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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:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
AIM FLOATING RATE FUND
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
- --------------------------------------------------------------------------------
(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.
You may vote at the meeting if you are the record owner of shares of the
funds as of the close of business on December 20, 1999. If you attend the
meeting, you may vote your shares in person. If you expect to attend the meeting
in person, please notify the trust by calling 1-800-952-3502. If you do not
expect to attend the meeting, please fill in, date, sign and return the proxy
card in the enclosed envelope which requires no postage if mailed in the United
States.
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,
/s/ ROBERT H. GRAHAM
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 Friday,
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,
/s/ SAMUEL D. SIRKO
Samuel D. Sirko
Secretary
January 7, 2000
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PROXY STATEMENT
AIM FLOATING RATE FUND
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TX 77046-1173
TOLL FREE: (800) 454-0327
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 2000
---------------------
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 Friday, 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, 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 44,585,181.349 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, except as indicated on
Exhibit E.
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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 other
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. Unlike the former manager of the Fund, AIM does not
utilize a master-feeder structure but instead uses multiple classes of
shares to provide several investment options to shareholders. Accordingly,
the Restructuring contemplates the offering of multiple classes of shares,
and 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.
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.
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"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.
---------------------
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 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
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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
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, Inc. ("INVESCO")
(successor to INVESCO (NY), Inc.) 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 contract between AIM and
INVESCO SSM, and (3) a sub-sub-advisory
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contract for the Trust that is substantially the same as the current
sub-sub-advisory contract between INVESCO SSM and INVESCO. 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.
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 less 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
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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. Following the Reorganization, the Trust will not issue
stock certificates 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.
Federal Income Tax Consequences. The Fund and the Trust will receive an
opinion of Kirkpatrick & Lockhart LLP 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.
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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 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.
7
<PAGE> 11
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 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
8
<PAGE> 12
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.
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. AS DISCUSSED BELOW, HOWEVER, APPROVAL OF PROPOSAL 2
WILL NOT INCREASE THE TOTAL ANNUAL OPERATING EXPENSES OF FUND SHARES. 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. 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),
overall expenses will not be increased. 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 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
9
<PAGE> 13
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. As noted above, this will not increase overall
operating expenses.
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 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
10
<PAGE> 14
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.
11
<PAGE> 15
INFORMATION REGARDING THE NOMINEE FOR ELECTION AT THE MEETING
<TABLE>
<CAPTION>
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS POSITION WITH FUND AND TENURE
- ------------------------------------------------------------------------------------- -----------------------------
<S> <C> <C>
ROBERT H. GRAHAM, Age 53*............................................... Director, Since 1998
Mr. Graham is Director, President and Chief Executive Officer, A I M Management Group Chairman and
Inc.; Director and President, AIM; Director and Senior Vice President, A I M Capital President
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.
INFORMATION REGARDING OTHER DIRECTORS
C. DEREK ANDERSON, Age 58............................................... Director Since 1997
Mr. Anderson is Senior Managing Partner, Plantagenet Capital Management, LLC (an
investment partnership); Chief Executive Officer, Plantagenet Holdings, Ltd.(an
investment banking firm); Director, PremiumWear, Inc. (formerly Munsingwear, Inc.) (a
casual apparel company); Director, "R" Homes, Inc., Big Online, Inc., Champagne
Albert Le Brun and various other privately owned 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
- ----------------------------
* 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.
FRANK S. BAYLEY, Age 60................................................. Director Since 1997
Mr. Bayley is a partner of the law firm of Baker & McKenzie; Trustee, The Badgley
Funds; 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>
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.
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
12
<PAGE> 16
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.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE FUND
COMPENSATION AND THE FUND
NAME OF PERSON, POSITION(2) FROM THE FUND COMPLEX(3)
- --------------------------- --------------------- ------------------
<S> <C> <C>
C. Derek Anderson
Director............................................... $7,700 $106,850
Frank S. Bayley
Director............................................... $7,100 $ 90,650
Ruth H. Quigley
Director............................................... $7,700 $ 99,500
</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
---------------------
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, 2000 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, 1999 and 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
---------------------
13
<PAGE> 17
GENERAL INFORMATION
INFORMATION REGARDING THE EXECUTIVE OFFICERS OF THE FUND
<TABLE>
<CAPTION>
POSITION(S) WITH THE FUND
NAME, AGE, AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND TENURE
- ------------------------------------------------------------- ---------------------------
<S> <C> <C>
ROBERT H. GRAHAM, Age 53.................................... Director, Since 1998
Mr. Graham is Director, President and Chief Executive Chairman, and
Officer, A I M Management Group Inc.; Director and President, 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
MELVILLE B. COX, Age 56..................................... Vice President Since 1998
Mr. Cox is Vice President and Chief Compliance Officer, AIM,
A I M Capital Management, Inc., AIM Distributors, A I M Fund
Services, Inc., and Fund Management Company
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, 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 and Secretary
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 $22,000 in connection with the
solicitation, which amount may increase depending upon the nature and extent of
the services provided.
14
<PAGE> 18
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 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,
/s/ SAMUEL D. SIRKO
Samuel D. Sirko
Secretary
January 7, 2000
15
<PAGE> 19
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.
- 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.
- 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:
- 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.
- 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.
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<PAGE> 20
- 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.
- Offers may be suspended or postponed under certain circumstances, as
provided for in Rule 23c-3.
- Repurchases in Excess of the Repurchase Offer Amount; Proration. If
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.
- 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.
- 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:
<TABLE>
<CAPTION>
EARLY
YEAR OF REPURCHASE WITHDRAWAL
AFTER PURCHASE CHARGE
- ------------------ ----------
<S> <C>
First.................................................... 3.0%
Second................................................... 2.5%
Third.................................................... 2.0%
Fourth................................................... 1.0%
Fifth and following...................................... 0.0%
</TABLE>
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 and their relatives.
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<PAGE> 21
- 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.
- 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.
- Withdrawal Rights. Tenders made pursuant to an repurchase offer will be
irrevocable after the request deadline. However, shareholders may modify
the number of shares being tendered or withdraw shares tendered at any
time up to the request deadline.
- Suspension and Postponement of Offers. The 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:
- 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.
- 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
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<PAGE> 22
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.
- 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.
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<PAGE> 23
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
Exhibit E -- Ownership of the Fund
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<PAGE> 24
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.
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 $10.00 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.
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<PAGE> 25
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 March 10,
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 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;
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<PAGE> 26
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;
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
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<PAGE> 27
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 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).
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
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<PAGE> 28
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;
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.
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<PAGE> 29
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 $10.00 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.
5. Expenses.
Except as otherwise provided in subparagraph 3.3.4, 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
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<PAGE> 30
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.
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.
<TABLE>
<S> <C>
GT GLOBAL FLOATING RATE FUND, INC.
(d/b/a AIM FLOATING RATE FUND)
Attest:
/s/ OFELIA M. MAYO By: /s/ SAMUEL D. SIRKO
- ----------------------------------------------------- -------------------------------------------------
Samuel D. Sirko
Title: Vice President and Secretary
Attest: AIM FLOATING RATE FUND
/s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
- ----------------------------------------------------- -------------------------------------------------
Robert H. Graham
Title: President
</TABLE>
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<PAGE> 31
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;
(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, sec. 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;
<PAGE> 32
(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 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.
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<PAGE> 33
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 initial Trustee hereby establishes and designates 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 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, at any time, no Portfolios
are then designated and existing, 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 initial Trustee hereby establishes 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:
(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).
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<PAGE> 34
(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 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
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<PAGE> 35
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.
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
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<PAGE> 36
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 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;
(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
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<PAGE> 38
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;
(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.
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No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
SECTION 4.2. Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, and otherwise deal in Shares and, subject to the provisions
set forth in 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
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.
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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 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.
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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 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.
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(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.
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
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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.
(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 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.
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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 or Portfolio 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, by any agreement between the Trust and any
national securities exchange, or by this Declaration.
(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.
(c) This Section shall apply to the following transactions:
1. Merger or consolidation 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 as reasonably
determined by the Trustees);
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 as
reasonably determined by the Trustees); 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
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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 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
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majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
SECTION 9.9. Provisions in Conflict with Law. The provisions of this
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.
/s/ ROBERT H. GRAHAM
------------------------------------
Robert H. Graham, as Trustee
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SCHEDULE A
AIM Floating Rate Fund shall be divided into two Classes (Class B and Class
C).
17
<PAGE> 48
EXHIBIT C
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 AIM FLOATING
RATE FUND (D/B/A RATE FUND
AIM FLOATING CLASS B SHARES
RATE FUND) PRO 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) to 1.50% annually.
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
18
<PAGE> 49
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.
19
<PAGE> 50
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 812-11754, dated
November 22, 1999, 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 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
20
<PAGE> 51
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 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
21
<PAGE> 52
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, any amendment to this Plan and any agreements related
to this Plan, shall not take effect with respect to any Shares of any Portfolio
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) 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) 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.
22
<PAGE> 53
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 12b-1
Share in accordance with the directions of the 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 12b-1 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 with respect to the Shares of any
Portfolio 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 of such Portfolio, and no material amendment to the Plan with
respect to the Shares of any Portfolio 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)
<TABLE>
<S> <C>
Attest: By:
- ---------------------------------------------- ----------------------------------------------
Assistant Secretary President
</TABLE>
Effective as of [date]
23
<PAGE> 54
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM FLOATING RATE FUND
(CLASS B SHARES)
(DISTRIBUTION FEE)
<TABLE>
<CAPTION>
MINIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
- ---- ------------ ------- ----------
<S> <C> <C> <C>
AIM Floating Rate Fund...................................... 0.00% 0.25% 0.25%
</TABLE>
24
<PAGE> 55
EXHIBIT E
OWNERSHIP OF THE FUND
Listed below is the name, address and percent ownership of each person who
as of December 20, 1999, to the knowledge of the Fund's management, owned
beneficially 5 percent or more of the outstanding shares of the Fund:
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
NUMBER OF OWNED OF RECORD AND
NAME AND ADDRESS SHARES OWNED RECORD* BENEFICIALLY
---------------- ------------- ---------- ------------
<S> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith
FBO The Sole Benefit of Customers
ATTN: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246................................ 2,305,883.507 5.17% -0-
</TABLE>
- ---------------
* The Fund has no knowledge as to whether all or any portion of the shares owned
of record only are also owned beneficially.
E-1
<PAGE> 56
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
_ _
v Please fold and detach card at perforation before mailing. v
PROXY PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
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.
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(s) (if held jointly)
Dated
----------------------------------
AFRF
<PAGE> 57
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
_ _
v Please fold and detach card at perforation before mailing. v
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: [ ]
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.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a distribution plan for AIM Floating Rate Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Election of Robert H. Graham as Director of the Fund.
WITHHOLD
FOR AUTHORITY
[ ] [ ]
4. Ratification of the selection of PricewaterhouseCoopers LLP
as the Fund's independent public accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT THEREOF.
AFRF
