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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 sec. 240.14a-11(c) or sec. 240.14a-12
GT Global Floating Rate Fund, Inc. (d/b/a AIM Floating Rate Fund)
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(Name of Registrant as Specified in its Charter)
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(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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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AIM FLOATING RATE FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
January 7, 2000
Dear Shareholder:
Enclosed is a proxy statement seeking your approval of two
proposals relating to the restructuring of AIM Floating Rate Fund (the
"Fund"), as well as two more routine proposals. Since its inception in
1997, the Fund has grown to well over $400 million in net assets. Despite
this impressive growth, the Board of Directors of the Fund (the "Board")
believes that additional improvements to the Fund could benefit Fund
shareholders. For example, the Fund currently offers a single class of
shares to investors. In accordance with recent regulatory developments, the
Fund, if it reorganizes, could offer investors a choice of shares similar
to the choices available to shareholders in open-end funds.
To provide Fund shareholders with these additional improvements
and options, and to ensure that the Fund remains competitive in an
extremely demanding marketplace, the Board is recommending that the Fund be
restructured along the lines described in the attached Proxy Statement (the
"Restructuring"). The Restructuring of the Fund would include collapsing
its current two-tiered investment structure into a simpler, single-tiered
investment arrangement; offering multiple classes of shares for Fund
investors with different sales and distribution charges; and converting the
Fund to an "interval" status in order to guarantee investors that the Fund
will conduct quarterly repurchase offers for a portion of its shares. The
Proxy Statement describes these changes in much greater detail.
After careful consideration, the Board has unanimously approved
each proposal. The Board believes that these changes will benefit the Fund
and its shareholders and recommends that you read the enclosed materials
carefully and then vote FOR each proposal.
Your vote is important. Please take a moment now to sign and
return your proxy card in the enclosed postage paid return 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. You may also vote your
shares on the internet at HTTP://WWW.AIMFUNDS.COM by following the
instructions that appear on the enclosed proxy insert. Thank you for your
cooperation and continued support.
Sincerely,
Robert H. Graham
Chairman and President
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AIM FLOATING RATE FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 2000
TO THE SHAREHOLDERS OF AIM FLOATING RATE FUND:
NOTICE IS HEREBY GIVEN that a special meeting of Shareholders
("Meeting") of GT Global Floating Rate Fund, Inc. (d/b/a AIM Floating Rate
Fund) ("Fund") will be held at 11 Greenway Plaza, Suite 100, Houston, TX
77046, on February 25, 2000, at 2:00 p.m., Central time, for the following
purposes:
1. To approve an agreement and plan of conversion and
liquidation for the Fund;
2. To approve a distribution plan;
3. To elect a Director;
4. To ratify the selection of PricewaterhouseCoopers LLP as
the Fund's independent public accountants; and
5. To transact such other business that may properly come
before the Meeting, or any adjournment thereof, in the
discretion of the proxies or their substitutes.
Shareholders of record as of the close of business on December 20,
1999, are entitled to notice of, and to vote at, the Meeting or any
adjournment thereof.
Please execute and return promptly in the enclosed envelope the
accompanying proxy, which is being solicited by the Board of Directors of
the Fund. You may also vote your shares through a web site established for
that purpose by following the instructions on the enclosed proxy insert.
Returning your proxy promptly is important to ensure a quorum at the
Meeting. You may revoke your proxy at any time before it is exercised by
the subsequent execution and submission of a revised proxy, by giving
written notice of revocation to the Fund at any time before the proxy is
exercised, or by voting in person at the Meeting.
By Order of the Board of Directors,
Samuel D. Sirko
Secretary
January 7, 2000
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AIM FLOATING RATE FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TX 77046-1173
TOLL FREE: (800) 454-0327
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 2000
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This Proxy Statement is being furnished to shareholders in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of GT Global Floating Rate Fund, Inc. (d/b/a AIM Floating Rate
Fund) (the "Fund"). These proxies are to be used at the special meeting of
Shareholders and at any adjournment thereof (the "Meeting") to be held at
the offices of the Fund, 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, on February 25, 2000, at 2:00 p.m., Central time.
If the accompanying proxy card is properly executed and returned
by a shareholder in time to be voted at the 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 nominee for the Fund's Board; in accordance with the recommendation
of the Board as to all other proposals described in this Proxy Statement;
and, at the discretion of the proxyholders, on any other matter that may
properly come before the 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 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, facsimile, 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 proposal or for or
against any adjournment to 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,
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however, as votes cast for purposes of determining whether sufficient
votes have been received to approve a proposal.
Shareholders of record as of the close of business on December 20,
1999 (the "Record Date"), are entitled to vote at the Meeting. On the
Record Date, there were ____ shares of the Fund outstanding. Each share is
entitled to one vote for each full share held and a fractional vote for a
fractional share held. A I M Advisors, Inc. ("AIM") does not know of any
person who owns beneficially 5% or more of the shares of the Fund.
The Fund has engaged the services of Shareholder Communications
Corporation ("SCC") to assist it in the solicitation of proxies for the
Meeting. The Fund expects to solicit proxies principally by mail, but it or
SCC may also solicit proxies by telephone, facsimile, telegraph, or
personal interview. Officers of the Fund and employees of AIM who assist in
the proxy solicitation will not receive any additional or special
compensation for any such efforts. 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.
The Fund intends to mail this Proxy Statement and the accompanying
proxy card on or about January 7, 2000.
SUMMARY OF THE RESTRUCTURING
The Fund's investment objective is to provide as high a level of
current income and preservation of capital as is consistent with investment
in senior secured corporate loans and corporate debt securities that have
adjustable or floating interest rates ("floating rate securities"). While
the Fund was one of the earliest funds to concentrate in this type of
investment, since its establishment, more flexibility in the options for
shareholders have developed as other funds have commenced operations. The
characteristics of and options available through these other floating rate
products have substantially expanded, and over the past two years many such
funds have begun offering multiple classes of shares, various sales load
and distribution fee arrangements, and several different liquidity options
for shareholders.
The Board believes that, to provide a broader array of additional
features to existing shareholders and to increase the attractiveness of the
Fund to new investors, the Fund should be restructured to (a) offer more
investment options and greater flexibility, (b) "modernize" the Fund by
conforming its organization, contracts, etc. with those of the other AIM
funds, and (c) integrate the Fund more closely into the AIM open-end fund
structure. As described in Proposal 1 below, this restructuring of the Fund
(the "Restructuring") would be effected in connection with the
reorganization of the Fund as a Delaware business trust. The Restructuring
is described more fully in Proposal 1 below, but the most important
elements include the following:
Elimination of Master-Feeder Structure. Like several of the former
GT Global open-end funds, the Fund was organized in a
master-feeder structure (in which the Fund invests in the Floating
Rate Portfolio (the "Portfolio")) with the expectation that an
additional feeder fund might be added at a later date. Because the
Restructuring also contemplates the offering of multiple classes
of shares, the necessity of a second feeder fund with different
features but also investing in the Portfolio has been eliminated.
Furthermore, the Board believes that a single investment company
structure will be more efficient to manage and administer and may
result in lower operating costs to the Fund and its shareholders.
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Multiple Classes. Recently organized floating rate products have
offered shareholders the option of investing in a "Class B" share
(with an early withdrawal charge ("EWC") and a small distribution
fee), a "Class C" share (with a lower EWC but a higher
distribution fee) and, in limited cases, a "Class A" share
(front-end load with a lower or no distribution fee). The Board
believes that investors find these alternatives attractive and
that, to attract new cash flows to the Fund, the Fund needs to be
able to offer similar options to current and prospective
shareholders. Accordingly, the Board is recommending the adoption
of a multiple class structure for the Fund that would offer Class
B and Class C shares (with the option in the future of offering
Class A or other classes of shares). The addition of new classes
will not raise the expenses of the existing classes, and may
increase assets under management, which could lower overall
expense ratios and provide for more investment diversification.
"Interval Fund" Structure. As shares of a closed-end fund, the
Fund shares are not redeemable by shareholders. In addition,
because the Fund is not listed on an exchange, there is no
secondary market for the Fund's shares. To provide liquidity to
Fund shareholders, the Board currently considers, on a quarterly
basis, whether to conduct a tender offer for a percentage of the
Fund's shares. Although the Fund has conducted such quarterly
tender offers for more than two years, there is no guarantee to
shareholders that it will continue to do so. Accordingly, the
Board has determined that it would be beneficial to shareholders
to convert to a so-called "interval fund" structure pursuant to
Rule 23c-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), which requires a closed-end fund to adopt a
periodic repurchase plan, in essence committing to shareholders
that the Fund will conduct repurchase offers at set intervals for
between 5% and 25% of the Fund's outstanding shares. In addition
to providing certainty to Fund shareholders, the interval
arrangement has other advantages, including simpler disclosure and
reporting requirements, the ability to have automatic
effectiveness of amendments to the Fund's registration statements,
and the ability to offer waivers of the Fund's EWCs to certain
shareholders.
The Board believes that the changes proposed in the Restructuring
will assure shareholders of a certain level of liquidity for their shares
through periodic repurchase offers, could eventually lower Fund expenses,
and will conform the Fund's organization with the other AIM Funds.
Accordingly, the Board recommends that you vote FOR each Proposal.
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PROPOSAL NO. 1:
APPROVAL OF AN AGREEMENT AND
PLAN OF CONVERSION AND LIQUIDATION
BACKGROUND AND SUMMARY. The Fund currently is organized as a Maryland
corporation. The Board has approved an Agreement and Plan of Conversion and
Liquidation ("Plan"), which provides for the reorganization of the Fund
into 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 the Trust
in exchange solely for shares of beneficial interest in the Trust and the
Trust's assumption of all the Fund's liabilities (the "Reorganization").
Attached to this Proxy Statement as Exhibit A is a form of the Plan
relating to the proposed Reorganization.
The Reorganization is being proposed primarily to conform the
organizational documents under which the Fund operates to those governing
most other AIM Funds and to provide the Fund with flexibility
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to implement the changes proposed in the Restructuring. Following the
Reorganization: (1) the Trust's Agreement and Declaration of Trust
("Declaration of Trust") will include provisions permitting the Trust to
issue multiple classes of shares; (2) the Declaration of Trust will require
the Trust to make periodic repurchase offers for a portion of its shares in
accordance with Rule 23c-3; (3) the Fund's master-feeder structure will be
eliminated and the Trust will invest directly in floating rate securities;
and (4) the Trust's distribution arrangements will conform to the distribution
plan proposed in Proposal 2, provided that Proposal 2 is approved and
implemented. In addition, as described below, the Declaration of Trust for
the Trust will differ from the Fund's Articles of Incorporation in certain
respects.
AIM and the Board believe that the Delaware business trust
organizational form offers a number of advantages over the Maryland
corporate organizational form. As a result of these advantages, the
Delaware business trust organizational form has been increasingly used by
investment companies, including most AIM Funds. The Delaware business trust
organizational form 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 the
Declaration of Trust, which will be substantially in the form of the
Declaration of Trust that is attached to this Proxy Statement as Exhibit B.
In particular, the Trust will have greater flexibility to conduct business
without the necessity of engaging in expensive proxy solicitations of
shareholders. For example, under Maryland corporation law, amendments to
the Fund's Articles of Incorporation would typically require shareholder
approval. Under Delaware law, unless the Declaration of Trust of a Delaware
business trust provides otherwise, amendments may be made without 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 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
circumstances. For example, the trustees may, without a shareholder vote,
change a Delaware business trust's domicile or organizational form. Any
exercise of this authority by the current Fund Board would require
shareholder approval.
Although these are important changes, in many respects the Fund
and the new Trust will remain the same. The Trust will have the same
investment objective, policies, and restrictions as the Fund, except as
noted below. The Fund and the Trust will have the same investment advisory
and sub-advisory arrangements and the Trust will retain the same
distributor, transfer agent and custodian as the Fund. Similarly, the
directors/trustees, officers, and independent accountants will be
unchanged, and the Trust's fiscal year will be the same as that of the
Fund.
IMPORTANT DIFFERENCES BETWEEN THE FUND AND THE TRUST.
Structure and Name of the Trust. The Trust has been established
under the laws of the State of Delaware, but will not have any operations
prior to the Reorganization. Pending the Reorganization, AIM will be the
sole shareholder of the Trust.
The Fund is currently incorporated under the name "GT Global
Floating Rate Fund, Inc.," and is authorized under Maryland law to conduct
business as "AIM Floating Rate Fund." The name of the Trust will be "AIM
Floating Rate Fund."
As a Delaware business trust, the Trust's operations will be
governed by the Declaration of Trust, the Bylaws of the Trust, and
applicable Delaware law rather than by the Fund's Articles of Incorporation
and Bylaws and applicable Maryland law. Certain differences between the two
domiciles and organizational
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forms, as well as certain structural changes, 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.
Elimination of Master-Feeder Structure. The Fund currently
operates as the sole feeder fund in a master-feeder structure and seeks to
achieve its investment objective by investing all of its investable assets
in Floating Rate Portfolio (the "Portfolio"), a master fund with the same
investment objective as the Fund. In connection with the Reorganization,
the Fund would transfer its interest in the Portfolio to the Trust in
return for Trust shares. The Trust would then redeem its interest in the
Portfolio in exchange for the assets held by the Portfolio, thereby
eliminating the master-feeder structure. As a result, the Trust would
invest directly in market securities rather than in the Portfolio. AIM and
the Board believe that the elimination of the master-feeder structure would
simplify the operations of the Trust and, as a result, may result in some
reduction in the Trust's operating expenses. The total expenses of Fund
shares will not decrease as a result of the implementation of Proposal 1
because the elimination of the Fund's administration fees will be offset by
the addition of the distribution fee, as discussed in Proposal 2. A table
showing the Fund's current and pro forma operating expenses is included as
Exhibit C. In addition, the elimination of the master-feeder structure
would conform the Trust's structure to the single tier structure of most
other AIM Funds.
In connection with the Reorganization and the elimination of the
master-feeder structure, the Trust will engage the services of AIM, INVESCO
Senior Secured Management, Inc. ("INVESCO SSM"), and INVESCO (NY), Inc.
("INVESCO (NY)") pursuant to contracts substantially the same as those
under which they currently provide services to the Portfolio. The Plan
authorizes AIM, as the sole shareholder of the Trust prior to the
Reorganization, to approve (1) an advisory contract for the Trust that is
substantially the same as the Portfolio's current investment management and
administration contract with AIM, (2) a sub-advisory contract for the Trust
that is substantially the same as the current sub-advisory between AIM and
INVESCO SSM, and (3) a sub-sub-advisory contract for the Trust that is
substantially the same as the current sub-sub-advisory contract between
INVESCO SSM and INVESCO (NY). The sole differences between the contracts
for the Trust and the current contracts are: (1) the effective date of the
Trust's contracts will be the date of the Reorganization; and (2) the
Trust, not the Fund and/or the Portfolio, will be the recipient of the
services provided under the contracts.
Multiple Classes of Shares of the Trust. The beneficial interests
in the Trust will be represented by transferable shares, par value $0.01
per share. The trustees will have the power under the Declaration of Trust
to establish series and classes of shares; the Fund's directors currently
do not have this power. Under the Declaration of Trust, the trustees will
be authorized to issue an unlimited number of shares of the Trust. 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.
The trustees intend initially to establish and offer two classes
of the Trust. The Fund presently offers a single class of shares. As part
of the Restructuring, these shares will be converted to Class B shares of
the Trust. It is expected that, in addition to Class B shares, Class C
shares also will be offered to the public. Class B and Class C shares will
differ only in the types of fees paid by shareholders. Class B shares will
be subject to the same four-year declining EWC that shareholders now pay if
they tender their shares for payment by the Fund (3.0% of net asset value,
declining to 0.0% after four years) and annual asset-based distribution
fees of 0.25% of average daily net assets. Class C shares will be subject
to a one-year EWC of 1.0% of net asset value and annual asset-based
distribution fees of 0.75% of average daily net assets. See Proposal 2
for more information on the asset-based distribution fees for Class B shares.
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Conversion To Interval Status Under Rule 23c-3. The Fund's Board
currently considers each quarter whether the Fund should conduct a tender
offer for a portion of its shares. The Board is not obligated to authorize
the making of these tender offers and does not guarantee that in any
particular quarter a tender offer will be made. Under the Proposal, the
Fund would convert to interval fund status pursuant to Rule 23c-3, and
would adopt a fundamental policy to make quarterly repurchase offers.
Although in the past the Fund has made tender offers each quarter, there is
no guarantee that it would continue to do so. Conversion to interval fund
status would provide shareholders of the Trust with greater assurance of
liquidity in their holdings of Trust shares by guaranteeing them the
ability to sell at least a portion of those shares each quarter.
The Trust will make quarterly repurchase offers of between 5% and
25% of its outstanding shares at net asset value minus any EWC that
applies. Under Rule 23c-3, the Trust is also permitted to deduct from a
shareholder's repurchase proceeds a fee of up to 2% of such proceeds to
offset expenses associated with the repurchase offer. This repurchase fee
would be retained by the Trust. The Trust has decided not to impose the
repurchase fee for at least the first four quarterly repurchase offers that
are conducted following the Fund's conversion to interval fund status.
Although it has no current intention to do so, the Trust may impose such a
repurchase fee thereafter if it determines that the expenses of the
repurchase offers and the resulting sales of investments are adversely
affecting the Trust and its shareholders.
Fund shareholders may realize additional benefits from converting
the Fund to interval fund status. First, Securities and Exchange Commission
("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 Trust additional
time and money that would otherwise be required to have the SEC declare
such post-effective amendments effective.
Shares of the Fund are currently subject to an EWC of up to 3%
which declines over a four-year period. Following conversion to interval
fund status, Class B shares of the Trust offered for repurchase within four
years of purchase similarly will be subject to an EWC of up to 3% of the
proceeds. The Trust may also waive the EWC for certain categories of
shareholders or transactions. These categories may include situations that
are not likely to be the cause of high turnover in shares of the Fund,
particularly where there are also important policy reasons to waive the
EWC, such as when shares are tendered for repurchase due to the death or
retirement of the shareholder. Events such as death or retirement are not
likely to cause high turnover in shares of the Trust, and financial needs
on the part of the shareholder or the shareholder's family are often
precipitated by such events.
Appendix A discusses in more detail the operation of the Trust as
an interval fund.
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. No further action by shareholders will be
required to continue any automatic investment plan or retirement plan currently
maintained by a shareholder with respect to the Fund's shares. For purposes of
calculating any applicable EWC, the period during which a shareholder held Fund
shares will be added to the period during which the shareholder held shares of
the Trust.
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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 Internal Revenue Code of 1986, as amended
(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 the Reorganization in light
of their individual circumstances and as to state and local consequences,
if any, of the Reorganization.
OTHER ASPECTS OF THE REORGANIZATION.
Trustees and Officers of the Trust. Subject to the provisions of
the Declaration of Trust, the business of the Trust will be managed by its
trustees, who will serve indefinite terms and who will have all powers
necessary or convenient to carry out their responsibilities. The
responsibilities, powers, and fiduciary duties of the trustees will be
substantially the same as those of the Directors of the Fund.
The trustees of the Trust would be the current Directors of the
Fund, including the nominee for election at this Special Meeting to serve
as a Director of the Fund. Information concerning the current Directors of
the Fund is set forth below under Proposal 3. The current officers of the
Fund will serve as officers of the Trust and the current officers of the
Fund will perform the same functions for the Trust following the
Reorganization that they now perform on behalf of the Fund.
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
the 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 or officer 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 or officer
actually received an improper personal benefit in money, property or
services; or (c) in the case of any criminal proceeding, the Director or
officer had reasonable cause to believe the act or omission was unlawful.
The Declaration of Trust will provide indemnification for current
and former trustees and officers to the fullest extent permitted by
Delaware law and other applicable law. Trustees of the Trust may be
personally liable to the Trust and its shareholders by reason 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.
Shareholder Meeting Requirements. The Fund's Bylaws 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 Bylaws will provide that a special meeting of shareholders solely
for the purpose of voting on the removal of any trustee may be called upon
written request of shareholders holding 10% of the Trust's shares.
The Trust, like the Fund, will operate as a closed-end management
investment company registered with the SEC under the 1940 Act (but, unlike
the Fund, will be subject to the interval fund provisions of Rule 23c-3).
Shareholders of the Trust will therefore have the power to vote at special
meetings with respect to, among other things, changes in the investment
objective and fundamental investment restrictions of the Trust; approval of
certain changes to investment advisory contracts; and additional matters
relating to the
9
<PAGE> 11
Trust 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 Bylaws 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 Declaration of Trust, 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 Trust's outstanding 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 of record at least 5% of the Fund's shares may inspect the Fund's books
of account and stock ledger. Similarly, under the Trust's Declaration of
Trust and Bylaws, shareholders who have held shares of record for at least
six months and who hold at least 5% of the outstanding shares of any class
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 held therein, except to
the extent that (1) the subscription price or other agreed upon
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 personal liability extended to stockholders of private
corporations for profit organized under Delaware law. It is conceivable,
however, that, notwithstanding current laws, courts in other states may
decline to apply 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 other 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 extremely remote.
To guard against this risk, the Declaration of Trust (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 Declaration of Trust will require that every written
agreement, obligation, or other undertaking made or issued by the Trust
contain a provision to the effect that Trust 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 (1) a
court refused to apply Delaware law or otherwise failed to give full effect
to the Declaration of Trust or contractual provisions limiting shareholder
liability and (2) 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.
Amendment of Articles of Incorporation and Declaration of Trust.
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 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
10
<PAGE> 12
provisions governing amendments to the Declaration of Trust, that is required
by law or by the Trust's registration statement to have shareholder approval,
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 Bylaws and Maryland law and
the Declaration of Trust and the Trust's Bylaws 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 Bylaws of the Fund,
and of the Declaration of Trust and the Trust's Bylaws are, or will be,
available, at any time prior to the Meeting, to shareholders as of the
Record Date without charge upon written request to the Fund or to the
Trust, when it comes into existence.
Appraisal Rights. It is possible that shareholders may have
appraisal rights pursuant to Maryland law arising out of the
Reorganization. Sections 3-202 and 3-203 of the Maryland Corporations and
Associations Code provide that a shareholder of a Maryland corporation has
the right to demand and receive payment of the fair value of the
stockholder's stock from the successor entity in certain transactions,
provided that the shareholder (a) files with the corporation a written
objection to the proposed transaction prior to the date of the shareholder
meeting in which the transaction is to be voted upon, (b) does not vote in
favor of the transaction, and (c) makes a written demand upon the successor
entity within 20 days after the Maryland State Department of Assessments
and Taxation accepts the transaction articles for record (the "filing
date"). The Fund believes that these appraisal rights may not apply given
the circumstances of the Reorganization and does not intend to provide
notice to shareholders of the filing date.
IMPLEMENTATION OF THE PLAN. To accomplish the Reorganization, on the
closing date of the Reorganization, 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 those Trust shares to its shareholders
in complete liquidation and will, as soon as practicable thereafter, be
terminated. 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 AIM to acquire one Class B share of the Trust
and, as the sole initial shareholder prior to the Reorganization: (1) to
approve investment advisory arrangements for the Trust that are
substantially the same as those currently in effect with respect to the
Portfolio; (2) 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; and (3) to ratify the
selection of PricewaterhouseCoopers LLP, the Fund's present independent
public accountants, as the Trust's independent public accountants.
Assuming approval of this Proposal by shareholders, it is
currently contemplated that the Reorganization will close on or about March
10, 2000. However, the Reorganization may close on another date if
circumstances warrant.
The obligations of the Fund and the Trust under the Plan are
subject to various conditions that are stated in the Plan. 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,
notwithstanding the approval of the Plan by the shareholders of the Fund.
However, no amendments may be made that would materially adversely affect
the interests of the shareholders of the Fund. The Fund and the Trust may
at any time waive compliance with any condition contained in the Plan,
provided that the waiver does not materially adversely affect the interests
of the shareholders of the Fund.
11
<PAGE> 13
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 1. If Proposal 1 is not approved, the Fund will continue to
operate as a Maryland corporation.
SHAREHOLDERS SHOULD NOTE THAT PROPOSAL 1 AND PROPOSAL 2 ARE
COMPLETELY INTERDEPENDENT, AND NEITHER PROPOSAL WILL BE IMPLEMENTED UNLESS
BOTH PROPOSALS ARE APPROVED.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 1.
-------------------
PROPOSAL NO. 2:
APPROVAL OF A DISTRIBUTION PLAN
As part of the Restructuring, existing Fund shares would be
redesignated as Class B shares of the Trust. It is proposed that Class B
shares would become subject to a distribution fee that would be paid at the
annual rate of 0.25% of the average daily net assets of the Trust's Class B
shares. Shareholders are being asked to approve a distribution plan (the
"Distribution Plan") that would impose this fee. As discussed below,
however, approval of Proposal 2 will not increase the total annual
operating expenses of Fund shares because the addition of the distribution
fee will be offset by the elimination of the Fund's existing administration
fees (also 0.25% of the average daily assets of the Fund). A table showing
the Fund's current and pro forma operating expenses is included as
Exhibit C.
On September 28, 1999, the Board approved the Distribution Plan,
which provides for payment out of Fund assets of distribution expenses
resulting from the sale of Fund shares. The fees will be paid to A I M
Distributors, Inc. ("AIM Distributors"), the Fund's principal underwriter,
as compensation for expenses incurred in its distribution-related and
service-related activities on behalf of the Trust. The Board, including the
independent Board members, unanimously voted to approve the Distribution
Plan at a Board meeting called for that purpose. The Board recommends that
shareholders also vote to approve the Distribution Plan.
The Board believes that, by having distribution-related and
service-related expenses borne directly by the Trust, the Distribution Plan
would better reflect the economic arrangements of the Trust. By promoting
distribution-related activities, the revised fee structure may lead to
increased assets under management, which could result in greater economies
of scale and reduced investment risk, as discussed below. Of course, such
economies of scale and risk reduction will not occur if assets under
management do not increase.
BACKGROUND. Unlike most closed-end funds but like open-end funds,
the Fund continuously offers its shares to the public. As a result, the
Fund incurs ongoing expenses related to the distribution of its shares.
Open-end funds are permitted to finance distribution of their shares from
fund assets, pursuant to Rule 12b-1 under the 1940 Act. No analogous rule
exists for closed-end funds. However, the SEC has issued an exemptive order
to the Fund and the Trust to permit them to implement distribution plans on
terms comparable to Rule 12b-1 plans.
CHANGES TO FEE STRUCTURE. The Fund currently pays an
administration fee at the annual rate of 0.25% of the Fund's average daily
net assets. If the Distribution Plan is implemented, the administration
12
<PAGE> 14
fee currently paid by the Fund will be eliminated. This will ensure that the
imposition of the Distribution Plan will not result in an increase in the
total annual operating expenses of the Trust.
DESCRIPTION OF THE DISTRIBUTION PLAN. The Distribution Plan, which
is attached as Exhibit D to this Proxy Statement, provides that AIM
Distributors shall be responsible for the payment of sales commissions on
each sale of the Trust's Class B shares to the selling retail broker. AIM
Distributors will also pay other distribution-related expenses, such as the
development and printing of sales literature, and service-related expenses.
In return, AIM Distributors will receive from the Trust a fee at the annual
rate of 0.25% of the average daily net assets of the Trust's Class B
shares, plus any EWCs paid by shareholders tendering their shares in a
repurchase offer.
The provisions of the Distribution Plan conform to the
requirements of Rule 12b-1 under the 1940 Act, as if such Rule were
applicable. Therefore, the Distribution Plan is subject to annual approval
by the Trust's Board, including the independent Board members. Moreover,
the Board must review a written report of the amounts expended under the
Distribution Plan and the purposes of the expenditures by AIM Distributors
at least quarterly. Shareholder approval is required for all amendments to
the Distribution Plan that would materially increase the amounts paid under
it. The Distribution Plan is terminable at any time by the vote of a
majority of the independent Board members or a majority of the outstanding
Class B voting securities of the Trust, or by AIM Distributors, upon 60
days' written notice to the other party. Assignment of the Distribution
Plan will result in its automatic termination. Finally, while the
Distribution Plan is in effect, the selection and nomination of the
independent Board members shall be committed to the discretion of the then
current independent Board members.
INFORMATION ABOUT THE DISTRIBUTOR. AIM Distributors is a broker-dealer
registered with the SEC and distributes shares of funds within The AIM Family of
Funds--Registered Trademark-- on a continuous basis. AIM Distributors is an
indirect wholly-owned subsidiary of AMVESCAP PLC, which, through its
subsidiaries and affiliates, engages in investment management, administration,
and marketing activities on a global basis. As of September 30, 1999, AMVESCAP
PLC, through its subsidiaries, had assets under management of over $292 billion.
AIM Distributors will use payments received pursuant to the
Distribution Plan to engage in activities primarily intended to result in
the sale of Class B shares of the Trust and to finance payments of service
fees under shareholder service arrangements and the costs of administering
the Distribution Plan. The distribution-related payments will be used
principally to pay sales commissions on sales of Trust shares by selling
retail brokers. Such distribution and servicing activities also include,
but are not limited to, organizing and conducting sales seminars and
advertising programs; other compensation to retail broker-dealers; printing
and mailing prospectuses, reports, and sales literature to prospective
investors; answering routine customer inquiries concerning the Trust;
assisting in the establishment and maintenance of customer accounts and
records; assisting in the processing of purchase and redemption
transactions; and maintaining Trust information on the Internet.
BOARD CONSIDERATIONS. The Board considered that implementation of
the Distribution Plan would better reflect the economic arrangements of the
Trust and may reduce the operating expenses of the Trust over time.
Currently, the Fund pays no distribution fees; AIM Distributors bears the
cost of distribution from its own resources. By setting a distribution fee
and reducing the administration fees indirectly borne by the Fund, the
Trust will be structured similar to an open-end fund, except that it will
not redeem its shares on a daily basis.
The Board also considered that increased distribution-related
activities under the Distribution Plan could result in a larger Fund. The
Board noted that, although a larger Fund would increase the
13
<PAGE> 15
aggregate amount of investment management and administration fees paid to AIM,
it could also provide economies of scale to Fund shareholders, reducing each
shareholder's share of certain costs that do not increase in direct
proportion to asset size. Increased assets are also likely to lead to a
more diversified investment portfolio, which reduces investment risk.
Diversification is particularly important when investing in floating rate
securities, because they trade in large denominations and credit exposure
to any one issuer can be minimized by holding a much larger number of
floating rate securities of different issuers. Of course, such economies of
scale and risk reduction will not occur if assets under management do not
increase.
The Board, including the independent Board members, determined
that the Distribution Plan is in the best interests of the Fund and its
shareholders and that it is reasonably likely to benefit the Fund and its
shareholders. In making this determination, the Board considered a variety
of factors, including the need for continued inflows of capital from new
sales to fully fund quarterly repurchase offer requests on a timely basis
without borrowings and without selling portfolio securities at potentially
inopportune times.
REQUIRED VOTE. The affirmative vote of the holders of a "majority
of the outstanding voting securities" of the Fund, as defined in the 1940
Act, is required for approval of Proposal 2. This means that Proposal 2
must be approved by the lesser of: (1) 67% of the Fund's shares present at
a meeting of shareholders if the owners of more than 50% of the Fund's
shares then outstanding are present in person or by proxy; or (2) more than
50% of the Fund's outstanding shares.
SHAREHOLDERS SHOULD NOTE THAT PROPOSAL 1 AND PROPOSAL 2 ARE
COMPLETELY INTERDEPENDENT, AND NEITHER PROPOSAL WILL BE IMPLEMENTED UNLESS
BOTH PROPOSALS ARE APPROVED.
THE BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" PROPOSAL 2.
-------------------
PROPOSAL NO. 3:
ELECTION OF BOARD MEMBER
The Board has nominated the individual identified below for
election to the Board of the Fund at the Meeting. It is the intention of
each proxyholder named on the accompanying proxy card to vote FOR the
election of the nominee listed below unless the shareholder specifically
indicates on his or her proxy card a desire to withhold authority to vote
for the nominee. The Board does not contemplate that the nominee, who has
consented to being nominated, will be unable to serve as a Board member for
any reason, but if that should occur prior to the Meeting, the proxies will
be voted for such other nominee as the Board may recommend. If elected, the
nominee will hold office until his successor is duly elected and qualified.
The nominee currently serves as a member of the Board, having been
appointed by the Fund's other Directors. All of the Fund's other Directors
were previously elected by the Fund's shareholders at a special meeting
held in May, 1998. The Fund's current Directors (including the nominee)
also serve as trustees of the Trust.
14
<PAGE> 16
INFORMATION REGARDING THE NOMINEE FOR ELECTION AT THE MEETING
<TABLE>
<CAPTION>
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER POSITION WITH FUND AND
DIRECTORSHIPS TENURE
- ----------------------------------------------------------------------- ----------------------
<S> <C>
Director, Since 1998
ROBERT H. GRAHAM, Age 53*....................................................... Chairman
Mr. Graham is Director, President and Chief Executive Officer, and President
A I M Management Group Inc.; Director and President, AIM; Director
and Senior Vice President, A I M Capital Management, Inc.,
AIM Distributors, A I M Fund Services, Inc. and Fund Management
Company; and Director, AMVESCAP PLC. Mr. Graham is also a director
or trustee of several other investment companies registered under the
1940 Act that are managed or administered by AIM.
</TABLE>
INFORMATION REGARDING OTHER DIRECTORS
<TABLE>
<CAPTION>
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER POSITION(S) WITH FUND
DIRECTORSHIPS AND TENURE
- ----------------------------------------------------------------------- ----------------------
<S> <C>
C. DEREK ANDERSON, Age 58....................................................... Director Since 1997
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 several other investment companies registered
under the 1940 Act that are managed or administered by AIM.
FRANK S. BAYLEY, Age 60......................................................... Director Since 1997
Mr. Bayley is a partner of the law firm of Baker & McKenzie; and
Director and Chairman of C.D. Stimpson Company (a private investment
company). Mr. Bayley is also a director or trustee of several other
investment companies registered under the 1940 Act that are managed or
administered by AIM.
RUTH H. QUIGLEY, Age 64......................................................... Director Since 1997
Ms. Quigley is a private investor. From 1984 to 1986, she was President
of Quigley Friedlander & Co., Inc. (a financial advisory services firm).
Ms. Quigley is also a director or trustee of several other investment
companies registered under the 1940 Act that are managed or administered
by AIM.
</TABLE>
- ----------------------
* Mr. Graham is deemed an "interested person" of the Fund, as defined in
the 1940 Act, by virtue of his association both with AIM and its
affiliates.
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.
15
<PAGE> 17
There were fifteen (15) meetings of the Fund's Board held during
the Fund's fiscal year ended December 31, 1998. The Board has an Audit
Committee composed of Miss Quigley (Chairman) and Messrs. Anderson and
Bayley. The purpose of the Audit Committee is to review annual audits of
the Fund and recommend firms to serve as independent auditors for the Fund.
During the Fund's last completed fiscal year, the Audit Committee met five
(5) times. [Each Director attended at least 75% of the total number of
meetings of the Board, and each member of the Audit Committee has attended
at least 75% of the meetings of that Committee.]
All of the Fund's Directors also serve as directors or trustees of
some or all of the other investment companies managed, administered, or
advised by AIM. The Fund pays each Director, who is not a director, officer
or employee of AIM or any affiliated company, an annual retainer component,
plus a per-meeting fee component 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 table
below summarizes the compensation of the Fund's Directors for the fiscal
year ended December 31, 1998 and provides the total compensation of the
Board members by the Fund Complex for the fiscal year ended December 31,
1998.
<TABLE>
<CAPTION>
COMPENSATION TABLE(1)
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM THE FUND
NAME OF PERSON, POSITION(2) FROM THE FUND AND THE FUND COMPLEX(3)
- --------------------------- ---------------------- -----------------------
<S> <C> <C>
C. Derek Anderson $ 7,700 $ 106,850
Director
Frank S. Bayley $ 7,100 $ 90,650
Director
Ruth H. Quigley $ 7,700 $ 99,500
Director
</TABLE>
- ----------------------
(1) The Directors do not receive any pension or retirement benefits as
compensation for their services to the Fund.
(2) As an employee of AIM, Mr. Graham receives no additional compensation
from the Fund for serving as a Director.
(3) The Fund Complex comprises 10 of the investment companies managed,
administered or advised by AIM.
REQUIRED VOTE. A plurality of all the votes cast at the Meeting is
required to elect the nominee.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE BOARD MEMBER LISTED IN
PROPOSAL 3
--------------
16
<PAGE> 18
PROPOSAL NO. 4:
RATIFICATION OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
At a meeting called for the purpose of such selection, the firm of
PricewaterhouseCoopers LLP was selected by the Board, including the
independent Board members, as the independent public accountants to audit
the books and accounts of the Fund for the fiscal year ending December 31,
1999 and to include its opinion in financial statements filed with the SEC.
The Board has directed the submission of this selection to Fund
shareholders for ratification. The board of trustees, including the
independent trustees, of the Trust has also selected PricewaterhouseCoopers
LLP as the Trust's independent public accountants and will direct the
submission of this selection to the Fund, which will be the Trust's sole
initial shareholder, for ratification. PricewaterhouseCoopers LLP has
advised the Board that it has no financial interest in the Fund. For the
fiscal years ended December 31, 1998, the professional services rendered by
PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers LLP 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. Ratification of the selection of
PricewaterhouseCoopers LLP requires the affirmative vote of a majority
of the votes cast thereon at the Meeting.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4
-------------------
GENERAL INFORMATION
INFORMATION REGARDING THE EXECUTIVE
OFFICERS OF THE FUND
<TABLE>
<CAPTION>
POSITION(S) WITH FUND
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND TENURE
- ----------------------------------------------------------------------- ------------------------
<S> <C>
ROBERT H. GRAHAM, Age 53....................................................... Director, Since 1998
Mr. Graham is Director, President and Chief Executive Officer, Chairman
A I M Management Group Inc.; Director and President, AIM; Director and
and Senior Vice President, A I M Capital Mangement, Inc., AIM President
Distributors, A I M Fund Services, Inc. and Fund Management Company;
and Director, AMVESCAP PLC. Mr. Graham is also a director or
trustee of several other investment companies registered under
the 1940 Act that are managed or administered by AIM.
MELVILLE B. COX, Age 55........................................................ Vice Since 1998
Mr. Cox is Vice President and Chief Compliance Officer, AIM, President
A I M Capital Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., and Fund Management Company.
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C>
GARY T. CRUM, Age 52............................................................Vice President Since 1998
Mr. Crum is Director and President, A I M Capital Management, Inc.;
Director and Senior Vice President, AIM; Director and Executive Vice
President, and A I M Management Group, Inc.; and Director, AIM
Distributors and AMVESCAP.
CAROL F. RELIHAN, Age 45........................................................Vice President Since 1998
Ms. Relihan is Director, Senior Vice President, General Counsel
and Secretary, AIM; Senior Vice President, General Counsel and
Secretary, A I M Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company; Vice President and
General Counsel, A I M Fund Services, Inc.; and Vice President,
A I M Capital Management, Inc. and AIM Distributors.
SAMUEL D. SIRKO, Age 40.........................................................Vice President Since 1998
Mr. Sirko is Assistant General Counsel and Assistant Secretary, and Secretary
A I M Management Group Inc., A I M Capital Management, Inc.,
AIM Distributors, A I M Fund Services, Inc., and Fund Management
Company; and Vice President, Assistant General Counsel and Assistant
Secretary of AIM.
DANA R. SUTTON, Age 40..........................................................Vice President Since 1999
Ms. Sutton is Vice President and Fund Controller, AIM and and Treasurer
Assistant Vice President and Assistant Treasurer,
Fund Management Company.
</TABLE>
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 AIM and its affiliates, without additional compensation, may
solicit proxies in person or by telephone. The costs associated with such
solicitation and the Meeting will be borne by the Fund. The Fund has
retained 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 and expenses currently estimated at $22,233 in connection with the
solicitation, which amount may increase depending upon the nature and
extent of the services provided.
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.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to submit proposals for inclusion in a proxy
statement for a shareholder meeting subsequent to the Meeting, if any,
should send their written proposals to the Secretary of the AIM
18
<PAGE> 20
Floating Rate Fund, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
within a reasonable time before the solicitation of proxies for such meeting.
The timely submission of a proposal does not guarantee its inclusion. Normally,
there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act.
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 11 GREENWAY
PLAZA, SUITE 100, HOUSTON, TEXAS 77046-1173, OR BY CALLING (800) 347-4246.
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,
SAMUEL D. SIRKO
Secretary
January 7, 2000
19
<PAGE> 21
APPENDIX A
OPERATION OF THE TRUST AS AN INTERVAL FUND
Background. Unlike the stock of many closed-end funds, the Fund's
common stock is not traded on any stock exchange. As discussed in Proposal
1, the Fund provides some 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 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. Because 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 allows closed-end funds to provide investors with a
limited ability to resell shares to the funds at approximately net asset
value. Under Rule 23c-3, 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, minus a repurchase fee
not to exceed 2.0% and an EWC. Among the conditions of Rule 23c-3 is that
interval funds are required to have a fundamental policy stating that each
will make periodic offers to repurchase from 5% to 25% of the fund's
outstanding shares, except under certain extraordinary conditions. This
percentage must be determined by the interval fund's board of directors or
trustees in advance of each repurchase offer. In addition to periodic
repurchase offers, interval funds may also make discretionary repurchase
offers for an unlimited percentage of the fund's outstanding shares no more
frequently than once every two years. Rule 23c-3 imposes a liquidity
requirement under which an interval fund must maintain, for a certain
period of time before and during each repurchase offer, liquid assets equal
to the amount of the repurchase offer. As a result, an interval fund may,
during the repurchase offer period, be forced to reduce the percentage of
assets invested according to its investment objective.
Description of Trust's Operation as an Interval Fund. If the
Reorganization is approved by shareholders, the Trust will become an
interval fund subject to Rule 23c-3. A description of how the Trust would
operate as an interval fund is provided below.
o Interval Repurchases. Pursuant to fundamental policies, the Trust
will be required to make quarterly offers to repurchase a
percentage of its outstanding shares with redemption proceeds
to be paid to participating Trust shareholders in cash. The percentage
of outstanding shares that the Trust would offer to repurchase must
be no less than 5% nor more than 25% of the Trust's then outstanding
shares. The percentage would be established by the Board shortly
before the commencement of each repurchase offer. The Board currently
anticipates that, assuming approval of the proposed conversion to
interval status, the first repurchase offer by the Trust would occur
no later than [May, 2000], with subsequent repurchase offers to
be made quarterly thereafter. As discussed below, offers may be
suspended or postponed only under certain extraordinary circumstances,
as permitted by Rule 23c-3.
o Fundamental Periodic Repurchase Policy. As noted above, the
Declaration of Trust will include the following fundamental policies
regarding periodic repurchases, which may be amended only by
shareholder vote:
o The Trust will make offers to repurchase its shares at
quarterly intervals pursuant to Rule 23c-3. The Board may
place such conditions and limitations on repurchase offers as
may be permitted pursuant to Rule 23c-3 or by the SEC.
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<PAGE> 22
o On or about the third Friday of the second month of each
calendar quarter, or the next business day if such day is not
a business day, will be the deadline by which the Trust must
receive repurchase requests submitted by shareholders in
response to the most recent repurchase offer.
o The date on which the repurchase price for shares is to be
determined 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.
o Offers may be suspended or postponed under certain circumstances,
as provided for in Rule 23c-3.
o Repurchases in Excess of the Repurchase Offer Amount; Proration. If
acceptances by Trust shareholders of a repurchase offer exceed the
repurchase offer amount established by the Board for that repurchase
offer, the Trust may, in its discretion, purchase up to an additional
2% of the shares outstanding as of the repurchase request deadline. If
the Trust determines not to repurchase more than the repurchase offer
amount, or if Trust shareholders tender shares in an amount exceeding
the repurchase offer amount plus 2% of the shares outstanding as of
the repurchase request deadline, the Trust may repurchase shares on a
pro rata basis, subject to limited exceptions permitted by Rule 23c-3.
o Repurchase Price; Repurchase Fee. The Trust will make repurchases
at net asset value determined on the pricing date, minus any applicable
EWC and repurchase fee. An earlier pricing date may be used if, on
or immediately following the request deadline, it appears 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. Under Rule 23c-3, the Trust is also permitted
to deduct from a shareholder's repurchase proceeds a fee of up to 2% of
such proceeds to offset expenses associated with the repurchase offer.
This repurchase fee would be retained by the Trust. The Trust has
determined not to impose the repurchase fee for at least the first four
quarterly repurchase offers that are conducted following the Fund's
conversion to interval fund status. Although it has no current
intention to do so, the Trust may impose such a repurchase fee thereafter
if it determines that the expenses of the repurchase offers and the
resulting sales of investments are adversely affecting the Trust
and its shareholders.
o Early Withdrawal Charge; Waivers. As is currently the case with
respect to the Fund's quarterly tender offers, the Trust will impose
an EWC of up to 3.0% of the proceeds of periodic repurchase offers on
Class B shares held less than 4 years. The EWC will be paid to AIM
Distributors and is intended to offset the costs to AIM Distributors
associated with short-term holding of the Trust's shares. The size of
the EWC varies according to the length of time that shareholders have
held their shares, according to the following schedule:
YEAR OF REPURCHASE EARLY WITHDRAWAL
AFTER PURCHASE CHARGE
-------------- ------
First................................... 3.0%
Second.................................. 2.5%
Third................................... 2.0%
Fourth.................................. 1.0%
Fifth and following..................... 0.0%
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<PAGE> 23
Shareholders may be eligible for certain waivers of the EWC. These
waivers allow Trust shares to be repurchased without imposition of the
EWC in certain situations that are unlikely to cause high turnover in
shares of the Trust. For instance, the EWC is expected to be waived
for shares repurchased upon the death or retirement of a shareholder
or in connection with certain employer-sponsored employee benefit
plans. In addition, waiver of the EWC is expected to be waived in
situations in which the Trust has not incurred significant promotional
expenses in selling the Trust shares, such as repurchases of shares
purchased by employees of AMVESCAP, AIM, INVESCO SSM, and INVESCO (NY)
and their relatives.
o Notification. Shareholders will be sent notification containing
specified information at least 21 days, and no more than 42 days,
before each repurchase request deadline. 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 Trust may repurchase such shares on a pro
rata basis, and the circumstances under which the Trust may suspend
or postpone an offer. The Trust will provide the net asset value of the
shares, which will be computed no more than seven days before the date
of notification, as well as provide the means by which shareholders
may ascertain the net asset value of their shares thereafter.
o Source of Funds. The Trust anticipates using cash on hand and
borrowings under its available line of credit to purchase shares
acquired pursuant to the repurchase offers. 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 Trust to sell its portfolio securities to provide additional
liquidity.
o 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.
o Suspension and Postponement of Offers. The Trust may suspend or postpone
a repurchase offer by vote of a majority of the Board, including a
majority of the independent Board members, but only (1) if the
repurchases would impair the Trust's status as a regulated investment
company under the Code; (2) for any period during which the New York
Stock Exchange or any other market in which the securities owned by the
Trust 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 Trust of securities owned by it is not reasonably
practicable, or during which it is not reasonably practicable for the
Trust fairly to determine its net asset value; or (4) for such other
periods as the SEC may by order permit for the protection of the
shareholders of the Trust.
If a repurchase offer is suspended or postponed, the Trust will
provide notice thereof to its shareholders. If the Trust renews a
suspended offer or reinstitutes a postponed offer, the Trust will send
a new notification to its shareholders.
Federal Income Tax Consequences of Repurchase Offers. The
conversion of the Fund to interval fund status will not alter the potential
tax consequences of a tender of shares from those applicable to 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:
22
<PAGE> 24
o In the event of 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 Trust may not offer to repurchase in any quarter more
than 25% of the Trust'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
Trust repurchase all of their shares may be more limited than
under the current tender offer structure.
o As required by Rule 23c-3, the Trust will be required to
maintain liquid assets in an amount equal to 100% of the
repurchase offer amount from the time it notifies its shareholders
of a repurchase offer until the pricing date. This requirement
may necessitate modification of portfolio management techniques
and result in the Trust's investments in floating rate securities
temporarily falling below 80% of its total assets. This may,
although it is not anticipated to, affect the ability of the Trust
to achieve its investment objective. Furthermore, there may be an
increase in portfolio turnover and a corresponding increase in
transaction costs. In addition, because shares of the Trust are
repurchased on a quarterly basis, the concurrent reduction in the
Trust's asset value may decrease investment opportunities
available to the Trust and will increase its expense ratio.
o 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, among other things, declines in prices
of securities held by the Trust.
23
<PAGE> 25
EXHIBITS:
- ---------
Exhibit A - Agreement and Plan of Conversion and Liquidation
Exhibit B - Declaration of Trust
Exhibit C - Table showing current and pro forma expenses (and examples)
Exhibit D - Distribution Plan
24
<PAGE> 26
EXHIBIT A
AGREEMENT AND PLAN OF CONVERSION AND LIQUIDATION
This AGREEMENT AND PLAN OF CONVERSION AND LIQUIDATION
("Agreement") is made as of the 9th day of December, 1999, between GT
Global Floating Rate Fund, Inc. (d/b/a AIM Floating Rate Fund), a Maryland
corporation ("Old Fund"), and AIM Floating Rate Fund, a Delaware business
trust ("New Fund") (each, 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"
within the meaning of the regulations under the Code ("Regulations")). 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, Old Fund's
interest in Floating Rate Portfolio and 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.
<PAGE> 27
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
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, but in all events within six
months after the Effective Time, 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 [February 3], 2000, at such other place and/or on such other date as to
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 to which the parties may agree
("Effective Time").
2.2. New Fund's fund accounting and pricing agent shall deliver
at the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot)
concerning the Assets, including all portfolio securities, transferred by
Old Fund to New Fund, as reflected on New Fund's books immediately
following the Closing, does or will conform to such information on Old
Fund's books immediately before the Closing.
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
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<PAGE> 28
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.
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. The Liabilities were incurred by Old Fund in
the ordinary course of its business and are associated
with the Assets;
3.1.7. 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;
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<PAGE> 29
3.1.8. 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; and
3.1.9. At the Effective Time, the performance of this
Agreement shall have been duly authorized by all necessary
action by Old Fund's shareholders.
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 have been duly authorized at the
Effective Time 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. Following the Reorganization, New Fund (a) will
continue Old Fund's "historic business" (within the meaning of
section 1.368-1(d)(2) of the Regulations), (b) use a significant
portion of Old Fund's historic business assets (within the
meaning of section 1.368-1(d)(3) of the Regulations) in a
business, and (c) has no plan or intention to sell or otherwise
dispose of any of the Assets (and expects to retain
substantially all the
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<PAGE> 30
Assets in the same form as it receives them in the Reorganization),
except for dispositions made in the ordinary course of that
business -- pursuant to which 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 Assets -- and dispositions necessary to
maintain its status as a RIC; and
3.2.10. There is no plan or intention for New Fund to
be dissolved or merged into another business trust or
corporation or "fund" thereof (within the meaning of section
851(g)(2) of the Code) following the Reorganization.
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. Its management (a) is unaware of any plan or
intention of Shareholders to redeem, sell, or otherwise dispose
of (i) any portion of their Old Fund Shares before the
Reorganization to any person related (within the meaning of
section 1.368-1(e)(3) of the Regulations) to either Fund or (ii)
any portion of the New Fund Shares to be received by them in the
Reorganization to any person related (within such meaning) to
New Fund, and (b) anticipates 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;
3.3.3. 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;
3.3.4. The Shareholders will pay their own expenses, if
any, incurred in connection with the Reorganization;
3.3.5. There is no intercompany indebtedness between the
Funds that was issued or acquired, or will be settled, at a discount;
3.3.6. Immediately following consummation of the
Reorganization, New Fund will hold the same assets -- except for
assets 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; and
3.3.7. Neither Fund will be reimbursed for any
expenses incurred by it or on its behalf in connection with the
Reorganization unless those expenses are solely and directly
related to the Reorganization (determined in accordance with the
guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187).
-5-
<PAGE> 31
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 at 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;
4.2. This Agreement and the transactions contemplated hereby
shall have been duly adopted and approved by Old Fund's board of directors
and New Fund's board of trustees (each, a "board") and shall have been
approved by Old Fund's shareholders at a meeting duly held 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
("Tax Opinion"). In rendering the Tax Opinion, such counsel may rely as to
factual matters, exclusively and without independent verification, on the
representations made in this Agreement (which shall be treated for purposes
of the Tax Opinion as having been made to such counsel), or in separate
letters addressed to such counsel, and the certificates delivered pursuant
to paragraph 2.4. The Tax 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 qualify as 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. Old Fund will recognize no gain or loss 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;
4.3.3. New Fund will recognize no gain or loss on its
receipt of the Assets in exchange solely for New Fund Shares and
its assumption of the Liabilities;
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<PAGE> 32
4.3.4. New Fund's basis for the Assets will be the
same as the basis therefor 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 aggregate basis for the New
Fund Shares to be received by it in the Reorganization will be
the same as the aggregate 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
the Shareholder holds them as capital assets 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.
Notwithstanding subparagraphs 4.5.2 and 4.5.4, the Tax Opinion may
state that no opinion is expressed as to the effect of the Reorganization on
the Funds or any Shareholder with respect to any Asset as to which any
unrealized gain or loss is required to be recognized for federal income tax
purposes on the termination or transfer thereof under a mark-to-market system
of accounting;
4.4. Prior to the Closing, New Fund's board shall have
authorized the issuance of, and New Fund shall have issued, one New Fund
Share to [A I M Advisors, Inc. ("AIM")] in consideration of the payment of
$1.00 for the purpose of enabling [AIM] 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
4.5. New Fund shall have entered into an investment management
and administration agreement, sub-advisory and sub-sub-advisory agreements,
a distribution contract, and other agreements necessary for New Fund's
operation as a closed-end investment company. [AIM], as New Fund's sole
shareholder, shall have approved such investment management and
administration agreement and sub-advisory and sub-sub-advisory agreements,
and each such agreement and contract shall have been approved by New Fund's
board, including, to the extent required by law, those trustees who are not
"interested persons" (as defined in the 1940 Act) of New Fund and who do
not have a material interest in such plan or any related agreement.
At any time prior to the Closing, either Fund may waive any of the
foregoing conditions (except that set forth in paragraph 4.2) if, in its
board's judgment, such waiver will not have a material adverse effect on
the interests of such Fund's shareholders.
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<PAGE> 33
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 any manner
mutually agreed upon 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], 2000; or
8.2. By the parties' mutual agreement.
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.
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.
-8-
<PAGE> 34
9.3. The execution and delivery of this Agreement have been
authorized by New Fund's trustees, and this Agreement has been executed and
delivered by authorized officers of New Fund acting as such; neither such
authorization by such trustees nor such execution and delivery by such
officers shall be deemed to have been made by them individually or to
impose any liability on any of them or any shareholder of New Fund
personally but shall bind only New Fund's assets and property, as provided
in its Agreement and Declaration of Trust.
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.
(d/b/a AIM FLOATING RATE FUND)
By:
- ------------------------ -------------------------------
Title:
----------------------------
Attest: AIM FLOATING RATE FUND
By:
- ------------------------ -------------------------------
Title:
----------------------------
-9-
<PAGE> 35
EXHIBIT B
AGREEMENT AND DECLARATION OF TRUST
OF
AIM FLOATING RATE FUND
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and
entered into as of December 6, 1999, between Robert H. Graham, as Trustee,
and each person who becomes a Shareholder in accordance with the terms
hereinafter set forth.
WHEREAS, the parties hereto desire to create a business trust
pursuant to the Delaware Act for the investment and reinvestment of funds
contributed thereto;
NOW, THEREFORE, the Trustee hereby directs that a Certificate of
Trust be filed with the Office of the Secretary of State of Delaware and
does hereby declare that all money and property contributed to the trust
hereunder shall be held and managed in trust under this Agreement for the
benefit of the Shareholders 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 "AIM
Floating Rate Fund," and the Trustee may transact the Trust's affairs in
that name. The Trust shall constitute a Delaware business trust in
accordance with the Delaware Act.
Section 1.2. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "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. The term
"Commission" shall have the meaning given it in the
1940 Act;
(b) "Agreement" means this Agreement and Declaration of Trust,
as it may be amended from time to time;
(c) "Bylaws" means the bylaws referred to in Article IV,
Section 4.1(e) hereof, as from time to time amended;
(d) "Class" means a portion of Shares of a Portfolio of
the Trust established in accordance with the
provisions of Article II, Section 2.3(b) hereof;
<PAGE> 36
(e) "Covered Person" means every person who is, or has been, a
Trustee or an officer or employee of the Trust;
(f) The "Delaware Act" refers to the Delaware Business
Trust Act, Del. Code, Title 12, Chapter 38, section 3801
et seq., as such Act may be amended from time to time;
(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(a) hereof;
(k) "Shareholder" means a record owner of Outstanding Shares
of the Trust;
(l) "Shares" means, as to a Portfolio or any Class
thereof, the equal proportionate transferable units of
beneficial interest into which the beneficial interest
of such Portfolio of the Trust or such Class thereof
shall be divided and may include fractions of Shares
as well as whole Shares;
(m) The "Trust" means AIM Floating Rate Fund, the Delaware
business trust established hereby, and reference to
the Trust, when applicable to one or more Portfolios,
shall refer to each such Portfolio;
(n) The "Trustee" means the Person who has signed this
Agreement as trustee so long as he shall continue to
serve as trustee of the Trust in accordance with the
terms hereof, and each other Person who may from time
to time be duly appointed as Trustee in accordance
with the provisions of Article III, Section 3.4 hereof
or elected as Trustee in accordance with the
provisions of Article III, Section 3.6 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 the Trust or any
Portfolio, or by the Trustees on behalf of the Trust
or any Portfolio.
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
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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 Agreement.
Section 1.4. Certificate of Trust. Immediately upon the execution of this
Agreement, the initial Trustee 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, (a) authorize the
division of the Shares into one or more series, each of which constitutes a
Portfolio, in accordance with Article II, Section 2.3(a) hereof, and (b)
may further authorize the division of the Shares of any Portfolio into one
or more separate and distinct Classes, in accordance with Article II,
Section 2.3(b) hereof. 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.
(a) The Trust shall consist of one or more separate and
distinct Portfolios, each with an unlimited number of
Shares unless otherwise specified. The Trustees hereby
establish and designate the Portfolio 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
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<PAGE> 38
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 is
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 as a whole.
(b) 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 a Proportionate
Interest (as defined in Article II, Section 2.3.2(c)
hereof) 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 (1) expenses, costs, charges, and
reserves allocated to a Class in accordance with
Article II, Section 2.3.2(d) hereof may be borne solely
by that Class, (2) dividends declared and payable to a
Class pursuant to Article VII, Section 7.1, shall reflect
the items separately allocated thereto pursuant to the
preceding clause, (3) each Class may have separate
rights to convert to another Class, exchange rights, and
similar rights, each as determined by the Trustees,
and (4) each 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).
Section 2.3.1. Subject to Article VI, Section 6.1 of this 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 of any Portfolio,
or Classes thereof, into a greater or lesser number; to classify or
reclassify any issued Shares of 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 Outstanding Shares 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:
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<PAGE> 39
(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.
(c) Each Class of a Portfolio shall have a proportionate
undivided interest (as determined by or at the
direction of, or pursuant to authority granted by, the
Trustees, consistent with industry practice)
("Proportionate Interest") in the net assets belonging
to that Portfolio. References herein to assets,
expenses, charges, costs, and reserves "allocable" or
"allocated" to a particular Class of a Portfolio shall
mean the aggregate amount of such item(s) of the
Portfolio multiplied by the Class's Proportionate
Interest.
(d) A particular Portfolio shall be charged with the
liabilities of that Portfolio, and all expenses, costs,
charges and reserves attributable to any particular
Portfolio shall be borne by such Portfolio; provided that
the Trustees may, in their sole discretion, allocate or
authorize the allocation of particular expenses, costs,
charges and/or reserves of a Portfolio to less than all
the Classes thereof, in which event payment or other
discharge of the expense(s), cost(s), charge(s) and/or
reserve(s) allocated to a particular Class shall be
chargeable first against the assets allocable to that
Class and shall be chargeable against the assets allocable
to the other Classes of that Portfolio only to the extent
the amount of the payment or other discharge exceeds such
particular Class's allocable assets. Any general
liabilities, expenses, costs, charges or reserves of the
Trust (or any Portfolio) that are not readily identifiable
as chargeable to or bearable by any particular
Portfolio (or any particular 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 foregoing provisions
of this Subsection 2.3.2, the debts, liabilities,
obligations and
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<PAGE> 40
expenses incurred, contracted for or otherwise
existing with respect to a particular Portfolio shall be
enforceable against the assets of such Portfolio only,
and not against the assets of the Trust generally or the
assets belonging to any other Portfolio. Notice
of this contractual limitation on inter-Portfolio
liabilities shall be set forth in the Certificate of
Trust described in Article I, 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.
All references to Shares in this 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 such 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 Shareholder 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 of 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 shall
include a recitation limiting the obligation represented thereby to the
Trust and its assets or to one or more Portfolios and the assets belonging
thereto (but the omission of such a recitation shall not operate to bind
any Shareholder or Trustee of the Trust).
Section 2.6. Assent to 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 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 Agreement, the
presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this 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 Trustee. The initial Trustee shall be the person
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 at 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 of
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
one (1) Trustee. Such appointment shall be
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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 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 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
one (1), 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 one (1) nor more than twelve (12).
The Shareholders shall elect the Trustees (other than the initial Trustee)
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 belonging to any Portfolio, or allocable to any
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 or in the assets
belonging to the Portfolio (or allocable to the Class) in which the
Shareholder holds Shares. The Shares shall be personal property giving only
the rights specifically set forth in this Agreement or the Delaware Act.
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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 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;
(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 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 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 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;
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(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 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;
(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 contract, 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;
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(t) To establish, from time to time, a minimum investment
for Shareholders in the Trust or in one or more
Portfolios or Classes, and to require the repurchase
of the Shares of any Shareholder whose investment is
less than such minimum upon giving notice to such
Shareholder;
(u) Subject to the requirements of the 1940 Act, 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 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.
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.
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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 Articles II and VII, to apply to any such
repurchase, redemption, retirement, cancellation, or acquisition of Shares
any funds or property of the Trust, or any assets belonging to the
particular Portfolio or any assets allocable to the particular Class, 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 that such exceptional circumstances exist, and are of
such urgency, as to make unanimous written consent impossible or
impractical, which determination shall be conclusive and binding on all
Trustees and not otherwise subject to challenge) 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.
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
any Portfolio, or partly out of the principal and partly out of income, and
to charge or allocate to, between or among such one or more of the
Portfolios (or Classes), 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
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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 ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. Investment Adviser. Subject to any vote of the Shareholders
pursuant to Article VI, Section 6.1(3) that is required by the 1940 Act,
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 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 service providers.
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
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, custodian, or other agency contract may have been or may
hereafter be made also has an
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advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian, 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
Agreement only as provided in Article IX, Section 9.7, (6) the sale or
other transfer of all or substantially all the assets of the Trust or
belonging to any Portfolio, unless the primary purpose of such sale or
other transfer 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 with and into another Company or a series or portfolio thereof,
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 Outstanding Shares as of a date selected by the Trustees, the
Shareholders of the Trust or such Portfolio will have a majority of the
outstanding shares of the surviving Company or series or portfolio thereof,
as the case may be; and (8) 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
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a 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 Agreement or in the Bylaws.
ARTICLE VII
DISTRIBUTIONS AND REPURCHASE OFFERS
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 other distributions and the payment of
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them and 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 shall 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) The third Friday of the second month of each calendar
quarter, or the next business day if such day is not a
business day, shall 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") shall 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.
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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) shall
be entitled, out of the assets belonging to the applicable Portfolio (or
allocable to the applicable 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, until the Trustees shall
have established any separate Portfolio, 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 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 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 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.
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(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 pursuant to
paragraph (a),
(1) the Trust or that Portfolio thereafter shall
carry on no business except for the purpose of
winding up its affairs,
(2) the Trustees shall (i) proceed to wind up
the affairs of the Trust or that Portfolio,
and all powers of the Trustees under this
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, (ii) collect its assets or the
assets belonging thereto, (iii) sell,
convey, assign, exchange, or otherwise
dispose of all or any part of those 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, (iv) discharge
or pay its liabilities, and (v) 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.
(c) On termination of any Class pursuant to paragraph (a),
(1) the Trust thereafter shall carry on no business
with respect to that Class except for the purpose
of winding up its affairs,
(2) the Trustees shall (i) proceed to wind up
all affairs respecting that Class, and all
powers of the Trustees under this Agreement
with respect thereto shall continue until
such affairs have been wound up, including
the powers to fulfill or discharge the
contracts respecting that Class, and (ii) do
all other acts appropriate to liquidate its
business respecting that Class, and
(3) the Trustees shall distribute ratably among
the Shareholders of that Class, in cash or
in kind, an amount equal to the net value of
the assets allocable to that Class (after
taking into account any fees, expenses, or
charges allocated thereto), and in
connection with any such distribution in
cash the Trustees are authorized to sell,
convey, assign, exchange, or otherwise
dispose of
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such assets of the Portfolio of which that
Class is a part as they deem necessary.
(d) On completion of distribution of the remaining assets
pursuant to paragraph (b)(3) (or the net value of
allocable assets pursuant to paragraph (c)(3)), 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 9.4, the transactions described in paragraph
(c) of this Section 9.4 shall require the affirmative vote
or consent of the holders of at least 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 9.4, 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 9.4, 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 this Section,
calculation of the outstanding Shares of the Trust shall
not include Shares deemed owned through application of
clause (1) above.
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(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 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);
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); or
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 9.4 shall not apply to
any transaction described in paragraph (c) of this
Section 9.4 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 Article
VI, Section 6.1 of this Agreement, the Trustees may cause (i) the Trust or
one or more of its Portfolios to the extent consistent with applicable law
to sell all or substantially all of its assets, or be merged into or
consolidated with another business 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 9.5 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 Agreement or any amendment hereto or any supplemental Agreement
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. In this Agreement or in any such amendment or supplemental
Agreement, references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as
amended or affected by any such supplemental 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
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of reference only and in case of any conflict, the text of this Agreement,
rather than the headings, shall control. This 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 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 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 Agreement by making
an amendment, an Agreement supplemental hereto, or an amended and restated
trust instrument. Any amendment submitted to Shareholders that the Trustees
determine would affect the Shareholders of less than all Portfolios (or
less than all Classes thereof) shall be authorized by vote of only the
Shareholders of the affected Portfolio(s) (or Class(es)), 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 VIII that would have the effect of reducing the
indemnification 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 Agreement and reciting that it was duly adopted by the
Shareholders or by the Trustees as aforesaid, or a copy of this Agreement,
as amended, executed by a majority of the
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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
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
of this Agreement; provided, however, that such determination shall not
affect any of the remaining provisions of this Agreement or render invalid
or improper any action taken or omitted prior to such determination. If any
provision of this 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 any other provision of this
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 the sole initial
Trustee of the Trust, has executed this instrument this 6th day of December,
1999.
------------------------------
Robert H. Graham, as Trustee
21
<PAGE> 56
SCHEDULE A
AIM Floating Rate Fund shall be divided into two Classes (Class B and
Class C).
22
<PAGE> 57
EXHIBIT C - FEES AND EXPENSES
These tables describe the fees and expenses that you may pay if you buy and
hold shares of AIM Floating Rate Fund. The pro forma information reflects
the effects of the Restructuring. The information set forth below is based
on the Fund's fees and expenses for the year ended December 31, 1998.
<TABLE>
<CAPTION>
GT Global Floating Rate AIM Floating Rate
Fund (d/b/a Fund
AIM Floating Class B Shares Pro
Rate Fund) Forma
---------- -----
<S> <C> <C>
STOCKHOLDER TRANSACTION EXPENSES
(fees paid directly from your investment)(1)
Maximum Sales Charge (load) Imposed on Purchase
(as a percentage of offering price) None None
Dividend Reinvestment Plan Fees None None
Maximum Early Withdrawal Charge(2) 3% 3%
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
Management Fees 0.95% 0.95%
Administration Fee 0.25% 0.00%
Distribution and/or Service (12b-1) Fees 0.00% 0.25%
Other Expenses 0.43% 0.43%
--------------------------- --------------------
Total Annual Fund Operating Expenses 1.63% 1.63%
Expense Reimbursement(3) -0.13% -0.13%
=========================== ====================
Total Annual Operating Expenses 1.50% 1.50%
=========================== ====================
</TABLE>
(1) Rule 23c-3 under the 1940 Act, which will apply to the Trust's
repurchases of its shares following the Restructuring, permits the
Trust to deduct from a shareholder's repurchase proceeds a fee of
up to 2% of such proceeds to offset expenses associated with the
repurchase offer. This repurchase fee would be retained by the
Trust. The Trust has determined not to impose the repurchase fee
for at least the first four quarterly repurchase offers that are
conducted following the Trust's conversion to interval fund
status. (Although it has no current intention to do so, the Trust
could impose such a repurchase fee thereafter.) Accordingly, the
repurchase fee does not appear in the table of fees and expenses.
(2) Calculated based on the lesser of the then current net asset value
or the original price of the shares being tendered. The maximum
early withdrawal charge applies to shares sold to the Trust
pursuant to a tender offer during the first year after purchase.
The early withdrawal charge declines annually thereafter, reaching
zero after four years.
(3) AIM has contractually agreed to limit net expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses)
over 1.50% annually.
25
<PAGE> 58
EXPENSE EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expense that would be incurred over various periods with respect
to a hypothetical investment in the Fund. As it is anticipated that the
Fund's total expenses will not change after the Restructuring, the same
example applies before or after the Restructuring.
The example assumes that you invest $10,000 in the Fund for the time
periods indicated. The example also assumes that your investments each have
5% return each year and that the Fund's operating expenses remain the same.
Although your actual returns and costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Assuming no tender of Common Stock $166 $514 $887 $1,933
Assuming tender and repurchase of
Common Stock on last day of period
and imposition of maximum
applicable early withdrawal charge(1) $466 $714 $887 $1,933
</TABLE>
(1) As noted above, the Trust may, under Rule 23c-3 under the 1940
Act, deduct from and retain a fee of up to 2% of a shareholder's
repurchase proceeds to offset expenses associated with the
repurchase offer. The Trust has determined not to impose the
repurchase fee for at least the first four quarterly repurchase
offers that are conducted following the Restructuring and has no
current intention to impose such a repurchase fee thereafter.
Accordingly, the expense example does not reflect the repurchase
fee.
<PAGE> 59
EXHIBIT D
MASTER DISTRIBUTION PLAN
OF
AIM FLOATING RATE FUND
(CLASS B SHARES)
(SECURITIZATION FEATURE)
SECTION 1. AIM Floating Rate Fund (the "Fund"), a Delaware
business trust, on behalf of the series of its shares of beneficial
interest set forth in Schedule A to this plan (the "Portfolios"), may pay
for distribution of the Class B Shares of such Portfolios (the "Shares")
which the Fund issues from time to time, pursuant to the conditions of an
order of the U.S. Securities and Exchange Commission, Investment Company
Act Release Number [812-xxx], dated [date], and according to the terms of
this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur expenses for and pay any
institution selected to act as the Fund's agent for distribution of the
Shares of any Portfolio from time to time (each, a "Distributor") at the
rates set forth on Schedule A hereto based on the average daily net assets
of each class of Shares subject to any applicable limitations imposed by
the Conduct Rules of the National Association of Securities Dealers, Inc.
and NASD Regulation, Inc. in effect from time to time (the "Conduct
Rules"). All such payments are the legal obligation of the Fund and not of
any Distributor or its designee.
SECTION 3.
(a) Amounts set forth in Section 2 may be
used to finance any activity which is primarily
intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing
and conducting sales seminars and running advertising
programs, payment of finders fees, printing of
prospectuses and statements of additional information
(and supplements thereto) and reports for other than
existing shareholders, preparation and distribution of
advertising material and sales literature, payment of
overhead and supplemental payments to dealers and
other institutions as asset-based sales charges, and
maintaining Fund information on the Internet. Amounts
set forth in Section 2 may also be used to finance
payments of service fees under a shareholder service
arrangement, which may be established by each
Distributor in accordance with Section 4, the costs of
administering the Plan. To the extent that amounts
paid hereunder are not used specifically to reimburse
the Distributor for any such expense, such amounts may
be treated as compensation for the Distributor's
distribution-related services. That portion of the
amounts paid under the Plan that is not paid or
advanced by the Distributor to dealers or other
institutions that provide personal continuing
shareholder service as a service fee pursuant to
Section 4 shall be deemed an asset-based sales charge.
No provision of this Plan shall be interpreted to
prohibit any payments by the Fund during periods when
the Fund has suspended or otherwise limited sales.
(b) Subject to the provisions of Sections 8
and 9 hereof, amounts payable pursuant to Section 2 in
respect of Shares of each Portfolio shall be paid by
the Fund to the Distributor in respect of such Shares
or, if more than one institution
-1-
<PAGE> 60
has acted or is acting as Distributor in respect of such
Shares, then amounts payable pursuant to Section 2 in
respect of such Shares shall be paid to each such
Distributor in proportion to the number of such Shares sold
by or attributable to such Distributor's distribution
efforts in respect of such Shares in accordance with
allocation provisions of each Distributor's
distribution agreement (the "Distributor's 12b-1
Share") notwithstanding that such Distributor's
distribution agreement with the Fund may have been
terminated. That portion of the amounts paid under the
Plan that is not paid or advanced by the Distributor
to dealers or other institutions that provide personal
continuing shareholder service as a service fee
pursuant to Section 4 shall be deemed an asset-based
sales charge.
(c) Any Distributor may assign, transfer or
pledge ("Transfer") to one or more designees (each an
"Assignee"), its rights to all or a designated portion
of its Distributor's 12b-1 Share from time to time
(but not such Distributor's duties and obligations
pursuant hereto or pursuant to any distribution
agreement in effect from time to time, if any, between
such Distributor and the Fund), free and clear of any
offsets or claims the Fund may have against such
Distributor. Each such Assignee's ownership interest
in a Transfer of a specific designated portion of a
Distributor's 12b-1 Share is hereafter referred to as
an "Assignee's 12b-1 Portion." A Transfer pursuant to
this Section 3(c) shall not reduce or extinguish any
claims of the Fund against the Distributor.
(d) Each Distributor shall promptly notify
the Fund in writing of each such Transfer by providing
the Fund with the name and address of each such
Assignee.
(e) A Distributor may direct the Fund to pay
an Assignee's 12b-1 Portion directly to such Assignee.
In such event, the Distributor shall provide the Fund
with a monthly calculation of the amount of (i) the
Distributor's 12b-1 Share, and (ii) each Assignee's
12b-1 Portion, if any, for such month (the "Monthly
Calculation"). In such event, the Fund shall, upon
receipt of such notice and Monthly Calculation from
the Distributor, make all payments required under such
distribution agreement directly to the Assignee in
accordance with the information provided in such
notice and Monthly Calculation upon the same terms and
conditions as if such payments were to be paid to the
Distributor.
(f) Alternatively, in connection with a
Transfer, a Distributor may direct the Fund to pay all
of such Distributor's 12b-1 Share from time to time to
a depository or collection agent designated by any
Assignee, which depository or collection agent may be
delegated the duty of dividing such Distributor's
12b-1 Share between the Assignee's 12b-1 Portion and
the balance of the Distributor's 12b-1 Share (such
balance, when distributed to the Distributor by the
depository or collection agent, the "Distributor's
12b-1 Portion"), in which case only the Distributor's
12b-1 Portion may be subject to offsets or claims the
Fund may have against such Distributor.
SECTION 4.
(a) Amounts expended by the Fund under the
Plan shall be used in part for the implementation by
the Distributor of shareholder service arrangements
with respect to the Shares. The maximum service fee
payable to any provider of such shareholder service
shall be twenty-five one-hundredths of one percent
(0.25%) per
-2-
<PAGE> 61
annum of the average daily net assets of
the Shares attributable to the customers of such
service provider. All such payments are the legal
obligation of the Fund and not of any Distributor or
its designee.
(b) Pursuant to this Plan, the Distributor
may enter into agreements substantially in the form
attached hereto as Exhibit A ("Service Agreements")
with such broker-dealers ("Dealers") as may be
selected from time to time by the Distributor for the
provision of continuing shareholder services in
connection with Shares held by such Dealers' clients
and customers ("Customers") who may from time to time
directly or beneficially own Shares. The personal
continuing shareholder services to be rendered by
Dealers under the Service Agreements may include, but
shall not be limited to, some or all of the following:
(i) distributing sales literature; (ii) answering
routine Customer inquiries concerning the Fund and the
Shares; (iii) assisting Customers in changing dividend
options, account designations and addresses, and
enrolling in any of several retirement plans offered
in connection with the purchase of Shares; (iv)
assisting in the establishment and maintenance of
Customer accounts and records, and in the processing
of purchase and redemption transactions; (v) investing
dividends and capital gains distributions
automatically in Shares; (vi) performing
sub-accounting; (vii) providing periodic statements
showing a Customer's shareholder account balance and
the integration of such statements with those of other
transactions and balances in the Customer's account
serviced by such institution; (viii) forwarding
applicable prospectuses, proxy statements, and reports
and notices to Customers who hold Shares; and (ix)
providing such other information and administrative
services as the Fund or the Customer may reasonably
request.
(c) The Distributor may also enter into Bank
Shareholder Service Agreements substantially in the
form attached hereto as Exhibit B ("Bank Agreements")
with selected banks and financial institutions acting
in an agency capacity for their customers ("Banks").
Banks acting in such capacity will provide some or all
of the shareholder services to their customers as set
forth in the Bank Agreements from time to time.
(d) The Distributor may also enter into
Agency Pricing Agreements substantially in the form
attached hereto as Exhibit C ("Pricing Agreements")
with selected retirement plan service providers acting
in an agency capacity for their customers ("Retirement
Plan Providers"). Retirement Plan Providers acting in
such capacity will provide some or all of the
shareholder services to their customers as set forth
in the Pricing Agreements from time to time.
(e) The Distributor may also enter into
Shareholder Service Agreements substantially in the
form attached hereto as Exhibit D ("Bank Trust
Department Agreements and Brokers for Bank Trust
Department Agreements") with selected bank trust
departments and brokers for bank trust departments.
Such bank trust departments and brokers for bank trust
departments will provide some or all of the
shareholder services to their customers as set forth
in the Bank Trust Department Agreements and Brokers
for Bank Trust Department Agreements from time to
time.
SECTION 5. This Plan shall not take effect until (i) it has been
approved, together with any related agreements, by votes of the majority of
both (a) the Board of Trustees of the Fund, and (b)
-3-
<PAGE> 62
those trustees of the Fund who are not "interested persons" of the Fund (as
defined in the Investment Company Act of 1940 (the "1940 Act")) and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Dis-interested Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan or such agreements,
and (ii) the execution by the Fund and A I M Distributors, Inc. of a Master
Distribution Agreement in respect of the Shares.
SECTION 6. Unless sooner terminated pursuant to Section 8, this
Plan shall continue in effect until June 30, 2000, and thereafter shall
continue in effect so long as such continuance is specifically approved, at
least annually, in the manner provided for approval of this Plan in Section
5.
SECTION 7. Each Distributor shall provide to the Fund's Board of
Trustees and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended for distribution of the Shares and
the purposes for which such expenditures were made.
SECTION 8. This Plan may be terminated with respect to the
Shares of any Portfolio at any time by vote of a majority of the
Dis-interested Trustees, or by vote of a majority of outstanding Shares of
such Portfolio. Upon termination of this Plan with respect to any or all
such Classes, the obligation of the Fund to make payments pursuant to this
Plan with respect to such Classes shall terminate, and the Fund shall not
be required to make payments hereunder beyond such termination date with
respect to expenses incurred in connection with Shares sold prior to such
termination date, provided, in each case that each of the requirements of a
Complete Termination of this Plan in respect of such class, as defined
below, are met. A termination of this Plan with respect to any or all
Shares of any or all Portfolios shall not affect the obligation of the Fund
to withhold and pay to any Distributor early withdrawal charges to which
such distributor is entitled pursuant to any distribution agreement. For
purposes of this Section 8 a "Complete Termination" of this Plan in respect
of any Portfolio shall mean a termination of this Plan in respect of such
Portfolio, provided that: (i) the Dis-interested Trustees of the Fund shall
have acted in good faith and shall have determined that such termination is
in the best interest of the Fund and the shareholders of such Portfolio;
(ii) and the Fund does not alter the terms of the early withdrawal charges
applicable to Shares outstanding at the time of such termination; and (iii)
unless the applicable Distributor at the time of such termination was in
material breach under the distribution agreement in respect of such
Portfolio, the Fund shall not, in respect of such Portfolio, pay to any
person or entity, other than such Distributor or its designee, either the
asset-based sales charge or the service fee (or any similar fee) in respect
of the Shares sold by such Distributor prior to such termination.
SECTION 9. Any agreement related to this Plan shall be made
in writing, and shall provide:
(a) that such agreement may be terminated
with respect to the Shares of any or all Portfolios at
any time, without payment of any penalty, by vote of a
majority of the Dis-interested Trustees or by a vote
of the majority of the outstanding Shares of such
Portfolio, on not more than sixty (60) days' written
notice to any other party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment;
provided, however, that, subject to the provisions of
Section 8 hereof, if such agreement is terminated for
any reason, the obligation of the Fund to make
payments of (i) the Distributor's Share in accordance
with the directions of the
-4-
<PAGE> 63
Distributor pursuant to Section 3(e) or (f) hereof if
there exist Assignees for all or any portion of such
Distributor's 12b-1 Share, and (ii) the remainder of such
Distributor's 12b-1 Share to such Distributor if there are
no Assignees for such Distributor's Share, pursuant to
such agreement and this Plan will continue with
respect to the Shares until such Shares are redeemed
or automatically converted into another class of
shares of the Fund.
SECTION 10. This Plan may not be amended to increase materially
the amount of distribution expenses provided for in Section 2 hereof unless
such amendment is approved by a vote of at least a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Shares,
and no material amendment to the Plan shall be made unless approved in the
manner provided for in Section 5 hereof.
SECTION 11. Notice is hereby given that, as provided by
applicable law, the obligations contemplated by this Plan are not binding
upon any of the shareholders of the Fund, but are binding only upon the
assets and property of the Fund and that the shareholders shall be
entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as stockholders of private corporations
for profit.
AIM FLOATING RATE FUND
(on behalf of its Class B Shares)
Attest: By:
----------------------- -----------------------------
Assistant Secretary President
Effective as of [date]
-5-
<PAGE> 64
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM FLOATING RATE FUND
(CLASS B SHARES)
(DISTRIBUTION FEE)
MINIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
AIM Floating Rate Fund 0.00% 0.25% 0.25%
-6-
<PAGE> 65
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
Please detach at perforation before mailing.
PROXY PROXY SOLICITED BY THE BOARD OF DIRECTORS OF PROXY
AIM FLOATING RATE FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS FEBRUARY 25, 2000
The undersigned hereby appoints Samuel D. Sirko and Gary T. Crum, and each
of them separately, proxies with the power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at
the Special Meeting of Shareholders of GT Global Floating Rate Fund, Inc.
(d/b/a AIM Floating Rate Fund), on February 25, 2000 at 2:00 p.m., Central
time, and at any adjournment thereof, all of the shares of the Fund which
the undersigned would be entitled to vote if personally present. IF THIS
PROXY IS SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE
VOTED "FOR" THE APPROVAL OF EACH PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint
owners should sign. When signing as
executor, administrator, attorney,
trustee or guardian or as custodian for
a minor, please give full title as such.
If a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the
partnership name.
-----------------------------------------
(Signature)
-----------------------------------------
(Signature) (if held jointly)
-----------------------------------------
Dated
<PAGE> 66
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
Please detach at perforation before mailing.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL. TO VOTE, FILL IN THE BOX COMPLETELY.
EXAMPLE: [ ]
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Approval of an agreement and plan of conversion and liquidation [ ] [ ] [ ]
providing for the reorganization of AIM Floating Rate Fund as a
Delaware business trust.
2. Approval of a distribution plan for AIM Floating Rate Fund. [ ] [ ] [ ]
FOR WITHHOLD
AUTHORITY
3. Election of Robert H. Graham as Director of the Fund. [ ] [ ]
FOR AGAINST ABSTAIN
4. Ratification of the selection of PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
Fund's independent public accountants.
5. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
