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Portfolio
and which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Portfolio any records which it
maintains for the Portfolio upon request by the Portfolio.
3. DUTIES AS ADMINISTRATOR. Adviser will administer the affairs of the
Portfolio subject to the supervision of the Board and the following
understandings:
(a) Adviser will supervise all aspects of the operations of the
Portfolio, including the oversight of transfer agency and custodial services,
except as hereinafter set forth; provided, however, that nothing herein
contained shall be deemed to relieve or deprive the Board of its responsibility
for control of the conduct of the affairs of the Portfolio.
(b) At Adviser's expense, Adviser will provide the Portfolio with such
corporate, administrative and clerical personnel (including officers of the
Portfolio) and services as are reasonably deemed necessary or advisable by the
Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of the Portfolio's
prospectus, proxy material, tax returns and required reports with or to the
Portfolio's shareholders, the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) Adviser will provide the Portfolio with, or obtain for them,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Portfolio and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. DELEGATION OF ADVISER'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. With respect to the Portfolio, Adviser may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a Sub-adviser or
Sub-administrator in which Adviser delegates to such sub-adviser or
sub-administrator the performance of any or all of the services specified in
Paragraph 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the delegated services under Paragraphs 2, 3 and 4 of this Contract;
(ii) each Sub-Advisory and Sub-Administration Contract meets all requirements of
the 1940 Act and rules thereunder, and (iii) Adviser shall not enter into a
Sub-Advisory or Sub-Administration Contract unless it is approved by the Board
prior to implementation.
2
<PAGE>
6. SERVICES NOT EXCLUSIVE. The services furnished by Adviser hereunder
are not to be deemed exclusive and Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Adviser, who may also be a Trustee, officer or
employee of the Portfolio, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
7. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses, not specifically assumed by Adviser.
(b) Expenses borne by the Portfolio will include but not be limited to
the following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Portfolio by Adviser under this Contract; (iii) expenses of organizing the
Portfolio and the Portfolio; (iv) filing fees and expenses relating to the
registration and qualification of the Portfolio's shares and the Portfolio under
federal and/or state securities laws and maintaining such registrations and
qualifications; (v) fees and salaries payable to the Portfolio's Trustees who
are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (vi) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii) costs of
any liability, uncollectible items of deposit and other insurance and fidelity
bonds; (ix) any costs, expenses or losses arising out of a liability of or claim
for damages or other relief asserted against the Portfolio or the Portfolio for
violation of any law; (x) legal, accounting and auditing expenses, including
legal fees of special counsel for the Independent Trustees; (xi) charges of
custodians, transfer agents, pricing agents and other agents; (xii) costs of
preparing share certificates; (xiii) with respect to existing shareholders,
expenses of setting in type, printing and mailing prospectuses and supplements
thereto, statements of additional information and supplements thereto, reports
and proxy materials for existing shareholders; (xiv) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions, suits or
proceedings to which the Portfolio is a party and the expenses the Portfolio may
incur as a result of its legal obligation to provide indemnification to its
officers, Trustees, employees and agents) incurred by the Portfolio or the
Portfolio; (xv) fees, voluntary assessments and other expenses incurred in
connection with membership in investment Portfolio organizations; (xvi) costs of
mailing and tabulating proxies and costs of meetings of shareholders, the Board
and any committees thereof; (xvii) the cost of investment Portfolio literature
and other publications provided by the Portfolio to its Trustees and officers;
and (xviii) costs of mailing, stationery and communications equipment.
(c) Adviser will assume the cost of any compensation for services
provided to the Portfolio received by the officers of the Portfolio and by the
Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Adviser of any expense of the Portfolio
that Adviser is not required by this Contract to pay or assume shall not
obligate Adviser to pay or assume the same or any similar expense of the
Portfolio or any Portfolio on any subsequent occasion.
3
<PAGE>
8. COMPENSATION.
(a) For the services provided to a Portfolio under this Contract, the
Portfolio shall pay the Adviser an annual fee, payable monthly, based upon the
average daily net assets of the Portfolio as forth in Appendix A attached
hereto.
(b) The fee shall be computed daily and paid monthly to Adviser on or
before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
9. LIMITATION OF LIABILITY OF ADVISER AND INDEMNIFICATION. Adviser
shall not be liable and the Portfolio shall indemnify Adviser and its directors,
officers and employees, for any costs or liabilities arising from any error of
judgment or mistake of law or any loss suffered by the Portfolio in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in the
performance by Adviser of its duties or from reckless disregard by Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Portfolio shall be deemed, when
rendering services to the Portfolio or acting with respect to any business of
the Portfolio, to be rendering such service to or acting solely for the
Portfolio and not as an officer, partner, employee, or agent or one under the
control or direction of Adviser even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to the
Portfolio unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to the Portfolio this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Portfolio on sixty days' written notice to Adviser or by
Adviser at any time, without the payment of any penalty, on sixty days' written
notice to the Portfolio. This Contract will automatically terminate in the event
of its assignment.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract shall be
effective until approved by vote of a majority of the Portfolio's outstanding
voting securities, when required by the 1940 Act.
4
<PAGE>
12. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of Delaware (without regard to Delaware conflict or choice
of law provisions) and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
13. LICENSE AGREEMENT. The Portfolio 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 adviser to the
Portfolio with respect to such series of shares.
14. LIMITATION OF SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Portfolio hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Portfolio
personally, but shall only bind the assets and property of the Portfolio, as
provided in the Portfolio's Declaration of Trust. The execution and delivery of
this Contract have been authorized by the Trustees of the Portfolio and
shareholders of the Portfolio, and this Contract has been executed and delivered
by an authorized officer of the Portfolio acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Portfolio, as provided in the Portfolio's Declaration
of Trust.
15. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
assignment," "broker," "dealer," "investment adviser, "national securities
exchange," "net assets," "prospectus," "sale," sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: [PORTFOLIO]
______________________________________ By:________________________________
Name:
Title:
Attest: A I M ADVISORS, INC.
______________________________________ By:________________________________
Name:
Title:
6
<PAGE>
APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
[PORTFOLIO]
The Portfolio shall pay the Adviser, out of the assets of a Portfolio, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Portfolio set forth below:
7
<PAGE>
EXHIBIT B
[NAME OF PORTFOLIO]
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
[CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC. - NAME TO BE CHANGED]
Contract made as of ________, 1998, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and [Chancellor LGT Senior Secured Management,
Inc. - name to be changed], a New York corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and
Administration Contract with [Portfolio], a closed-end management investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Portfolio, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of the Portfolio for the period and on the terms set forth in
this Contract. Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for the Portfolio, including investment research and management, for all
securities and investments and cash equivalents of the Portfolio. The
Sub-Adviser will determine from time to time investments to be purchased,
retained or sold with respect to the Portfolio., and the brokers and dealers
through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
attempt to obtain the best net result in terms of price and execution; provided
that, on behalf of the Portfolio, the Sub-Adviser may, in its discretion,
purchase portfolio securities from and sell portfolio securities to brokers and
dealers who provide the Portfolio with research, analysis, advice and similar
services. The Sub-Adviser may pay to those brokers, in return for such services,
a higher commission than may be charged by other brokers, subject to the
Sub-Adviser determining in good faith that such commission is reasonable in
terms either of the particular transaction or of the overall responsibility of
the Sub-Adviser to the Portfolio and its other clients and that the total
commissions paid by the Portfolio will be reasonable in relation to the benefits
to the Portfolio over the long term. In no instance will securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
8
<PAGE>
accordance with the federal securities laws and the rule and regulations
thereunder. Whenever the Sub-Adviser simultaneously places orders to purchase or
sell the same security on behalf of the Portfolio and one or more other accounts
advised by the Sub-Adviser, such orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable to each account.
(c) The Sub-Adviser will maintain all books and records with respect to
the securities transactions of the Portfolio, and will furnish the Board and
Adviser with such periodic and special reports as the Board or Adviser
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Portfolio are the property of the Portfolio, agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any records which it
maintains for the Portfolio and which are required to be maintained by Rule
31a-1 under the 1940 Act, and further agrees to surrender promptly to the
Portfolio any records which it maintains for the Portfolio upon request by the
Portfolio.
3. DUTIES AS SUB-ADMINISTRATOR. Sub-Adviser will administer the affairs
of the Portfolio subject to the supervision of the Portfolio's Board of Trustees
("Board") and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of the
Portfolio, including the oversight of transfer agency and custodial except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Portfolio.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Portfolio
with such corporate, administrative and clerical personnel (including officers
of the Portfolio) and services as are reasonably deemed necessary or advisable
by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of the Portfolio's
prospectus, statement of additional information, proxy material, tax returns and
required reports with or to the Portfolio's shareholders, the Securities and
Exchange Commission and other appropriate federal or state regulatory
authorities.
(d) Sub-Adviser will provide the Portfolio with, or obtain for them,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Sub-Adviser will act in conformity with the Declaration of Trust,
By-Laws and Registration Statement of the Portfolio and with the instructions
and directions of the Board and will comply with the requirements of the 1940
Act, the rules thereunder, and all other applicable federal and state laws and
regulations.
5. DELEGATION OF SUB-ADVISER'S DUTIES AS SUB-ADVISER AND
SUB-ADMINISTRATOR. With respect to the Portfolio, Sub-Adviser may enter into one
or more contracts ("Sub-Sub-Advisory or Sub-Sub-Administration Contracts") with
a Sub-sub-adviser or Sub-sub-administrator in which Sub-Adviser delegates to
such sub-sub-adviser or sub-sub-administrator the performance of any or all of
the services specified in Paragraph 2 and 3 of this Contract, provided that: (i)
each Sub-Sub-Advisory and Sub-Sub-Administration Contract imposes on the
sub-sub-adviser or sub-sub-administrator bound thereby all the duties and
conditions to which Sub-Adviser is subject with respect to the delegated
services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Sub-Advisory and Sub-Sub-Administration Contract meets all requirements of
9
<PAGE>
the 1940 Act and rules thereunder, and (iii) Adviser shall not enter into a
Sub-Sub-Advisory or Sub-Sub-Administration Contract unless it is approved by the
Board prior to implementation.
5. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser
hereunder are not to be deemed exclusive and Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of Sub-Adviser, who may also be a
Trustee, officer or employee of the Portfolio, to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
6. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses not specifically assumed by Sub-Adviser.
(b) Expenses borne by the Portfolio will include but not be limited to
the following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Portfolio by Sub-Adviser under this Contract; (iii) expenses of organizing
the Portfolio; (iv) filing fees and expenses relating to the registration and
qualification of the Portfolio's shares and the Portfolio under federal and/or
state securities laws and maintaining such registrations and qualifications; (v)
fees and salaries payable to the Portfolio's Trustees who are not parties to
this Contract or interested persons of any such party ("Independent Trustees");
(vi) all expenses incurred in connection with the Independent Trustees'
services, including travel expenses; (vii) taxes (including any income or
franchise taxes) and governmental fees; (viii) costs of any liability,
uncollectable items of deposit and other insurance and fidelity bonds; (ix) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Portfolio for violation of any law; (x) legal,
accounting and auditing expenses, including legal fees of special counsel for
the Independent Trustees; (xi) charges of custodians, transfer agents, pricing
agents and other agents; (xii) costs of preparing share certificates; (xiii)
expenses of setting in type, printing and mailing prospectuses and supplements
thereto, statements of additional information, reports and proxy materials for
existing shareholders; (xiv) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Portfolio is a party and the expenses the Portfolio may incur as a result of its
legal obligation to provide indemnification to its officers, Trustees, employees
and agents) incurred by the Portfolio; (xv) fees, voluntary assessments and
other expenses incurred in connection with membership in investment Portfolio
organizations; (xvi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xvii) the cost
of investment Portfolio literature and other publications provided by the
Portfolio to its Trustees and officers; and (xviii) costs of mailing, stationery
and communications equipment.
(c) Sub-Adviser will assume the cost of any compensation for services
provided to the Portfolio received by the officers of the Portfolio and by the
Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Sub-Adviser of any expense of the
Portfolio that Sub-Adviser is not required by this Contract to pay or assume
shall not obligate Sub-Adviser to pay or assume the same or any similar expense
of the Portfolio on any subsequent occasion.
10
<PAGE>
7. COMPENSATION.
(a) For the services provided to a Portfolio under this Contract,
Adviser will pay Sub-Adviser a fee, computed weekly and paid monthly, as set
forth in Appendix A hereto.
(b) The fee shall be computed weekly and paid monthly to Sub-Adviser on
or before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF SUB-ADVISER AND INDEMNIFICATION.
Sub-Adviser shall not be liable for any costs or liabilities arising from any
error of judgment or mistake of law or any loss suffered by the Portfolio in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance by Sub-Adviser of its duties or from reckless
disregard by Sub-Adviser of its obligations and duties under this Contract. Any
person, even though also an officer, partner, employee, or agent of Sub-Adviser,
who may be or become a Trustee, officer, employee or agent of the Portfolio,
shall be deemed, when rendering services to the Portfolio or acting with respect
to any business of the Portfolio to be rendering such service to or acting
solely for the Portfolio and not as an officer, partner, employee, or agent or
one under the control or direction of Sub-Adviser even though paid by it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to the
Portfolio unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to the Portfolio, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Portfolio on sixty days' written notice to Sub-Adviser or by
Sub-Adviser at any time, without the payment of any penalty, on sixty days'
written notice to the Portfolio. This Contract will automatically terminate in
the event of its assignment.
11
<PAGE>
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Portfolio's outstanding voting
securities, when required by the 1940 Act.
11. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of Delaware (without regard to Delaware conflict or choice
of law provisions) and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: A I M ADVISORS, INC.
______________________________________ By:________________________________
Name:
Title:
Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC. [Name to be Changed]
______________________________________ By:________________________________
Name:
Title:
13
<PAGE>
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
14
<PAGE>
EXHIBIT C
[NAME OF PORTFOLIO]
SUB-SUB-ADVISORY AND SUB-SUB-ADMINISTRATION CONTRACT
BETWEEN
CHANCELLOR LGT SENIOR SECURED MANAGEMENT, INC.
AND
[CHANCELLOR LGT ASSET MANAGEMENT, INC. - NAME TO BE CHANGED]
Contract made as of ________, 1998, between Chancellor LGT Senior Secured
Management, Inc.,[name to be changed] a New York corporation ("Sub-Adviser"),
and Chancellor LGT Asset Management, Inc. [name to be changed], a New York
corporation ("Secondary Sub-Adviser").
WHEREAS Sub-Adviser has entered into a Sub-Advisory and Sub-Administration
Contract with A I M Management, Inc. ("Adviser") with respect to [Portfolio], a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"); and
WHEREAS Sub-Adviser desires to retain Secondary Sub-Adviser as
sub-sub-adviser and sub-sub-administrator to furnish certain advisory and
administrative services to the Portfolio, and Secondary Sub-Adviser is willing
to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Sub-Adviser hereby appoints Secondary Sub-Adviser as
sub-sub-adviser and sub-sub-administrator of the Portfolio for the period and on
the terms set forth in this Contract. Secondary Sub-Adviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DUTIES AS SECONDARY SUB-ADVISER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for the Portfolio, including investment research and management, for a
portion of the investments of the Portfolio to be determined by the Sub-Adviser
(the "Sub-Sub-Advised Assets). The Secondary Sub-Adviser will determine from
time to time investments to be purchased, retained or sold with respect to the
Sub-Sub-Advised Assets of the Portfolio. The Secondary Sub-Adviser will be
responsible for placing purchase and sell orders for such investments and for
other related transactions. The Secondary Sub-Adviser will provide services
under this Agreement in accordance with the Portfolio's investment objectives,
policies and restrictions as stated in the Portfolio's registration statement.
(b) The Secondary Sub-Adviser agrees that, in placing orders with
brokers, it will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of the Portfolio, the Secondary Sub-Adviser
may, in its discretion, purchase portfolio securities from and sell portfolio
securities to brokers and dealers who provide the Portfolio with research,
15
<PAGE>
analysis, advice and similar services. The Secondary Sub-Adviser may pay to
those brokers, in return for such services, a higher commission than may be
charged by other brokers, subject to the Secondary Sub-Adviser determining in
good faith that such commission is reasonable in terms either of the particular
transaction or of the overall responsibility of the Secondary Sub-Adviser to the
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long term. In no instance will securities be purchased from or sold to the
Secondary Sub-Adviser, or any affiliated person thereof, except in accordance
with the federal securities laws and the rule and regulations thereunder.
Whenever the Secondary Sub-Adviser simultaneously places orders to purchase or
sell the same security on behalf of the Portfolio and one or more other accounts
advised by the Secondary Sub-Adviser, such orders will be allocated as to price
and amount among all such accounts in a manner believed to be equitable to each
account.
(c) The Secondary Sub-Adviser will maintain all books and records with
respect to the securities transactions of the Portfolio, and will furnish the
Board and Adviser with such periodic and special reports as the Board or Adviser
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Secondary Sub-Adviser hereby agrees that all records which it
maintains for the Portfolio are the property of the Portfolio, agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any records
which it maintains for the Portfolio and which are required to be maintained by
Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the
Portfolio any records which it maintains for the Portfolio upon request by the
Portfolio.
(d) The Secondary Sub-Adviser will provide the Board and the Sub-Adviser
on a regular basis with economic and investment analyses and reports and make
available to the Board and the Sub-Adviser upon request any economic,
statistical and investment services normally available to institutional or other
customers of the Secondary Sub-Adviser.
3. DUTIES AS SUB-SUB-ADMINISTRATOR. Secondary Sub-Adviser will
administer the affairs of the Portfolio subject to the supervision of the
Portfolio's Board of Trustees ("Board") and the following understandings:
(a) Secondary Sub-Adviser will supervise all aspects of the operations
of the Portfolio, including the oversight of transfer agency and custodial
except as hereinafter set forth; provided, however, that nothing herein
contained shall be deemed to relieve or deprive the Board of its responsibility
for control of the conduct of the affairs of the Portfolio.
(b) At Secondary Sub-Adviser's expense, Secondary Sub-Adviser will
provide the Portfolio with such corporate, administrative and clerical personnel
(including officers of the Portfolio) and services as are reasonably deemed
necessary or advisable by the Board.
(c) Secondary Sub-Adviser will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolio's prospectus, statement of additional information, proxy material, tax
returns and required reports with or to the Portfolio's shareholders, the
Securities and Exchange Commission and other appropriate federal or state
regulatory authorities.
(d) Secondary Sub-Adviser will provide the Portfolio with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, Secondary Sub-Adviser will act in conformity with the Declaration of
Trust, By-Laws and Registration Statement of the Portfolio and with the
16
<PAGE>
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. SERVICES NOT EXCLUSIVE. The services furnished by Secondary
Sub-Adviser hereunder are not to be deemed exclusive and Secondary Sub-Adviser
shall be free to furnish similar services to others so long as its services
under this Contract are not impaired thereby. Nothing in this Contract shall
limit or restrict the right of any director, officer or employee of Secondary
Sub-Adviser, who may also be a Trustee, officer or employee of the Portfolio, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
6. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses not specifically assumed by Secondary Sub-Adviser.
(b) Expenses borne by the Portfolio will include but not be limited to
the following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Portfolio by Secondary Sub-Adviser under this Contract; (iii) expenses of
organizing the Portfolio; (iv) filing fees and expenses relating to the
registration and qualification of the Portfolio's shares and the Portfolio under
federal and/or state securities laws and maintaining such registrations and
qualifications; (v) fees and salaries payable to the Portfolio's Trustees who
are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (vi) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (vii) taxes
(including any income or franchise taxes) and governmental fees; (viii) costs of
any liability, uncollectable items of deposit and other insurance and fidelity
bonds; (ix) any costs, expenses or losses arising out of a liability of or claim
for damages or other relief asserted against the Portfolio for violation of any
law; (x) legal, accounting and auditing expenses, including legal fees of
special counsel for the Independent Trustees; (xi) charges of custodians,
transfer agents, pricing agents and other agents; (xii) costs of preparing share
certificates; (xiii) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, statements of additional information,
reports and proxy materials for existing shareholders; (xiv) any extraordinary
expenses (including fees and disbursements of counsel, costs of actions, suits
or proceedings to which the Portfolio is a party and the expenses the Portfolio
may incur as a result of its legal obligation to provide indemnification to its
officers, Trustees, employees and agents) incurred by the Portfolio; (xv) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment Portfolio organizations; (xvi) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xvii) the cost of investment Portfolio literature and other
publications provided by the Portfolio to its Trustees and officers; and (xviii)
costs of mailing, stationery and communications equipment.
(c) Secondary Sub-Adviser will assume the cost of any compensation for
services provided to the Portfolio received by the officers of the Portfolio and
by the Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by Secondary Sub-Adviser of any expense of
the Portfolio that Secondary Sub-Adviser is not required by this Contract to pay
or assume shall not obligate Secondary Sub-Adviser to pay or assume the same or
any similar expense of the Portfolio on any subsequent occasion.
17
<PAGE>
7. COMPENSATION.
(a) For the services provided to a Portfolio under this Contract,
Sub-Adviser will pay Secondary Sub-Adviser a fee, computed weekly and paid
monthly, as set forth in Appendix A hereto.
(b) The fee shall be computed weekly and paid monthly to Secondary
Sub-Adviser on or before the last business day of the next succeeding calendar
month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF SECONDARY SUB-ADVISER AND
INDEMNIFICATION. Secondary Sub-Adviser shall not be liable for any costs or
liabilities arising from any error of judgment or mistake of law or any loss
suffered by the Portfolio in connection with the matters to which this Contract
relates except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of Secondary Sub-Adviser in the performance by Secondary
Sub-Adviser of its duties or from reckless disregard by Secondary Sub-Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Secondary Sub-Adviser, who may be or
become a Trustee, officer, employee or agent of the Portfolio, shall be deemed,
when rendering services to the Portfolio or acting with respect to any business
of the Portfolio to be rendering such service to or acting solely for the
Portfolio and not as an officer, partner, employee, or agent or one under the
control or direction of Secondary Sub-Adviser even though paid by it.
9. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to the
Portfolio unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Portfolio's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to the Portfolio, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the Portfolio.
(c) Notwithstanding the foregoing, with respect to the Portfolio this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Portfolio on sixty days' written notice to Secondary
Sub-Adviser or by Secondary Sub-Adviser at any time, without the payment of any
penalty, on sixty days' written notice to the Portfolio. This Contract will
automatically terminate in the event of its assignment.
10. AMENDMENT. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
18
<PAGE>
until approved by vote of a majority of the Portfolio's outstanding voting
securities, when required by the 1940 Act.
11. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of Delaware (without regard to Delaware conflict or choice
of law provisions) and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT, INC. [Name to be Changed]
_________________________________ By:____________________________________
Name:
Title:
Attest: CHANCELLOR LGT ASSET MANAGEMENT, INC.
[Name to be Changed]
_________________________________ By:____________________________________
Name:
Title:
20
<PAGE>
APPENDIX A
TO
SUB-SUB-ADVISORY AND SUB-SUB-ADMINISTRATION CONTRACT
21
<PAGE>
EXHIBIT D
AGREEMENT AND PLAN OF CONVERSION AND LIQUIDATION
This AGREEMENT AND PLAN OF CONVERSION AND LIQUIDATION ("Agreement") is
made as of this _____ day of __________, 1998, between GT Global Floating Rate
Fund, Inc., a Maryland corporation ("Old Fund"), and _______________, a Delaware
business trust ("New Fund") (individually, a "Fund" and collectively, the
"Funds").
Old Fund intends to change its identity, form, and place of organization
- -- by converting from a Maryland corporation to a Delaware business trust --
through a reorganization within the meaning of section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended ("Code"). Old Fund desires to
accomplish such conversion by transferring all its assets to New Fund (which is
being established solely for the purpose of acquiring such assets and continuing
Old Fund's business) in exchange solely for voting shares of beneficial interest
in New Fund ("New Fund Shares") and New Fund's assumption of Old Fund's
liabilities, followed by the constructive distribution of the New Fund Shares
PRO RATA to the holders of shares of common stock of Old Fund ("Old Fund
Shares") in exchange therefor, all on the terms and conditions set forth in this
Agreement (which is intended to be, and is adopted as, a "plan of
reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties
agree as follows:
1. Plan of Conversion and Liquidation.
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund agrees in
exchange therefor (a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares equal to the
number of full and fractional Old Fund Shares then outstanding and (b) to assume
all of Old Fund's liabilities described in paragraph 1.3 ("Liabilities"). Such
transactions shall take place at the Closing (as defined in paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not determinable at the Effective Time, and
whether or not specifically referred to herein.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall constructively distribute
the New Fund Shares received by it pursuant to paragraph 1.1 to Old Fund's
shareholders of record, determined as of the Effective Time (collectively,
"Shareholders" and each individually, a "Shareholder"), in exchange for their
Old Fund Shares. Such distribution shall be accomplished by New Fund's transfer
agent ("Transfer Agent") opening accounts on New Fund's share transfer books in
the Shareholders' names and transferring such New Fund Shares thereto. Each
Shareholder's account shall be credited with the respective PRO RATA number of
full and fractional (rounded to the third decimal place) New Fund Shares due
that Shareholder. All outstanding Old Fund Shares, including those represented
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by certificates, shall simultaneously be canceled on Old Fund's share transfer
books. New Fund shall not issue certificates representing the New Fund Shares in
connection with the Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, Old Fund shall be liquidated and any further
actions shall be taken in connection therewith as required by applicable law.
1.6. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
1.7. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
2. Closing.
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
May 29, 1998, or on such other date and at such other place upon which the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of the Funds' close of business on the date thereof or
at such other time as the parties may agree ("Effective Time").
2.2. Old Fund shall deliver to New Fund at the Closing a schedule of the
Assets as of the Effective Time, which shall set forth for all portfolio
securities included therein their adjusted tax basis and holding period by lot.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. Old Fund shall deliver to New Fund at the Closing a list of the
Shareholders' names and addresses and the number of outstanding Old Fund Shares
owned by each Shareholder, all as of the Effective Time, certified by Old Fund's
Secretary or Assistant Secretary. The Transfer Agent shall deliver at the
Closing a certificate as to the opening on New Fund's share transfer books of
accounts in the Shareholders' names. New Fund shall issue and deliver a
confirmation to Old Fund evidencing the New Fund Shares to be credited to Old
Fund at the Effective Time or provide evidence satisfactory to Old Fund that
such shares have been credited to Old Fund's account on such books. At the
Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the other party
or its counsel may reasonably request.
2.4. Each Fund shall deliver to the other at the Closing a certificate
executed in its name by its President or a Vice President in form and substance
satisfactory to the recipient and dated the Effective Time, to the effect that
the representations and warranties it made in this Agreement are true and
correct at the Effective Time except as they may be affected by the transactions
contemplated by this Agreement.
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3. Representations and Warranties.
3.1. Old Fund represents and warrants as follows:
3.1.1. Old Fund is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland, and its
Articles of Incorporation are on file with that state's Department of
Assessments and Taxation;
3.1.2. Old Fund is duly registered as a closed-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and such registration is in full force and effect;
3.1.3. At the Closing, Old Fund will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, New Fund will acquire good
and marketable title thereto;
3.1.4. New Fund Shares are not being acquired for the
purpose of making any distribution thereof, other than in accordance
with the terms hereof;
3.1.5. Old Fund qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year (and the
Assets will be invested at all times through the Effective Time in a
manner that ensures compliance with the foregoing); it has no earnings and
profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it; and it has made all distributions for
each such past taxable year that are necessary to avoid the imposition of
federal excise tax or has paid or provided for the payment of any excise
tax imposed for any such year;
3.1.6. There is no plan or intention of Shareholders who
individually own 5% or more of the Old Fund Shares -- and, to the best of
Old Fund's management's knowledge, there is no plan or intention of the
remaining Shareholders -- to sell, exchange, or otherwise dispose of any
New Fund Shares to be received by them in the Reorganization.
Consequently, that management expects that the percentage of Shareholder
interests, if any, that will be disposed of as a result of or at the time
of the Reorganization will be DE MINIMIS;
3.1.7. The Liabilities were incurred by Old Fund in the
ordinary course of its business and are associated with the Assets;
3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
3.1.10. As of the Effective Time, Old Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Old Fund Shares;
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3.1.11. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be liquidated as soon as reasonably
practicable after the Reorganization, but in all events within twelve
months after the Effective Time.
3.2. New Fund represents and warrants as follows:
3.2.1. New Fund is a business trust duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
and its Certificate of Trust has been duly filed in the office of the
Secretary of State thereof;
3.2.2. At the Effective Time New Fund will succeed to Old Fund's
registration statement filed under the 1940 Act with the Securities and
Exchange Commission ("SEC") and thus will become duly registered as a
closed-end management investment company thereunder;
3.2.3. New Fund has not commenced operations and will not
commence operations until after the Closing;
3.2.4. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.5. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
3.2.6. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of New Fund, fully paid and non-assessable;
3.2.7. New Fund will meet all the requirements to qualify
for treatment as a RIC for its taxable year in which the Reorganization
occurs;
3.2.8. New Fund has no plan or intention to issue additional New
Fund Shares following the Reorganization except for shares issued in the
ordinary course of its business as a closed-end investment company the
shares of which are continuously offered; nor does New Fund have any plan
or intention to redeem or otherwise reacquire any New Fund Shares issued
pursuant to the Reorganization, other than pursuant to repurchase offers
at periodic intervals that are necessary to comply with Rule 23c-3 under
the 1940 Act;
3.2.9. New Fund will actively continue Old Fund's business in
substantially the same manner that Old Fund conducted that business
immediately before the Reorganization; and New Fund has no plan or
intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of its business and dispositions
necessary to maintain its qualification as a RIC, although in the ordinary
course of its business New Fund will continuously review its investment
portfolio (as Old Fund did before the Reorganization) to determine whether
to retain or dispose of particular stocks or securities, including those
included in the Assets;
3.2.10. There is no plan or intention for New Fund to be dissolved
or merged into another corporation or business trust or "fund" thereof
(within the meaning of section 851(g)(2) of the Code) following the
Reorganization; and
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3.2.11. Immediately after the Reorganization, (a) not more than 25%
of the value of New Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock and securities
of any one issuer and (b) not more than 50% of the value of such assets
will be invested in the stock and securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The fair market value of the New Fund Shares received by each
Shareholder will be approximately equal to the fair market value of the
Old Fund Shares constructively surrendered in exchange therefor;
3.3.2. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if
any, incurred in connection with the Reorganization;
3.3.4. There is no intercompany indebtedness between the
Funds that was issued or acquired, or will be settled, at a discount;
and
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization -- and be subject
to the same liabilities that Old Fund held or was subject to immediately
prior to the Reorganization, plus any liabilities for expenses of the
parties incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and distributions
(other than regular, normal dividends) made by Old Fund immediately
preceding the Reorganization, will, in the aggregate, constitute less than
1% of its net assets.
4. Conditions Precedent.
Each Fund's obligations hereunder shall be subject to (a) performance by
the other party of all its obligations to be performed hereunder at or before
the Effective Time, (b) all representations and warranties of the other party
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain same would not involve a risk of a
material adverse effect on the assets or properties of either Fund, provided
that either Fund may for itself waive any of such conditions;
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<PAGE>
4.2. Old Fund shall have called a meeting of its shareholders
("Shareholders Meeting") to consider and act on this Agreement and the
Reorganization, and at such meeting those shareholders shall have approved
thereof in accordance with applicable law;
4.3. Each party shall have received an opinion from Kirkpatrick & Lockhart
LLP as to the federal income tax consequences mentioned below. In rendering such
opinion, such counsel may rely as to factual matters, exclusively and without
independent verification, on the representations made in this Agreement (or in
separate letters addressed to such counsel) and the certificates delivered
pursuant to paragraph 2.4. Such opinion shall be substantially to the effect
that, based on the facts and assumptions stated therein and conditioned on
consummation of the Reorganization in accordance with this Agreement, for
federal income tax purposes:
4.3.1. The Reorganization will constitute a reorganization within
the meaning of section 368(a)(1)(F) of the Code, and each Fund will be "a
party to a reorganization" within the meaning of section 368(b) of the
Code;
4.3.2. No gain or loss will be recognized to Old Fund on the
transfer of the Assets to New Fund in exchange solely for New Fund Shares
and New Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders, in constructive exchange
for their Old Fund Shares, in liquidation of Old Fund;
4.3.3. No gain or loss will be recognized to New Fund on
its receipt of the Assets in exchange for New Fund Shares and its
assumption of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the Reorganization, and New
Fund's holding period for the Assets will include Old Fund's holding
period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's basis for the New Fund Shares to be received
by it in the Reorganization will be the same as the basis for its Old Fund
Shares to be constructively surrendered in exchange for those New Fund
Shares, and its holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held as
capital assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4. Prior to the Closing, New Fund's trustees shall have authorized the
issuance of, and New Fund shall have issued, one New Fund Share to Old Fund in
consideration of the payment of $1.00 for the purpose of enabling Old Fund to
elect Old Fund's directors as New Fund's trustees (to serve without limit in
time, except as they may resign or be removed by action of New Fund's trustees
or shareholders), to ratify the selection of New Fund's independent certified
public accountants, and to vote on the matters referred to in paragraph 4.5; and
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<PAGE>
4.5. New Fund shall have entered into an investment management and
administration agreement, a sub-advisory agreement, a distribution contract, and
such other agreements as are necessary for New Fund's operation as a closed-end
investment company. Each such agreement shall have been approved by New Fund's
trustees and, to the extent required by law, by such of those trustees who are
not "interested persons" thereof (as defined in the 1940 Act) and by Old Fund as
the sole shareholder of New Fund.
At any time prior to the Closing, any of the foregoing conditions (except
that set forth in paragraph 4.2) may be waived by the directors/trustees of
either Fund if, in their judgment, such waiver will not have a material adverse
effect on the interests of Old Fund's shareholders.
5. Expenses.
Except as otherwise provided in subparagraph 3.3.3, all expenses incurred
in connection with the transactions contemplated by this Agreement (regardless
of whether they are consummated) will be borne by the parties as they mutually
agree.
6. Entire Agreement; Survival.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the Closing.
7. Amendment.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
8. Termination.
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
8.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before September 30, 1998; or
8.2. By the parties' mutual agreement.
Except as otherwise provided in paragraph 5, in the event of termination
under paragraphs 8.1(c) or 8.2, there shall be no liability for damages on the
part of either Fund -- or the directors or trustees, as the case may be, or
officers of either Fund -- to the other Fund.
9. Miscellaneous.
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
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9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
Attest: GT GLOBAL FLOATING RATE FUND, INC.,
________________________ By:____________________________________
Title:_________________________________
Attest: _______________________________,
________________________ By:____________________________________
Title:_________________________________
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<PAGE>
EXHIBIT E
AGREEMENT AND DECLARATION OF TRUST
OF
[FLOATING RATE FUND]
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into
as of ________, 1998, among ________, ________, ________, ________, and
________, as trustees, and each person who becomes a shareholder (as hereinafter
defined) in accordance with the terms hereinafter set forth.
WHEREAS, the parties hereto desire to create a business trust pursuant to
the Delaware Act (as hereinafter defined) for the investment and reinvestment of
funds contributed thereto;
NOW, THEREFORE, the Trustees hereby direct that a Certificate of Trust be
filed with the Office of the Secretary of State of Delaware and do hereby
declare that all money and property contributed to the trust hereunder shall be
held and managed in trust under this Trust Agreement for the benefit of the
Shareholders (as hereinafter defined) as herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
SECTION 1.1. NAME. The name of the business trust created hereby is
"___________," and the Trustees may transact the Trust's affairs in that
name. The Trust shall constitute a Delaware business trust in accordance
with the Delaware Act, as hereinafter defined.
SECTION 1.2. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Agreement" means this Agreement and Declaration of Trust, as it may
be amended from time to time;
(b) "Bylaws" means the Bylaws referred to in Article IV, Section 4.1(e)
hereof, as from time to time amended;
(c) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Article II, Section
2.3 hereof;
(d) "Commission" shall have the meaning given it in the 1940 Act. The
terms "Affiliated Person," "Company," "Person," and "Principal
Underwriter" shall have the meanings given them in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretive
releases of the Commission thereunder;
(e) "Covered Person" means every person who is, or has been, a Trustee
or an officer of the Trust;
(f) The "Delaware Act" refers to the Delaware Business Trust Act, 12
Del. C. ss. 3801 et seq., as such Act may be amended from time to
time;
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(g) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the
Trust, Portfolio, or Class, as applicable;
(h) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time;
(i) "Outstanding Shares" means Shares shown on the books of the Trust or
its transfer agent as then issued and outstanding, but does not
include Shares that have been repurchased or redeemed by the Trust;
(j) "Portfolio" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.3 hereof;
(k) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(l) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of the Trust,
or of a Portfolio of the Trust or a Class thereof, as the context
may require, shall be divided and may include fractions of Shares as
well as whole Shares;
(m) The "Trust" means __________, the Delaware business trust
established hereby, and reference to the Trust, when applicable to
one or more Portfolios of the Trust, or Classes thereof, shall refer
to any such Portfolio, or Class thereof, as the case may be;
(n) The "Trustees" means the Persons who have signed this Agreement
and Declaration of Trust as trustees so long as they shall
continue to serve as trustees of the Trust in accordance with the
terms hereof, and all other Persons who may from time to time be
duly appointed as Trustee in accordance with the provisions of
Section 3.4 hereof, and reference herein to a Trustee or to the
Trustees shall refer to such Persons in their capacity as
Trustees hereunder; and
(o) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account
of one or more of the Trust, any Portfolio, any Class of a
Portfolio, or the Trustees on behalf of the Trust, a Portfolio, or a
Class.
SECTION 1.3. PURPOSE. The purpose of the Trust is to conduct, operate and
carry on the business of a management investment company registered under
the 1940 Act through one or more Portfolios investing primarily in
securities and to carry on such other business as the Trustees may from
time to time determine pursuant to their authority under this Trust
Agreement.
SECTION 1.4. CERTIFICATE OF TRUST. Immediately upon the execution of this
Trust Agreement, the Trustees shall file a Certificate of Trust with
respect to the Trust in the Office of the Secretary of State of the State
of Delaware pursuant to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.1. SHARES OF BENEFICIAL INTEREST. The beneficial interest in the
Trust shall be divided into an unlimited number of Shares, with par value
of $0.01 per Share. The Trustees may, from time to time, authorize the
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division of the Shares into one or more series, each of which constitutes
a Portfolio, and may further authorize the division of said Portfolios
into one or more additional, separate and distinct Classes in accordance
with Article II, Section 2.3 of this Agreement. All shares issued
hereunder, including without limitation, Shares issued in connection with
a dividend or other distribution in Shares or a split or reverse split of
Shares, shall be fully paid and nonassessable.
SECTION 2.2. ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, subject to applicable law, including cash or securities, at
such time or times and on such terms as the Trustees may deem appropriate,
and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with, the assumption of liabilities)
and businesses. In connection with any issuance of Shares, the Trustees
may issue fractional Shares and Shares held in the treasury. The Trustees
may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for,
and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share
or integral multiples thereof.
SECTION 2.3. ESTABLISHMENT OF PORTFOLIOS AND CLASSES. The Trustees may
divide the Trust into one or more separate and distinct Portfolios, each
with an unlimited number of Shares unless otherwise specified. The
Trustees hereby establish and designate the Portfolios listed on Schedule
A attached hereto and made a part hereof ("Schedule A"). Each additional
Portfolio shall be established by the adoption of a resolution by the
Trustees and shall be effective upon the date stated therein (or, if no
such date is stated, upon the date of such adoption). The Shares of each
Portfolio shall have the relative rights and preferences provided for
herein and such rights and preferences as may be designated by the
Trustees. The Trust shall maintain separate and distinct records for each
Portfolio and shall hold and account for the assets belonging thereto
separately from the other Trust Property and the assets belonging to any
other Portfolio. Each Share of a Portfolio shall represent an equal
beneficial interest in the net assets belonging to that Portfolio, except
to the extent of expenses separately allocated to Classes thereof as
permitted herein. A Portfolio may have exclusive voting rights with
respect to matters affecting only that Portfolio. If no Portfolio shall be
established, the Shares shall have the rights and preferences provided for
herein to the extent relevant, and all references to Portfolio shall be
construed (as the context may require) to refer to the Trust.
The Trustees may divide the Shares of any Portfolio into two or more
Classes, each with an unlimited number of Shares unless otherwise
specified. Each Class so established and designated shall represent
interests in the net assets belonging to that Portfolio and shall have
identical voting, dividend, liquidation, and other rights and be subject
to the same terms and conditions, except that expenses (or certain assets
as determined by the Trustees) allocated to a Class may be borne solely by
(or credited solely to) that Class and except that each Class may have
separate rights to convert to another Class, exchange rights, and similar
rights, each as determined by the Trustees and a Class may have exclusive
voting rights with respect to matters affecting only that Class. The
Trustees hereby establish for each Portfolio listed on Schedule A the
Classes listed thereon. Each additional Class for any or all Portfolios
shall be established by the adoption of a resolution by the Trustees and
shall be effective upon the date stated therein (or, if no such date is
stated, upon the date of such adoption).
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SECTION 2.3.1. Subject to Section 6.1 of this Trust Agreement, the
Trustees shall have full power and authority, in their sole discretion
without obtaining any prior authorization or vote of the Shareholders of
any Portfolio, or Class thereof, to establish and designate and to change
in any manner any Portfolio of Shares, or any Class or Classes thereof; to
fix such preferences, voting powers, rights, and privileges of any
Portfolio, or Classes thereof, as the Trustees may from time to time
determine (but the Trustees may not change the preferences, voting powers,
rights, and privileges of Outstanding Shares in a manner materially
adverse to the Shareholders of such Shares without the prior approval of
the affected Shareholders); to divide or combine the Shares or any
Portfolio, or Classes thereof, into a greater or lesser number; to
classify or reclassify any issued Shares or any Portfolio, or Classes
thereof, into one or more Portfolios or Classes of Shares of a Portfolio;
and to take such other action with respect to the Shares as the Trustees
may deem desirable. A Portfolio and any Class thereof may issue any number
of Shares but need not issue any shares. At any time that there are no
Shares outstanding of any particular Portfolio or Class previously
established and designated, the Trustees may abolish that Portfolio or
Class and the establishment and designation thereof.
SECTION 2.3.2. Unless the establishing resolution or any other resolution
adopted pursuant to this Section 2.3 otherwise provides, Shares of each
Portfolio or Class thereof established hereunder shall have the following
relative rights and preferences:
(a) Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust or the
Trustees, whether of the same or other Portfolio (or Class).
(b) All consideration received by the Trust for the issue or sale of
Shares of a particular Portfolio, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange, or liquidation of such assets,
and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall be held and
accounted for separately from the other assets of the Trust and
of every other Portfolio and may be referred to herein as "assets
belonging to" that Portfolio. The assets belonging to a
particular Portfolio shall belong to that Portfolio for all
purposes, and to no other Portfolio, subject only to the rights
of creditors of that Portfolio. In addition, any assets, income,
earnings, profits, or funds, or payments and proceeds with
respect thereto, which are not readily identifiable as belonging
to any particular Portfolio shall be allocated by the Trustees
between and among one or more of the Portfolios for all purposes
and such assets, income, earnings, profits, or funds, or payments
and proceeds with respect thereto, shall be assets belonging to
that Portfolio. The Trustees may, in their sole discretion,
allocate certain assets to a particular Class, and such assets
may be referred to herein as "assets belonging to" that Class.
(c) A particular Portfolio (or Class) shall be charged with the
liabilities of that Portfolio (or Class) and all expenses, costs,
charges and reserves attributable to any particular Portfolio (or
Class) shall be borne by such Portfolio (or Class). Any general
liabilities, expenses, costs, charges or reserves to the Trust
which are not readily identifiable as belonging to any particular
Portfolio (or Class) shall be allocated and charged by the
Trustees between or among any one or more of the Portfolios (or
Classes) in such manner as the Trustees in their sole discretion
deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Portfolios
(or Classes) for all purposes. Without limitation of the
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foregoing provisions of this Subsection 2.3.2, the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular Portfolio (or
Class) shall be enforceable against the assets of such Portfolio
(or Class) only, and not against the assets of the Trust
generally. Notice of this contractual limitation on
inter-Portfolio liabilities shall be set forth in the Certificate
of Trust described in Section 1.4 of this Agreement (whether
originally or by amendment), and upon the giving of such notice
in the Certificate of Trust, the statutory provisions of Section
3804 of the Delaware Act relating to limitations on
inter-Portfolio liabilities shall be set forth in the Certificate
of Trust described in Section 1.4 of this Agreement (whether
originally or by amendment), and upon the giving of such notice
in the Certificate of Trust, the statutory provisions of Section
3804 of the Delaware Act relating to limitations on
inter-Portfolio liabilities (and the statutory effect under
Section 3804 of setting forth such notice in the Certificate of
Trust) shall become applicable to the Trust and each Portfolio
and Class thereof.
All references to Shares in this Trust Agreement shall be deemed to
be shares of any or all Portfolios, or Classes thereof, as the
context may require. All provisions herein relating to the Trust
shall apply equally to each Portfolio of the Trust, and each Class
thereof, except as the context otherwise requires.
SECTION 2.4. INVESTMENT IN THE TRUST. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible
property or a combination thereof, as the Trustees from time to time may
authorize. At the Trustees' sole discretion, such investments, subject to
applicable law, may be in the form of cash or securities in which the
affected Portfolio is authorized to invest, valued as provided in
applicable law. Each Investment shall be credited to the individual
shareholder's account in the form of full and fractional Shares of the
Trust, in such Portfolio (or Class) as the purchaser shall select.
SECTION 2.5. PERSONAL LIABILITY OF SHAREHOLDERS. As provided by applicable
law, no Shareholder of the Trust shall be personally liable for the debts,
liabilities, obligations, and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Portfolio (or Class)
thereof. Neither the Trust nor the Trustees, nor any officer, employee, or
agent of the Trust shall have any power to bind personally any Shareholder
or, except as provided herein or by applicable law, to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay
by way of subscription for any Shares or otherwise. The Shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the
same limitation on personal liability as is extended under the Delaware
General Corporation Law to stockholders of private corporations for
profit. Every note, bond, contract, or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust or to any
Portfolio (or Class) thereof shall include a recitation limiting the
obligation represented thereby to the Trust or to one or more Portfolios
thereof or to one or more Classes of a Portfolio and its or their assets
(but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
SECTION 2.6. ASSENT TO TRUST AGREEMENT. Every Shareholder, by virtue of
having purchased a Share, shall be held to have expressly assented to, and
agreed to be bound by, the terms hereof. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the same nor
entitle the representative of any deceased Shareholder to an accounting or
to take any action in court or elsewhere against the Trust or the
Trustees, but only to rights of said decedent under this Trust.
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ARTICLE III
THE TRUSTEES
SECTION 3.1. MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the
Trust to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, but with such powers of
delegation as may be permitted by this Trust Agreement. The Trustees shall
have power to conduct the business of the Trust and carry on its
operations in any and all of its branches and maintain offices both within
and without the State of Delaware, in any and all states of the United
States of America, in the District of Columbia, in any and all
commonwealths, territories, dependencies, colonies, or possessions of the
United States of America, and in any and all foreign jurisdictions and to
do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the
Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the
Trustees in good faith shall be conclusive. In construing the provisions
of this Trust Agreement, the presumption shall be in favor of a grant of
power to the Trustees.
The enumeration of any specific power in this Trust Agreement shall not be
construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court or other authority.
SECTION 3.2. INITIAL TRUSTEES. The initial Trustees shall be the
persons named herein.
SECTION 3.3. TERMS OF OFFICE OF TRUSTEES. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as herein
provided; except (a) that any Trustee may resign his trusteeship or may
retire by written instrument signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later
date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who has died, become
physically or mentally incapacitated by reason of disease or otherwise, or
is otherwise unable to serve, may be retired by written instrument signed
by a majority of the other Trustees, specifying the date of his
retirement; and (d) that a Trustee may be removed at any meeting of the
Shareholders of the Trust by a vote of the Shareholders owning at least
two-thirds of the Outstanding Shares.
SECTION 3.4. VACANCIES AND APPOINTMENT OF TRUSTEES. A vacancy shall occur
in case of the declination to serve, death, resignation, retirement or
removal of a Trustee, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled, the other Trustees
shall have all the powers hereunder and the certification of the other
Trustees of such vacancy shall be conclusive. In the case of an existing
vacancy, the remaining Trustees may fill such vacancy by appointment such
other person as they in their discretion shall see fit, or may leave such
vacancy unfilled or may reduce the number of Trustees to not less than two
(2) Trustees. Such appointment shall be evidenced by a written instrument
signed by a majority of the Trustees in office or by resolution of the
Trustees, duly adopted, which shall be recorded in the minutes of a
meeting of the Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation,
or removal of a Trustee or an increase in number of Trustees effective at
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a later date, provided that said appointment shall become effective only
at the time or after the expected vacancy occurs. As soon as any Trustee
appointed pursuant to this Section 3.4 shall have accepted this
appointment in writing and agreed in writing to be bound by the terms of
the Trust Agreement, the Trust estate shall vest in the new Trustee or
Trustees, together with the continuing Trustees, without any further act
or conveyance, and he shall be deemed a Trustee hereunder.
SECTION 3.5. TEMPORARY ABSENCE OF TRUSTEE. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any
one time to any other Trustee or Trustees, provided that in no case shall
less than two Trustees personally exercise the other powers hereunder
except as herein otherwise expressly provided.
SECTION 3.6. NUMBER OF TRUSTEES. The number of Trustees shall initially be
five (5), and thereafter shall be such number as shall be fixed from time
to time by a majority of the Trustees; provided, however, that the number
of Trustees shall in no event be less than two (2) [nor more than twelve
(12)]. The Shareholders shall elect the Trustees (other than the initial
Trustees) on such dates as the Trustees may fix from time to time.
SECTION 3.7. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The
declination to serve, death, resignation, retirement, removal, incapacity,
or inability of the Trustees, or any one of them, shall not operate to
terminate the Trust or to revoke any existing agency created pursuant to
the terms of this Trust Agreement.
SECTION 3.8. OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust and
of each Portfolio thereof shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. Legal title in all of the assets
of the Trust and the right to conduct any business shall at all times be
considered as vested in the Trustees on behalf of the Trust, except that
the Trustees may cause legal title to any Trust Property to be held by, or
in the name of the Trust, or in the name of any Person as nominee. No
Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or of any Portfolio, or Class thereof, or
any right of partition or possession thereof, but each Shareholder shall
have, except as otherwise provided for herein, a proportionate undivided
beneficial interest in the Trust, Portfolio or Class thereof. The Shares
shall be personal property giving only the rights specifically set forth
in this Trust Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.1. POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any
and all acts and to make and execute any and all contracts and instruments
that they may consider necessary or appropriate in connection with the
management of the Trust. Without limiting the foregoing and subject to any
applicable limitation in this Trust Agreement or the Bylaws of the Trust,
the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or
limited by any present or future law or custom in regard to
investments by Trustees, and to sell, exchange, lend, pledge,
mortgage, hypothecate, write options on, and lease any or all of the
assets of the Trust;
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(b) To operate as, and to carry on the business of, an investment
company, and exercise all the powers necessary and appropriate to
the conduct of such operations;
(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging, or
otherwise subjecting as security the Trust Property; to endorse,
guarantee, or undertake the performance of an obligation or
engagement of any other Person and to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereafter provided for
or by the Trust itself, or both, or otherwise pursuant to a plan of
distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Agreement providing
for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve such right to the
shareholders; such Bylaws shall be deemed incorporated and included
in this Trust Agreement;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange, or such other domestic or
foreign entities as custodians of any assets of the Trust subject to
any conditions set forth in this Trust Agreement or in the Bylaws;
(h) To retain one or more transfer agents or Shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager,
administrator, custodian, underwriter, or other agent or independent
contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article VI, Section 6.1 hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies and powers of attorney to such person or persons as
the Trustees shall deem proper, granting to such person or persons
such power and discretion with relation to securities or property as
the Trustee shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any Trust,
whether in bearer, book entry, unregistered, or other negotiable
form; or either in the name of the Trust or of a Portfolio or Class
thereof or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
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(o) To establish separate and distinct Portfolios with separately
defined investment objectives and policies and distinct investment
purposes in accordance with the provisions of Article II hereof and
to establish Classes of such Portfolios having relative rights,
powers, and duties as they may provide consistent with applicable
law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities, and expenses of the Trust to a
particular Portfolio or to apportion the same between or among two
or more Portfolios, provided that any liabilities or expenses
incurred by a particular Portfolio shall be payable solely out of
the assets belonging to that Portfolio as provided for in Article II
hereof;
(q) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any corporation or concern, any security
of which is held in the Trust; to consent to any contact, lease,
mortgage, purchase, or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any
security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not
limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income and of
capital gains and capital to Shareholders in the manner hereinafter
provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Portfolio or Class, and
to require the redemption of the Shares of any Shareholder whose
investment is less than such minimum upon giving notice to such
Shareholder;
(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees, and to adopt a
committee charter providing for such responsibilities, membership
(including Trustees, officers, or other agents of the Trust
therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this
Article IV, and in addition to such provisions or any other
provision of this Trust Agreement or of the Bylaws, the Trustees
may by resolution appoint a committee consisting of less than the
whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then
in office, with respect to the institution, prosecution,
dismissal, settlement, review, or investigation of any action,
suit, or proceeding which shall be pending or threatened to be
brought before any court, administrative agency, or other
adjudicatory body;
(v) To interpret the investment policies, practices or limitations of
any Portfolios;
(w) To establish a registered office and have a registered agent in the
State of Delaware; and
(x) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything
necessary, suitable, or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance of any
power hereinbefore set forth, either alone or in association with
others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid
business or purposes, objects, or powers.
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The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by
one or more of the Trustees in their capacity as such hereunder shall be
deemed an action on behalf of the Trust or the applicable Portfolio, and
not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees
or upon their order.
SECTION 4.2. ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, and otherwise deal in Shares and,
subject to the provisions set forth in Article II and VII, to apply to any
such repurchase, redemption, retirement, cancellation, or acquisition of
Shares any funds or property of the Trust, or the particular Portfolio or
Class of the Trust, with respect to which such Shares are issued.
SECTION 4.3. ACTION BY THE TRUSTEES. The Trustees shall act by majority
vote of those present at a meeting duly called (including a meeting by
telephonic or other electronic means, unless the 1940 Act requires that a
particular action be taken only at a meeting of the Trustees in person) at
which a quorum is present or by unanimous written consent of the Trustees
(or by written consent of a majority of the Trustees if the President of
the Trust determines, in good faith, that such exceptional circumstances
exist, and are of such urgency, as to make unanimous written consent
impossible or impracticable within a reasonable time frame) without a
meeting. A majority of the Trustees shall constitute a quorum at any
meeting. Meetings of the Trustees may be called orally or in writing by
the President of the Trust or by any two Trustees. Notice of the time,
date, and place of all meetings of the Trustees shall be given to each
Trustee by telephone, facsimile, electronic-mail, or other electronic
mechanism sent to his or her home or business address at least twenty-four
hours in advance of the meeting or in person at another meeting of the
Trustees or by written notice mailed to his or her home or business
address at least seventy-two hours in advance of the meeting. Notice need
not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who signs a waiver of notice either before or after
the meeting. Subject to the requirements of the 1940 Act, the Trustees by
majority vote may delegate to any Trustee or Trustees authority to approve
particular matters or take particular actions on behalf of the Trust. Any
written consent or waiver may be provided and delivered to the Trust by
any means by which notice may be given to a Trustee.
SECTION 4.4. PRINCIPAL TRANSACTIONS. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any
assets of the Trust to, any Trustee or officer of the Trust or any firm of
which any such Trustee or officer is a member acting as principal, or have
any such dealings with any investment adviser, distributor, or transfer
agent for the Trust or with any affiliated person of such Person; and the
Trust may employ any such Person, or firm or Company in which such Person
is an affiliated person, as broker, legal counsel, registrar, investment
adviser, distributor, administrator, transfer agent, dividend disbursing
agent, custodian, or in any capacity upon customary terms, subject in all
cases to applicable laws, rules, and regulations and orders of regulatory
authorities.
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SECTION 4.5. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are authorized
to pay or cause to be paid out of the principal or income of the Trust or
Portfolio (or Class), or partly out of the principal and partly out of
income, and to charge or allocate the same to, between or among such one
or more of the Portfolios (or Classes) that may be established or
designated pursuant to Article II, Section 2.3, as they deem fair, all
expenses, fees, charges, taxes, and liabilities incurred or arising in
connection with the Trust or Portfolio (or Class), or in connection with
the management thereof, including, but not limited, to the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser and manager, administrator,
principal underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
SECTION 4.6. TRUSTEE COMPENSATION. The Trustees as such shall be entitled
to reasonable compensation from the Trust. They may fix the amount of
their compensation. Nothing herein shall in any way prevent the employment
of any Trustee for advisory, management, administrative, legal,
accounting, investment banking, underwriting, brokerage, or investment
dealer or other services and the payment for the same by the Trust.
ARTICLE V
INVESTMENT ADVISORY, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
SECTION 5.1. INVESTMENT ADVISER. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management
contract or contracts with respect to the Trust or any Portfolio whereby
the other party or parties to such contract or contracts shall undertake
to furnish the Trustees with such management, investment advisory,
statistical, and research facilities and services and such other
facilities and services, if any, and all upon such terms and conditions,
as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ, from time to
time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be
agreed upon among the Trustees, the investment adviser, and the
sub-adviser. Any references in this Trust Agreement to the investment
adviser shall be deemed to include such sub-advisers, unless the context
otherwise requires.
SECTION 5.2. OTHER SERVICE CONTRACTS. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator,
custodian, and similar servicers.
SECTION 5.3. PARTIES TO CONTRACT. Any contract of the character described
in Sections 5.1 and 5.2 of this Article V may be entered into with any
corporation, firm, partnership, trust, or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract.
SECTION 5.4. MISCELLANEOUS. The fact that (i) any of the Shareholders,
Trustees, or officers of the Trust is a shareholder, director, officer,
partner, trustee, employee, manager, adviser, principal underwriter or
distributor, or agent of or for any Company or of or for any parent or
affiliate of any Company, with which an advisory or administration
contract, or principal underwriter's or distributor's contract, or
transfer, shareholder servicing, custodian, or other agency contract may
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have been or may hereafter be made, or that any such Company, or any
parent or affiliate thereof, is a Shareholder or has an interest in the
Trust, or that (ii) any Company with which an advisory or administration
contract or principal underwriter's or distributor's contract, or
transfer, shareholder servicing, or other agency contract may have been or
may hereafter be made also has an advisory or administration contract, or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing, custodial, or other agency contract with one or
more other companies, or has other business or interests shall not affect
the validity of any such contract or disqualify any Shareholder, Trustee,
or officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust or its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
SECTION 6.1. VOTING POWERS. The Shareholders shall have power to vote only
with respect to (1) the election of Trustees as provided in Article III,
Section 3.6, (2) the removal of a Trustee as provided in Article III,
Section 3.3(d), (3) any investment advisory contract to the extent
required by the 1940 Act, (4) termination of the Trust or a Portfolio or
Class thereof as provided in Article IX, Section 9.3, (5) amendment of
this Trust Agreement only as provided in Article IX, Section 9.7, (6) the
sale of all or substantially all the assets of the Trust or of any
Portfolio or Class, unless the primary purpose of such sale is to change
the Trust's domicile or form of organization or form of business trust;
(7) the merger or consolidation of the Trust or any Portfolio or Class
with and into another Company, unless (A) the primary purpose of such
merger or consolidation is to change the Trust's domicile or form of
organization or form of business trust, or (B) after giving effect to such
merger or consolidation, based on the number of Shares outstanding as of a
date selected by the Trustees, the Shareholders of the Trust or such
Portfolio or Class will have a majority of the outstanding shares of the
surviving Company or Portfolio or Class, as the case may be; (8) amendment
of quarterly repurchase offers provided for in Article VII, Section 7.2;
and (9) such additional matters relating to the Trust as may be required
by law or as the Trustees may consider desirable.
Until shares are issued, the Trustees may exercise all rights of
Shareholders and may make any action required or permitted by law, this
Trust Agreement or any of the Bylaws of the Trust to be taken by
Shareholders.
On any matter submitted to vote of the Shareholders, all Shares shall be
voted together, except when required by applicable law or when the
Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of all such
Portfolios (or Classes) shall be entitled to vote thereon. Each whole
Share shall be entitled to one vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. The vote necessary to approve any such
matter shall be set forth in this Trust Agreement or in the Bylaws.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
SECTION 7.1. DISTRIBUTIONS. The Trustees may from time to time declare and
pay dividends and make other distributions with respect to any Portfolio,
or Class thereof, which may be from income, capital gains, or capital. The
amount of such dividends or distributions and the payment of them and
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whether they are in cash or any other Trust Property shall be wholly in
the discretion of the Trustees. Dividends and other distributions may be
paid pursuant to a standing resolution adopted once or more often as the
Trustees determine. All dividends and other distributions on Shares of a
particular Portfolio or Class shall be distributed pro rata to the
Shareholders of that Portfolio or Class, as the case may be, in proportion
to the number of Shares of that Portfolio or Class they held on the record
date established for such payment, provided that such dividends and other
distributions on Shares of a Class shall appropriately reflect expenses
allocated to that Class. The Trustees may adopt and offer to Shareholders
such dividend reinvestment plans, cash distribution payout plans, or
similar plans as the Trustees deem appropriate.
SECTION 7.2. PERIODIC REPURCHASE OFFERS.
(a) The Trust will make offers to repurchase its shares at quarterly
intervals pursuant to Rule 23c-3 under the 1940 Act ("Offers"). The
Trustees may place such conditions and limitations on repurchase
offers as may be permitted pursuant to Rule 23c-3 or by the SEC.
(b) On or about the fourth Tuesday of the last month of each calendar
quarter, or the next business day if such day is not a business day,
will be the deadline (the "request deadline") by which the Trust
must receive repurchase requests submitted by shareholders in
response to the most recent repurchase offer.
(c) The date on which the repurchase price for shares is to be
determined (the "pricing date") will occur no later than the
fourteenth day after a repurchase request deadline, or the next
business day if such day is not a business day.
(d) Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
SECTION 7.3. OTHER REPURCHASE OFFERS. The Trust may, at the
discretion of the Trustees and to the extent permitted by Rule 23c-3,
make discretionary repurchase offers pursuant to Rule 23c-3.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 8.1. LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person for any act,
omission, or obligation of the Trust or any Trustee; provided, however,
that nothing contained herein or in the Delaware Act shall protect any
Trustee against any liability to the Trust or to Shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of the office of Trustee hereunder.
SECTION 8.2. INDEMNIFICATION OF COVERED PERSONS. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by
the Delaware Act and other applicable law.
SECTION 8.3. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former shareholder of the Trust shall be held to be personally liable
solely by reason of his being or having been a Shareholder of the Trust or
any Portfolio or Class and not because of his acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his heirs,
executors, administrators, or other legal representatives, or, in the case
of a corporation or other entity, its corporate or general successor)
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shall be entitled, out of the assets belonging to the applicable Portfolio
(or Class), to be held harmless from and indemnified against all loss and
expense arising from such liability in accordance with the Bylaws and
applicable law. The Trust, on behalf of the affected Portfolio (or Class),
shall, upon request by the Shareholder, assume the defense of any claim
made against the Shareholder for any act or obligation of that Portfolio
(or Class).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. TRUST NOT A PARTNERSHIP; TAXATION. It is hereby expressly
declared that a trust and not a partnership is created hereby. No trustee
hereunder shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit to, contracting
with or having any claim against the Trust or the Trustees shall look only
to the assets of the appropriate Portfolio or Class or, if the Trustees
shall have yet to have established any separate Portfolio or Class, of the
Trust for payment under such credit, contract, or claim; and neither the
Shareholders nor the Trustee, nor any of their agents, whether past,
present, or future, shall be personally liable therefor.
It is intended that the Trust, or each Portfolio if there is more than one
Portfolio, be classified for income tax purposes as an association taxable
as a corporation, and the Trustees shall do all things that they, in their
sole discretion, determine are necessary to achieve that objective,
including (if they so determine) electing such classification on Internal
Revenue Form 8832. Any Trustee is hereby authorized to sign such form on
behalf of the Trust or any Portfolio, and the Trustees may delegate such
authority to any executive officer(s) of any Portfolio's investment
adviser. The Trustees, in their sole discretion and without the vote or
consent of the Shareholders, may amend this Trust Agreement to ensure that
this objective is achieved.
SECTION 9.2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances
then prevailing shall be binding upon everyone interested. Subject to the
provisions of Article VIII hereof and to Section 9.1 of this Article IX,
the Trustees shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Trust Agreement, and subject
to the provisions of Article VIII hereof and Section 9.1 of this Article
IX, shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall not
be required to give any bond as such, nor any surety if a bond is
obtained.
SECTION 9.3. TERMINATION OF TRUST OR PORTFOLIO OR CLASS. (a) The Trust or
any Portfolio (or Class) may be terminated by (1) a Majority Shareholder
Vote of the Trust or the affected Portfolio (or Class), respectively, or
(2) if there are fewer than 100 Shareholders of record of the Trust or of
such terminating Portfolio (or Class), the Trustees pursuant to written
notice to the Shareholders of the Trust or the affected Portfolio (or
Class).
(b) On termination of the Trust or any Portfolio (or Class) pursuant to
paragraph (a),
(1) the Trust or that Portfolio (or Class) thereafter shall carry on no
business except for the purpose of winding up its affairs,
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(2) the Trustees shall proceed to wind up the affairs of the Trust or
that Portfolio (or Class), and all powers of the Trustees under this Trust
Agreement with respect thereto shall continue until such affairs have been
wound up, including the powers to fulfill or discharge the contracts of
the Trust or that Portfolio (or Class), collect its assets, sell, convey,
assign, exchange, or otherwise dispose of all or any part of its remaining
assets to one or more persons at public or private sale for consideration
that may consist in whole or in part of cash, securities, or other
property of any kind, discharge or pay its liabilities, and do all other
acts appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and refunding
agreements as they deem necessary for their protection, the Trustees shall
distribute the remaining assets ratably among the Shareholders of the
Trust or that Portfolio (or Class); however, the payment to any particular
Class of that Portfolio may be reduced by any fees, expenses, or charges
allocated to that Class.
(c) On completion of distribution of the remaining assets pursuant to
paragraph (b), the Trust or the affected Portfolio (or Class) shall
terminate and the Trustees and the Trust shall be discharged from all
further liabilities and duties hereunder with respect thereto and the
rights and interests of all parties therein shall be canceled and
discharged. On termination of the Trust, following completion of winding
up of its business, the Trustees shall cause a certificate of cancellation
of the Trust's certificate of trust to be filed in accordance with the
Delaware Act, which certificate may be signed by any one Trustee.
SECTION 9.4. CERTAIN TRANSACTIONS.
(a) Notwithstanding any other provision hereof and subject to the
exception provided in Paragraph (d) of this Section, the transactions
described in Paragraph (c) of this Section shall require the affirmative
vote or consent of the holders of sixty-six and two-thirds percent (66
2/3%) of the outstanding Shares of the Trust. Notwithstanding any other
provision herein, such affirmative vote shall be in addition to, and not
in lieu of, the vote or consent of the Shareholders of the Trust otherwise
required by law (including without limitation, any separate vote by class
of capital stock that may be required by the 1940 Act or by other
applicable law), by the terms of any Class or Portfolio that is now or
hereafter authorized, or by any agreement between the Trust and any
national securities exchange.
(b) For purposes of this Section, the term "Principal Shareholder" shall
mean any corporation, person, or group (within the meaning of Rule 13d-5
under the Securities Exchange Act of 1934), which is the beneficial owner,
directly or indirectly, of more than five percent (5%) of the outstanding
Shares of the Trust and shall include any affiliate or associate, as such
terms are defined in clause (2) below, of a Principal Shareholder. For the
purposes of this Section, in addition to the Shares which a corporation,
person, entity, or group beneficially owns directly, any corporation,
person, entity, or group shall be deemed to be the beneficial owner of any
Shares (1) which it has the right to acquire pursuant to any agreement or
upon exercise of conversion rights or warrants, or otherwise or (2) which
are beneficially owned, directly or indirectly (including Shares deemed
owned through application of clause (1) above), by any other corporation,
person, entity, or group with which it or its "affiliate" or "associate,"
as those terms are defined in Rule 12b-2 under the Securities Exchange Act
of 1934, has any agreement, arrangement, or understanding for the purpose
of acquiring, holding, voting, or disposing of Shares of the Trust, or
which is its "affiliate" or "associate" as so defined. For purposes of
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this Section, calculation of the outstanding Shares of the Trust shall not
include Shares deemed owned through application of clause (1) above.
(c) This Section shall apply to the following transactions:
1. Merger, consolidation, or statutory share exchange of the
Trust with or into any other corporation;
2. Issuance of any securities of the Trust to any Principal
Shareholder for entity for cash;
3. Sale, lease, or exchange of all or any substantial part of the
assets of the Trust to any person or entity (except assets
having an aggregate fair market value of less than
$1,000,000); or
4. Sale, lease, or exchange to the Trust, in exchange for
securities of the Trust, of any assets of any person or entity
(except assets having an aggregate fair market value of less
than $1,000,000).
5. Any amendment of this Agreement that makes the Shares a
"redeemable security" as that term is defined in the 1940 Act.
(d) The provisions of this Section shall not apply to any transaction
described in Paragraph (c) of this Section if the Trustees authorize such
transaction by an affirmative vote of a majority of the Trustees,
including a majority of the Trustees who are not "interested persons" of
the Trust, as that term is defined in the 1940 Act.
SECTION 9.5. SALE OF ASSETS; MERGER AND CONSOLIDATION. Subject to Section
6.1 of Article VI of this Trust Agreement, the Trustees may cause (i) the
Trust or one or more of its Portfolios (or Classes) to the extent
consistent with applicable law to sell all or substantially all of its
assets, or be merged into or consolidated with another Trust or Company,
(ii) the Shares of the Trust or any Portfolio (or Class) to be converted
into beneficial interests in another business trust (or series thereof)
created pursuant to this Section 9.4 of Article IX, or (iii) the Shares to
be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. In all respects not governed by statute or
applicable law, the Trustees shall have power to prescribe the procedure
necessary or appropriate to accomplish a sale of assets, merger or
consolidation including the power to create one or more separate business
trusts to which all or any part of the assets, liabilities, profits or
losses of the Trust may be transferred and to provide for the conversion
of Shares of the Trust or any Portfolio (or Class) into beneficial
interests in such separate business trust or trusts (or series or class
thereof).
SECTION 9.6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Agreement supplemental hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. In this
Trust Agreement or in any such amendment or supplemental Trust Agreement,
references to this Trust Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Trust
Agreement as amended or affected by any such supplemental Trust Agreement.
All expressions like "his," "he," and "him," shall be deemed to include
the feminine and neuter, as well as masculine, genders. Headings are
placed herein for convenience of reference only and in case of any
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conflict, the text of this Trust Agreement, rather than the headings,
shall control. This Trust Agreement may be executed in any number of
counterparts each of which shall be deemed an original.
SECTION 9.7. GOVERNING LAW. The Trust and this Trust Agreement, and the
rights, obligations and remedies of the Trustees and Shareholders
hereunder, are to be governed by and construed and administered according
to the Delaware Act and the other laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees,
the Shareholders or this Trust Agreement (a) the provisions of Section
3540 of Title 12 of the Delaware Code or (b) any provisions of the laws
(statutory or common) of the State of Delaware (other than the Delaware
Act) pertaining to trusts which relate to or regulate (i) the filing with
any court or governmental body or agency of trustee accounts or schedules
of trustee fees and charges, (ii) affirmative requirements to post bonds
for trustees, officers, agents, or employees of a Trust, (iii) the
necessity for obtaining court or other governmental approval concerning
the acquisition, holding, or disposition of real or personal property,
(iv) fees or other sums payable to trustees, officers, agents, or
employees of a trust, (v) the allocation of receipts and expenditures to
income or principal, (vi) restrictions or limitations on the permissible
nature, amount, or concentration of trust investments or requirements
relating to the titling, storage, or other manner of holding of trust
assets, or (vii) the establishment of fiduciary or other standards or
responsibilities or limitations on the indemnification, acts or powers of
trustees or other Persons, which are inconsistent with the limitations of
liabilities or authorities and powers of the Trustees or officers of the
Trust set forth or referenced in this Trust Agreement.
The Trust shall be of the type commonly called a "business trust," and
without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts
under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege, or action shall not imply that the Trust may
not exercise such power or privilege or take such actions, provided,
however, that the exercise of any such power, privilege, or action shall
not otherwise violate applicable law.
SECTION 9.8. AMENDMENTS. Except as specifically provided herein, the
Trustees may, without any Shareholder vote, amend this Trust Agreement by
making an amendment, a Trust Agreement supplemental hereto, or an amended
and restated trust instrument. Any amendment submitted to Shareholders
that the Trustees determine would affect the Shareholders of only one or
more Portfolios (or Classes thereof) shall be authorized by vote of only
the Shareholders of that Portfolio (or Class), and no vote shall be
required of Shareholders of any Portfolio (or Class) that is not affected.
Notwithstanding anything else herein to the contrary, any amendment to
Article IX that would have the effect of reducing the indemnification and
other rights provided thereby to Covered Persons or to Shareholders or
former Shareholders, and any repeal or amendment of this sentence shall
each require the affirmative vote of Shareholders owning at least
two-thirds of the Outstanding Shares entitled to vote thereon. A
certification signed by a majority of the Trustees setting forth an
amendment to this Trust Agreement and reciting that it was duly adopted by
the Shareholders or by the Trustees as aforesaid, or a copy of this Trust
Agreement, as amended, executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
SECTION 9.9. PROVISIONS IN CONFLICT WITH LAW. The provisions of this Trust
Agreement are severable, and the Trustees shall determine, with the advice
of counsel, that any of such provisions is in conflict with applicable law
the conflicting provision shall be deemed never to have constituted a part
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of this Trust Agreement; provided, however, that such determination shall
not affect any of the remaining provisions of this Trust Agreement or
render invalid or improper any action taken or omitted prior to such
determination. If any provision of this Trust Agreement shall be held
invalid or enforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provisions in any other
jurisdiction or nay other provision of this Trust Agreement in any
jurisdiction.
SECTION 9.10. SHAREHOLDERS' RIGHT TO INSPECT SHAREHOLDER LIST. One or more
persons who together and for at least six months have been Shareholders of
at least five percent (5%) of the outstanding shares of any Class may
present to any officer or resident agent of the Trust a written request
for a list of its Shareholders. Within twenty (20) days after such request
is made, the Trust shall prepare and have available on file at its
principal office a list verified under oath by one of its officers or its
transfer agent or registrar which sets forth the name and address of each
Shareholder and the number of Shares of each Class which the Shareholder
holds. The rights provided for herein shall not extend to any person who
is a beneficial owner but not also a record owner of Shares of the Trust.
IN WITNESS WHEREOF, the undersigned, being all of the initial
Trustees of the Trust, have executed this instrument this _____ day of ______,
1998.
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[THIS IS THE SIGNATURE PAGE FOR THE AGREEMENT AND DECLARATION OF TRUST OF
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DRAFT 3/20/98
SCHEDULE A
The Trustees have not established for [Name of Trust] any Portfolios or Classes.
Date: [ ]
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