<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 2000.
SECURITIES ACT FILE NO. 333-72419
INVESTMENT COMPANY ACT FILE NO. 811-08485
POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT AS STATED BELOW
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 1
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 10 X
(CHECK APPROPRIATE BOX OR BOXES)
---------------------
AIM FLOATING RATE FUND
--------------------------------
(Exact name of Registrant as specified in charter)
11 GREENWAY PLAZA, SUITE 100, HOUSTON, TX 77046
------------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: (713) 626-1919
---------------------
Copies to:
<TABLE>
<S> <C>
ARTHUR J. BROWN, ESQ. SAMUEL D. SIRKO, ESQ.
R. CHARLES MILLER, ESQ. A I M ADVISORS, INC.
KIRKPATRICK & LOCKHART LLP 11 Greenway Plaza
1800 Massachusetts Avenue, N.W. Suite 100
Washington, D.C. 20036 Houston, Texas 77046
(Name and address of agent for service)
</TABLE>
---------------------
Approximate date of proposed public offering: AS SOON AS PRACTICABLE AFTER THIS
REGISTRATION STATEMENT BECOMES EFFECTIVE.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
AGGREGATE PROPOSED MAXIMUM
TITLE OF AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED(1) PER UNIT(2) PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Beneficial Interest
Class B................................... 80,000,000 N/A(1) N/A(1) N/A(1)
- ----------------------------------------------------------------------------------------------------------------------------
Class C................................... 1,000,000 $9.68 $9,680,000 $2,555.52
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As discussed below, the Registrant is the successor issuer to GT Global
Floating Rate Fund, Inc. (the "Predecessor Fund") and, pursuant to Rule 414
under the Securities Act of 1933, the Registrant expressly adopts this
amended Registration Statement of the Predecessor Fund as its own
Registration Statement. Pursuant to the terms of merger between the
Registrant and the Predecessor Fund, all shares of common stock of the
Predecessor Fund have been converted into Class B shares of the Registrant.
The Predecessor Fund has previously paid all registration fees in connection
with such shares pursuant to Registration Statement Nos. 333-17425,
333-37243, and 333-72419. Approximately shares previously registered
were unissued as of March , 2000.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE REGISTRANT IS THE SUCCESSOR ISSUER TO GT GLOBAL FLOATING RATE FUND,
INC. (THE "PREDECESSOR FUND"). PURSUANT TO RULE 414 UNDER THE SECURITIES ACT,
THE REGISTRANT IS FILING THIS REGISTRATION STATEMENT AS A POST-EFFECTIVE
AMENDMENT TO CURRENTLY EFFECTIVE REGISTRATION STATEMENT NO. 333-72419 OF THE
PREDECESSOR FUND. IN ACCORDANCE WITH RULE 414, THE REGISTRANT EXPRESSLY ADOPTS
THIS AMENDED REGISTRATION STATEMENT OF THE PREDECESSOR FUND AS ITS OWN
REGISTRATION STATEMENT FOR ALL PURPOSES OF THE SECURITIES ACT, THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, AND THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED.
<PAGE> 2
AIM FLOATING RATE FUND
FORM N-2 CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION PROSPECTUS CAPTION
- ------ ------- ------------------
<C> <S> <C>
1 Outside Front Cover................ Outside Front Cover of Prospectus
2 Inside Front and Outside Back Cover
Page............................. Inside Front and Outside Back Cover Page of
Prospectus
3 Fee Table and Synopsis............. Summary; Table of Fees and Expenses
4 Financial Highlights............... Financial Highlights
5 Plan of Distribution............... Outside Front Cover; Summary; Purchase of Shares;
Description of Shares
6 Selling Shareholders............... Not Applicable
7 Use of Proceeds.................... Use of Proceeds; Investment Objective and Policies
8 General Description of
Registrant....................... Summary; Organization of the Fund; Investment
Objective and Policies; Investment Restrictions;
Special Considerations and Risk Factors;
Description of Shares
9 Management......................... Management; Description of Shares; Custodian,
Transfer and Dividend Disbursing Agent and Registrar
10 Capital Stock, Long-Term Debt and
Other Securities................. Dividends and Other Distributions; Dividend
Reinvestment Plan; Taxes; Description of Shares
11 Defaults and Arrears on Senior
Securities....................... Not Applicable
12 Legal Proceedings.................. Not Applicable
13 Table of Contents of the Statement
of Additional Information........ Not Applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
ITEM
NUMBER CAPTION
- ------ -------
<C> <S> <C>
14 Cover Page......................... Not Applicable
15 Table of Contents.................. Not Applicable
16 General Information and History.... Not Applicable
17 Investment Objective and
Policies......................... Investment Objective and Policies; Investment
Restrictions; Portfolio Transactions
18 Management......................... Management
19 Control Persons and Principal
Holders of Securities............ Description of Shares
20 Investment Advisory and Other
Services......................... Management; Custodian, Transfer and Dividend
Disbursing Agent and Registrar
21 Brokerage Allocation and Other
Practices........................ Portfolio Transactions
22 Tax Status......................... Taxes
23 Financial Statements............... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 3
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
AIM FLOATING RATE FUND
PROSPECTUS
, 2000
This Prospectus contains information about AIM FLOATING RATE FUND (the "Fund"),
a continuously offered, non-diversified, closed-end management investment
company. The investment objective of the Fund is to provide as high a level of
current income and preservation of capital as is consistent with investment in
senior secured corporate loans ("Corporate Loans") and senior secured debt
securities ("Corporate Debt Securities") that meet credit standards established
by its investment manager, A I M Advisors, Inc. and its sub-advisor, INVESCO
Senior Secured Management, Inc. The Fund invests primarily in assignments of, or
participations in, Corporate Loans made by banks and other financial
institutions and Corporate Debt Securities. The Corporate Loans and Corporate
Debt Securities are expected to pay interest at rates that float or reset at a
margin above a generally recognized base lending rate such as the London
InterBank Offered Rate or the prime rate of a designated U.S. bank. The
investment objective of the Fund may not be achieved.
Shares of beneficial interest ("Shares") of the Fund are continuously offered at
a price equal to the next determined net asset value per share without a
front-end sales charge. The minimum initial purchase is $500, and the minimum
subsequent purchase is $50.
No market presently exists for the Fund's Shares and it is not currently
expected that a secondary market will develop. To provide the Fund's
shareholders ("Shareholders") with liquidity, the Fund makes offers on a
quarterly basis to repurchase between 5% and 25% of its outstanding Shares from
Shareholders at the net asset value per Share. The Fund may determine the net
asset value applicable to repurchases no later than the 14th calendar day (or,
if not a business day, the next business day) after the repurchase request
deadline, and will distribute payment to shareholders on or before the
repurchase payment deadline, which will be no later than seven calendar days
after the pricing date. See "Repurchase Offers."
The Fund offers Class B and Class C Shares. Both Classes of Shares are sold at
net asset value with no front-end sales charge. Class B Shares held for less
than four years, and Class C Shares held for less than one year, are subject to
an Early Withdrawal Charge upon their repurchase by the Fund. See "Early
Withdrawal Charge."
Investing in the Shares of the Fund involves risks, including fluctuations in
value, and there is a risk that you could lose a portion or all of your money.
The Fund may invest all or substantially all of its assets in Corporate Loans,
Corporate Debt Securities or other securities that are rated below investment
grade by a nationally recognized statistical rating organization, or in
comparable unrated securities. The Fund is authorized to borrow money to finance
repurchase offers or for temporary, extraordinary or emergency purposes. While
it has no current intention of doing so, the Fund may also borrow money to
finance additional investments. The leverage created by borrowing money to
finance additional investments results in certain risks for Shareholders,
including the risk of higher volatility of the net asset value of the Shares.
See "Special Considerations and Risk Factors -- Effects of Borrowing."
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. Please read it before
investing and keep it for future reference. Additional information concerning
the Fund may be obtained by writing to A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739 or by calling 1-800-347-4246. Additional information
about the Fund may also be obtained from http://www.aimfunds.com.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO SALES PROCEEDS
PUBLIC(1) LOAD(2) TO FUND(3)
------------ ------- ------------
<S> <C> <C> <C>
Per Class B Share...................................... $ None $
Per Class C Share...................................... $ None $
Total.................................................. $ (4) None $ (4)
- ------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The Shares are offered at a price equal to net asset value, which at the
date of this Prospectus is $ per Share.
(2) A I M Distributors, Inc., the Fund's distributor, will pay all sales
commissions to selected dealers from its own resources.
(3) Assuming the sale of all Shares registered hereby.
(4) Including the sale of previously registered but unsold Class B
Shares and newly registered Class C Shares.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Use of Proceeds...................... 5
Investment Objective and Policies.... 6
Investment Restrictions.............. 13
Special Considerations and Risk
Factors........................... 13
Purchase of Shares -- Multiple
Pricing System.................... 16
Early Withdrawal Charge.............. 16
Waivers of Early Withdrawal Charge... 17
Distribution Plans................... 18
Repurchase Offers.................... 18
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Management........................... 19
Trustees and Executive Officers...... 20
Fund Transactions.................... 21
Dividends and Other Distributions.... 22
Taxes................................ 23
Dividend Reinvestment Plan........... 24
Automatic Investment Plan............ 25
Exchange Privilege................... 25
Determination of Net Asset Value..... 25
Description of Shares................ 26
Performance Information.............. 27
OTHER INFORMATION...................... 27
APPENDIX A............................. A-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM Floating Rate Fund (the "Fund") is a continuously offered,
non-diversified, closed-end management investment company. See "The Fund."
THE OFFERING. The Fund offers its Class B and Class C Shares at a price equal
to the next determined net asset value per share. Shares of the Fund are not
subject to a front-end sales charge. Class B Shares are subject to a 3.0% early
withdrawal charge ("EWC") that declines over a four-year period and a 0.25%
distribution and service fee. Class C Shares are subject to an EWC of 1% during
the first year a Shareholder owns Class C Shares, plus a 0.75% distribution and
service fee. (The Distributor has agreed to waive 0.25% of the Class C
distribution and service fee.) The minimum initial purchase is $500, and the
minimum subsequent purchase is $50, except that the minimum initial purchase is
$250 for certain retirement accounts. The Fund reserves the right to waive or
modify the initial and subsequent minimum investment requirements at any time.
INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is to
provide as high a level of current income and preservation of capital as is
consistent with investment in senior secured corporate loans ("Corporate Loans")
and senior secured debt securities ("Corporate Debt Securities") that meet
credit standards established by the Fund's investment manager, A I M Advisors,
Inc. ("AIM") and its sub-advisor, INVESCO Senior Secured Management, Inc. (the
"Sub-advisor").
Under normal market conditions, the Fund invests primarily in Corporate Loans
and Corporate Debt Securities made to or issued by U.S. or non-U.S. companies
("Borrowers"). These Corporate Loans and Corporate Debt Securities (i) have
variable rates which adjust to a base rate, such as the London InterBank Offered
Rate ("LIBOR") on set dates, typically every 30 days but not to exceed one year;
and/or (ii) have interest rates that float at a margin above a generally
recognized base lending rate such as the prime rate ("Prime Rate") of a
designated U.S. bank.
In general, the net asset value of an investment company that invests
primarily in fixed-income securities changes in response to fluctuations in the
general level of interest rates. Funds that invest in floating rate and variable
rate securities are generally less affected by interest rate changes. Because
the Fund consists primarily of floating rate and variable rate Corporate Loans
and Corporate Debt Securities, AIM and the Sub-advisor expect the value of the
Fund to fluctuate less in response to interest rate changes than would a
portfolio of fixed-rate obligations. However, because interest rates are
constantly changing, and the interest rates on the floating and variable rate
securities in which the Fund invests are only reset periodically, the Fund's net
asset value may fluctuate.
SPECIAL CONSIDERATION AND RISK FACTORS. The Corporate Loans and Corporate Debt
Securities in which the Fund may invest are subject to the risk of nonpayment of
scheduled interest or principal payments. If a nonpayment or default occurs, the
Fund may experience a decline in the value of such obligations, resulting in a
decline in the net asset value of the Fund's Shares.
The Corporate Loans and Corporate Debt Securities in which the Fund invests
consist primarily of obligations of a Borrower undertaken to finance the growth
of the Borrower's business internally or externally or to finance a capital
restructuring. A significant portion of such Corporate Loans and Corporate Debt
Securities may be issued in highly leveraged transactions that are subject to
greater credit risks, including a greater possibility of default or bankruptcy
of the Borrower.
The Fund may borrow money to finance repurchase offers, for temporary or
emergency purposes, or to finance additional investments. Money raised through
borrowing will be subject to interest costs which may or may not exceed the
interest on any assets purchased.
2
<PAGE> 5
INVESTMENT MANAGERS. The Fund is managed by AIM and the Sub-Advisor. AIM and
the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly-owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
or manages over investment portfolios.
The Sub-advisor determines the investment composition of the Fund, places all
orders for the purchase and sale of securities and for other transactions, and
oversees the settlement of the Fund's securities and other transactions. The
Sub-advisor has appointed INVESCO, Inc. as the investment sub-sub-advisor with
respect to certain of the assets of the Fund. See "Management."
ADMINISTRATOR. AIM provides administrative services to the Fund. These
include, among other things, furnishing officers and office space, preparing or
assisting in preparing materials for stockholders and regulatory bodies and the
provision of accounting services.
DISTRIBUTIONS. The Fund distributes substantially all of its net investment
income to Shareholders by declaring dividends daily and paying them monthly.
Substantially all net capital gains, if any, are distributed at least annually
to Shareholders. See "Dividends and Other Distributions." Under the Fund's
Dividend Reinvestment Plan (the "Dividend Plan"), each Shareholder is assumed to
have elected, unless the Shareholder instructs otherwise in writing, to have all
dividends and other distributions, net of any applicable withholding taxes,
automatically reinvested in additional Shares. See "Dividend Reinvestment Plan."
REPURCHASE OFFERS. The Fund's Shares are not listed on any exchange and it is
not anticipated that a secondary market will develop. In view of this, the Fund
makes offers (each, a "Repurchase Offer") each quarter to repurchase between 5%
and 25% of the Fund's outstanding Shares from its Shareholders. The Shares will
be purchased in these Repurchase Offers at the net asset value per Share
determined at the close of business on the day a Repurchase Offer terminates.
Class B Shares that have been held for less than four years and which are
repurchased by the Fund pursuant to Repurchase Offers will be subject to an EWC
up to 3% of the lesser of the then current net asset value or the original
purchase price of the Shares being tendered. Class C Shares that have been held
for less than one year and which are repurchased by the Fund will be subject to
an EWC of 1%. See "Repurchase Offers" and "Early Withdrawal Charge."
No secondary market currently exists for the Fund's Shares, and the Fund does
not expect a secondary market to develop. Moreover, A I M Distributors, Inc.
("AIM Distributors" or the "Distributor") and other selected dealers are
prohibited under applicable law from making a market in the Fund's Shares while
the Fund is making either a public offering of or an offer to repurchase its
Shares. Because of the lack of a secondary market and the EWC, the Fund is
designed primarily for long-term investors and should not be considered a
vehicle for trading purposes. See "Special Considerations and Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS, LA FAMILIA AIM DE FONDOS AND DESIGN AND INVEST WITH
DISCIPLINE ARE REGISTERED SERVICE MARKS AND AIM BANK CONNECTION, AIM FUNDS, AIM
FUNDS AND DESIGN, AIM INTERNET CONNECT AND AIM INVESTOR ARE SERVICE MARKS OF
A I M MANAGEMENT GROUP INC.
3
<PAGE> 6
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is intended to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear, directly or
indirectly.
<TABLE>
CLASS B CLASS C(1)
------- ----------
<S> <C> <C>
Shareholder Transaction Expenses(2)
Sales Load (as a percentage of offering price)............ None None
Dividend Reinvestment Plan Fees........................... None None
Maximum Early Withdrawal Charge(3)........................ 3.00% 1.00%
Annual Fund Operating Expenses (as a percentage of net
assets)(4)
Investment Management and Administrative Fee.............. 0.95% 0.95%
Distribution and/or Service Fee (after waiver)............ 0.25% 0.50%(5)
Other Expenses (after waiver)(6).......................... 0.30% 0.30%
---- ----
Total Annual Operating Expenses (after waiver).... 1.50% 1.75%
==== ====
</TABLE>
- ---------------
(1)Class C Shares not currently offered for sale. Expenses are based on those of
Class B Shares.
(2)Under applicable rules governing the Repurchase Offers, the Fund may deduct
from a Shareholder's repurchase proceeds a fee of up to 2.00% of such
proceeds to offset expenses associated with the Repurchase Offer. The Fund
has determined not to impose a repurchase fee on any Repurchase Offers
conducted prior to March 31, 2001. Although it has no current intention to do
so, the Fund could impose such a repurchase fee thereafter.
(3)Calculated based on the lesser of the then current net asset value or the
original price of the Shares being tendered. For Class B Shares, the maximum
EWC applies to Shares sold during the first year after purchase; the EWC
declines annually thereafter, reaching zero after four years. For Class C
Shares, the EWC applies to Shares sold during the first year after purchase;
the EWC disappears thereafter. See "Early Withdrawal Charge."
(4)See "Management" for additional information.
(5)The Distributor has agreed to waive 0.25% of the annual Distribution and
Service Fee for Class C Shares. Had the Distributor not agreed to such waiver
the annual Distribution and Service Fee would have been 0.75%. See
"Distribution Plans" for additional information.
(6)AIM has agreed to limit Total Annual Operating Expenses (exclusive of
brokerage commissions, taxes, interest, dividend on short sales and
extraordinary expenses) to 1.50% for Class B Shares and 1.75% for Class C
Shares. Had AIM not agreed to limit expenses the Total Annual Operating
Expenses would have been % for Class B Shares and % for Class C
Shares.
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. These amounts are based upon
payment by the Fund of operating expenses at the levels set forth in the above
table.
An investor would directly or indirectly pay the following expenses of a
$1,000 investment in the Fund, assuming (i) a 5% annual return and (ii)
reinvestment of all dividends and other distributions at net asset value:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Assuming no repurchase of Shares.......... Class B $153 $474 $818 $1,791
Class C 178 551 949 2,062
Assuming repurchase of Shares on last day
of period and imposition of maximum
applicable Early Withdrawal Charge...... Class B 453 674 818 1,791
Class C 278 551 949 2,062
</TABLE>
This Example assumes that the percentage amounts listed under Total Annual
Operating Expenses remain the same in the years shown. The above tables and the
assumption in the Example of a 5% annual return and reinvestment at net asset
value are required by regulation of the Securities and Exchange Commission
applicable to all closed-end investment companies; the assumed 5% annual return
is not a prediction of, and does not represent, the projected or actual
performance of the Shares. Actual expenses and annual rates of return may be
more or less than those assumed for purposes of the Example. In addition,
although the Example assumes reinvestment of all dividends and other
distributions at net asset value, participants in the Plan may receive shares of
the Shares obtained at or based on the market price in effect at the time, which
may be at, above or below net asset value.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES, AND
THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
4
<PAGE> 7
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share
outstanding, total investment return, ratios and supplemental data. This
information has been derived from information provided in the financial
statements. The financial statements and notes for the fiscal years or periods
noted, have been audited by [Name], independent accountants, whose report
thereon also is included in the financial statements attached to this
prospectus.
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
DECEMBER 31, DECEMBER 31, OF OPERATIONS) TO
1999 1998 DECEMBER 31, 1997
------------ ------------ -----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............ $ 10.02 $ 10.00
-------- -------- --------
Income from investment operations:
Net investment income........................... 0.68 0.46
Net realized and unrealized gain (loss) on
investments.................................. (0.18) 0.02
-------- -------- --------
Net increase from investment operations...... 0.50 0.48
-------- -------- --------
Distributions to shareholders:
From net investment income...................... (0.67) (0.46)
From net realized gain on investments........... (0.01) --
-------- -------- --------
Total distributions.......................... (0.68) (0.46)
-------- -------- --------
Net asset value, end of period.................... $ 9.84 $ 10.02
======== ======== ========
Total investment return(c)........................ 5.25% 5.04%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $288,074 $161,697
Ratio of net investment income to average net
assets:
With expense reductions......................... 6.88% 7.26%(a)
Without expense reductions...................... 6.75% 6.24%(a)
Ratio of expenses to average net assets:
With expense reimbursement...................... 1.50% 1.50%(a)
Without expense reimbursement................... 1.63% 2.52%(a)
Ratio of interest expense to average net assets... 0.01% 0.15%(a)
Portfolio turnover rate........................... 75% 118%(a)
</TABLE>
- ---------------
(a)
Annualized
(b)
Not annualized
(c)
Total investment return does not include sales charges.
USE OF PROCEEDS
The net proceeds from the sale of the Shares offered hereby will be invested
in accordance with the Fund's investment objective and policies on an ongoing
basis, depending on the availability of Corporate Loans and Corporate Debt
Securities and other relevant conditions. Pending such investment, it is
anticipated that the proceeds will be invested in short-term debt obligations or
instruments. See "Investment Objective and Policies."
5
<PAGE> 8
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
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 meet credit standards
established by AIM and the Sub-advisor. This is a fundamental policy of the Fund
and may not be changed without a vote of a majority of the outstanding Shares of
the Fund. There can be no assurance that the investment objective of the Fund
will be achieved.
Under normal market conditions, the Fund will invest at least 80% of its total
assets in interests in Corporate Loans and Corporate Debt Securities made to or
issued by Borrowers (which may include U.S. and non-U.S. companies), including
those that: (i) have variable rates which adjust to a base rate, such as LIBOR,
on set dates, typically every 30 days but not to exceed one year; and/or (ii)
have interest rates that float at a margin above a generally recognized base
lending rate such as the Prime Rate of a designated U.S. bank.
Corporate Loans in which the Fund invests typically are negotiated and
structured by a syndicate of lenders ("Lenders") consisting of commercial banks,
thrift institutions, insurance companies, finance companies or other financial
institutions, one or more of which administers the Corporate Loan on behalf of
all the Lenders (the "Agent Bank"). The Fund's investments in Corporate Loans
are either participation interests in Corporate Loans ("Participation
Interests") or assignments of Corporate Loans ("Assignments"). Participation
Interests may be acquired from a Lender or other holders of Participation
Interests ("Participants"). If the Fund purchases an Assignment from a Lender,
it will generally become a "Lender" for purposes of the relevant loan agreement,
with direct contractual rights under the loan agreement and under any related
collateral security documents in favor of the Lenders. On the other hand, if the
Fund purchases a Participation Interest either from a Lender or a Participant,
the Fund will not have established any direct contractual relationship with the
Borrower and must rely on the Lender or the Participant that sold the
Participation Interest not only for the enforcement of the Fund's rights against
the Borrower but also for the receipt and processing of payments due to the Fund
under the Corporate Loans. Thus, when investing in Participation Interests, the
Fund is subject to the credit risk of both the Borrower and the Lender or
Participant who sold the Participation Interest. The Fund will invest in
Participation Interests only if, at the time of investment, the outstanding debt
obligations of the Agent Bank and any Lenders and Participants interposed
between the Fund and a Borrower are investment grade; i.e., rated BBB, A-3 or
higher by Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("Standard & Poor's"), or Baa, P-3 or higher by Moody's Investors Service, Inc.
("Moody's"), or, if unrated, deemed by the Sub-advisor to be of equivalent
quality. See "Investment Objective and Policies." A description of Moody's and
Standard & Poor's ratings is included in the Appendix to this Prospectus.
Corporate Debt Securities typically are in the form of notes or bonds issued
in public or private placements in the securities markets. Corporate Debt
Securities will typically have substantially similar terms to Corporate Loans,
but will not be in the form of Participations or Assignments.
The Fund may invest up to 20% of its total assets in any of the following: (a)
senior floating rate loans made and notes issued on an unsecured basis to
Borrowers that meet the credit standards established by AIM and the Sub-advisor
("Unsecured Corporate Loans" and "Unsecured Corporate Debt Securities"); (b)
secured or unsecured short-term debt obligations including, but not limited to,
U.S. Government and Government agency securities (some of which may not be
backed by the full faith and credit of the United States), money market
instruments (such as certificates of deposit and bankers' acceptances),
corporate and commercial obligations (such as commercial paper and medium-term
notes) and repurchase agreements, none of which are required to be secured but
all of which will be (or the securities of counterparties associated therewith
will be) investment grade (i.e., rated Baa, P-3 or higher by Moody's or BBB, A-3
or higher by Standard & Poor's or, if unrated, determined to be of comparable
quality in the judgment of the Sub-advisor); (c) fixed rate obligations of U.S.
or non-U.S. companies that meet the credit standards established by AIM and the
Sub-advisor and that the Fund expects to swap for a floating rate structure; or
(d) cash or cash equivalents, except that the Fund, pursuant to an exemptive
order granted by the SEC, may invest up to 25% of its total assets in shares of
money market investment companies advised by AIM or its affiliates ("Affiliated
Money Market Funds"). In general, a purchase of investment company securities
may result in the duplication of fees and expenses. With respect to the Fund's
purchase of shares of Affiliated Money Market Funds, the Fund will indirectly
pay the advisory fees and other operating expenses of the Affiliated Money
Market Funds. Securities rated Baa, BBB, P-3 or A-3 are considered to have
adequate capacity for payment of principal and interest, but are more
susceptible to adverse economic conditions and, in the case of securities rated
BBB or Baa (or comparable unrated securities), have speculative characteristics.
Such securities or cash will not exceed 20% of the Fund's total assets except
(i) during interim periods pending investment of the net proceeds of public
offerings of the Fund's securities, (ii) pending reinvestment of proceeds of the
sale of a security, and (iii) during temporary defensive periods when, in the
opinion of the Sub-advisor, suitable Corporate Loans and Corporate Debt
Securities are not available for investment by the Fund or prevailing market or
economic conditions warrant. During such periods, the Fund may also invest up to
25% of its total assets in Affiliated Money Market Funds. Investments in
Unsecured Corporate Loans and Unsecured Corporate Debt Securities will be made
on the same basis as investments in Corporate Loans and Corporate Debt
Securities as described herein, except with respect to collateral requirements.
To a limited extent, incidental to and in connection with its lending
activities, the Fund also may acquire warrants and other equity securities.
The Fund has no restrictions on portfolio maturity, but it is anticipated that
a majority of the Corporate Loans and Corporate Debt Securities in which it
invests will have stated maturities ranging from three to ten years. However,
Corporate Loans usually will require, in addition to scheduled payments of
interest and principal, the prepayment of the Corporate Loan from excess cash
flow, and
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<PAGE> 9
may permit the Borrower to prepay at its election. The degree to which Borrowers
prepay Corporate Loans, whether as a contractual requirement or at their
election, cannot be predicted with accuracy, and may be affected by general
business conditions, the financial condition of the Borrower and competitive
conditions among lenders, among other factors. However, it is anticipated that
the Fund's Corporate Loans and Corporate Debt Securities will have an expected
average life of three to five years. See "Description of Corporate Loans and
Corporate Debt Securities."
Investment in Shares of the Fund offers several benefits. The Fund offers
investors the opportunity to receive a high level of current income by investing
in a professionally managed portfolio comprised primarily of Corporate Loans, a
type of investment typically not available directly to individual investors. In
managing the Fund, the Sub-advisor provides the Fund and its Shareholders with
professional credit analysis and portfolio diversification. The Fund also
relieves the investor of the burdensome administrative details involved in
managing a portfolio of such investments, if available to individual investors.
The benefits are at least partially offset by the expenses involved in operating
an investment company. Such expenses primarily consist of the management and
administrative fees and operations costs.
Generally, the net asset value of the shares of an investment company which
invests primarily in fixed-income securities changes as the general levels of
interest rates fluctuate. When interest rates increase, the value of a
fixed-income portfolio can be expected to decline. The Sub-advisor expects the
Fund's net asset value to be relatively stable during normal market conditions,
because the portfolio securities in which the Fund's assets are invested will
consist primarily of floating and variable rate Corporate Loans and Corporate
Debt Securities, of fixed rate Corporate Loans and Corporate Debt Securities
hedged by interest rate swap transactions and of short-term instruments. For
these reasons, the Sub-advisor expects the value of the Fund to fluctuate
significantly less as a result of interest rate changes than would a portfolio
of fixed-rate obligations. However, because variable interest rates only reset
periodically, the Fund's net asset value may fluctuate from time to time in the
event of an imperfect correlation between either the interest rates on variable
rate loans in the Fund or the variable interest rates on nominal amounts in the
Fund's interest rate swap transactions, and prevailing interest rates. Also, a
default on a Corporate Loan or Corporate Debt Security in which the Fund has
invested or a sudden and extreme increase in prevailing interest rates may cause
a decline in the Fund's net asset value. Conversely, a sudden and extreme
decline in interest rates could result in an increase in the Fund's net asset
value.
The Fund is classified as non-diversified within the meaning of the 1940 Act,
which means that the Fund is not limited by such Act in the proportion of its
assets that it may invest in securities of a single issuer. However, the Fund's
investments will be limited so as to enable the Fund to qualify as a "regulated
investment company" ("RIC") for purposes of the Internal Revenue Code of 1986,
as amended (the "Code"). Accordingly, the Fund will limit its investments so
that, at the close of each quarter of its taxable year, (i) not more than 25% of
the value of its total assets will be invested in the securities (including
Corporate Loans but excluding U.S. Government securities) of a single issuer and
(ii) with respect to 50% of the value of its total assets, its investments will
consist of cash, U.S. Government securities and securities of other issuers
limited, in respect of any one issuer, to not more than 5% of the value of its
total assets and not more than 10% of the issuer's outstanding voting
securities. To the extent the Fund assumes large positions in the securities of
a small number of issuers, the Fund's yield may fluctuate to a greater extent
than that of a diversified company as a result of changes in the financial
condition or in the market's assessment of the issuers. However, the Fund has no
current intention of investing more than 15% of its assets in the obligations of
any single Borrower.
DESCRIPTION OF CORPORATE LOANS AND CORPORATE DEBT SECURITIES
The Corporate Loans and Corporate Debt Securities in which the Fund invests
primarily consist of obligations of a Borrower undertaken to finance the growth
of the Borrower's business internally or externally, or to finance a capital
restructuring. Corporate Loans and Corporate Debt Securities may also include
senior obligations of a Borrower issued in connection with a restructuring
pursuant to Chapter 11 of the United States Bankruptcy Code provided that such
senior obligations meet the credit standards established by AIM and the
Sub-advisor. It is anticipated that a significant portion of such Corporate
Loans and Corporate Debt Securities may be issued in highly leveraged
transactions such as leveraged buy-out loans, leveraged recapitalization loans
and other types of acquisition financing. Such Corporate Loans and Corporate
Debt Securities present special risks. See "Special Considerations and Risk
Factors." Such Corporate Loans may be structured to include both term loans,
which are generally fully funded at the time of the Fund's investment, and
revolving credit facilities, which would require the Fund to make additional
investments in the Corporate Loans as required under the terms of the credit
facility. Such Corporate Loans may also include receivables purchase facilities,
which are similar to revolving credit facilities secured by a Borrower's
receivables.
The Fund may invest in Corporate Loans and Corporate Debt Securities which are
made to non-U.S. Borrowers, provided that the loans are U.S. dollar-denominated
or otherwise provide for payment in U.S. dollars, and any such Borrower meets
the credit standards established by AIM and the Sub-advisor for U.S. Borrowers.
The Fund similarly may invest in Corporate Loans and Corporate Debt Securities
made to U.S. Borrowers with significant non-U.S. dollar-denominated revenues,
provided that the loans are U.S. dollar-denominated or otherwise provide for
payment to the Fund in U.S. dollars. In all cases where the Corporate Loans or
Corporate Debt Securities are not denominated in U.S. dollars, provision will be
made for payments to the Lenders, including the Fund, in U.S. dollars pursuant
to foreign currency swap arrangements. Loans to such non-U.S. Borrowers or U.S.
Borrowers may involve risks not typically involved in domestic investment,
including fluctuation in foreign exchange rates, future foreign political and
economic developments, and the possible imposition of exchange controls or other
foreign or U.S. governmental laws or restrictions applicable to such loans. With
respect to certain foreign countries, there is the possibility of expropriation
or confiscatory taxation, political or social instabil-
7
<PAGE> 10
ity, or diplomatic developments which could affect the Fund's investments in
those countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payment position. In addition, information with respect to non-U.S.
Borrowers may differ from that available with respect to U.S. Borrowers, since
foreign companies are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. Borrowers.
The Corporate Loans and Corporate Debt Securities in which the Fund invests
will, in most instances, hold the most senior position in the capitalization
structure of the Borrower, and in any case will, in the judgment of the
Sub-advisor, be in the category of senior debt of the Borrower. Each Corporate
Loan and Corporate Debt Security will generally be secured by collateral the
value of which generally will be determined by reference to financial statements
of the Borrower, by an independent appraisal, by obtaining the market value of
such collateral (e.g., cash or securities) if it is readily ascertainable and/or
by other customary valuation techniques considered appropriate in the judgment
of the Sub-advisor. The Sub-advisor generally expects the value of the
collateral securing a Corporate Loan or Corporate Debt Security to be greater
than the value of such Corporate Loan or Corporate Debt Security. However, the
value of such collateral may be equal to or less than the value of the Corporate
Loan or Corporate Debt Security that it secures. Accordingly, in the event of a
default, the Fund may incur a loss. The ability of the Lender to have access to
the collateral may be limited by bankruptcy and other insolvency laws. Under
certain circumstances, the collateral may be released with the consent of the
Agent Bank and Lenders or pursuant to the terms of the underlying credit
agreement with the Borrower or bond indenture. There is no assurance that the
liquidation of the collateral would satisfy the Borrower's obligation in the
event of nonpayment of scheduled interest or principal, or that the collateral
could be readily liquidated. As a result, the Fund might not receive payments to
which it is entitled and thereby may experience a decline in the value of the
investment and, possibly, its net asset value.
In the case of highly leveraged loans, a Borrower generally is required to
pledge collateral which may include (i) working capital assets, such as accounts
receivable or inventory, (ii) tangible fixed assets, such as real property,
buildings and equipment, (iii) intangible assets, such as trademarks, copyrights
and patent rights and (iv) security interests in securities of subsidiaries or
affiliates. In the case of Corporate Loans to or Corporate Debt Securities of
privately held companies, the companies' owners may pledge additional security
in the form of guarantees and/or other securities that they own. There may be
temporary periods in the course of providing financing to a Borrower where the
collateral for the loan consists of common stock having a value not less than
200% of the value of the loan on the date the loan is made. Under such
circumstances, the Borrower generally proceeds with a subsequent transaction
which will permit it to pledge sufficient assets as collateral for the loan,
although there can be no assurance that the Borrower will be able to effect such
transaction.
The rate of interest payable on floating or variable rate Corporate Loans or
Corporate Debt Securities is established as the sum of a base lending rate plus
a specified margin. These base lending rates generally are LIBOR, the Prime Rate
of a designated U.S. bank, or another base lending rate used by commercial
lenders. The interest rate on Prime Rate-based Corporate Loans and Corporate
Debt Securities floats daily as the Prime Rate changes, while the interest rate
on LIBOR-based Corporate Loans and Corporate Debt Securities is reset
periodically, typically every 30 days to one year. Certain of the floating or
variable rate Corporate Loans and Corporate Debt Securities in which the Fund
will invest may permit the Borrower to select an interest rate reset period of
up to one year. A portion of the Fund's investments may consist of Corporate
Loans with interest rates that are fixed for the term of the loan. Investment in
Corporate Loans and Corporate Debt Securities with longer interest rate reset
periods or fixed interest rates may increase fluctuations in the Fund's net
asset value as a result of changes in interest rates. However the Fund will
attempt to hedge all of its fixed-rate Corporate Loans and Corporate Debt
Securities against fluctuations in interest rates by entering into interest rate
swap transactions. The Fund also will attempt to maintain a portfolio of
Corporate Loans and Corporate Debt Securities that will have a dollar weighted
average period to the next interest rate adjustment of no more than 90 days.
Corporate Loans and Corporate Debt Securities traditionally have been
structured so that Borrowers pay higher margins when they elect LIBOR, in order
to permit lenders to obtain generally consistent yields on Corporate Loans and
Corporate Debt Securities, regardless of whether Borrowers select the LIBOR
option, or the Prime-based option. In recent years, however, the differential
between the lower LIBOR base rates and the higher Prime Rate base rates
prevailing in the commercial bank markets has widened to the point where the
higher margins paid by Borrowers for LIBOR pricing options do not currently
compensate for the differential between the Prime Rate and the LIBOR rates.
Consequently, Borrowers have increasingly selected the LIBOR-based pricing
option, resulting in a yield on Corporate Loans and Corporate Debt Securities
that is consistently lower than the yield would be if Borrowers selected the
Prime Rate-based pricing option. This trend will significantly limit the ability
of the Fund to achieve a net return to stockholders that consistently
approximates the average published prime rate of leading U.S. banks. At the date
of this Prospectus, the Sub-advisor cannot predict any significant change in
this market trend.
The Fund may receive and/or pay certain fees in connection with its lending
activities. These fees are in addition to interest payments received and may
include facility fees, commitment fees, commissions and prepayment penalty fees.
When the Fund buys a Corporate Loan or Corporate Debt Security it may receive a
facility fee and when it sells a Corporate Loan or Corporate Debt Security may
pay a facility fee. In certain circumstances, the Fund may receive a prepayment
penalty fee on the prepayment of a Corporate Loan or Corporate Debt Security by
a Borrower. In connection with the acquisition of Corporate Loans or Corporate
Debt Securities, the Fund may also acquire warrants and other equity securities
of the Borrower or its affiliates. The acquisition of such equity securities
will only be incidental to the Fund's purchase of a Corporate Debt Security or
an interest in a Corporate Loan.
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<PAGE> 11
The Fund invests in a Corporate Loan or Corporate Debt Security only if, in
the Sub-advisor's judgment, the Borrower can meet debt service on such loan or
security. In addition, the Sub-advisor considers other factors deemed by it to
be appropriate to the analysis of the Borrower and the Corporate Loan or
Corporate Debt Security. Such factors include financial ratios of the Borrower
such as interest coverage, fixed charge coverage and leverage ratios. In its
analysis of these factors, the Sub-advisor also will be influenced by the nature
of the industry in which the Borrower is engaged, the nature of the Borrower's
assets and the Sub-advisor's assessment of the general quality of the Borrower.
The factors utilized have been reviewed by the Fund's Board of Trustees.
The primary consideration in selecting such Corporate Loans and Corporate Debt
Securities for investment by the Fund is the creditworthiness of the Borrower.
In evaluating Corporate Loans and Corporate Debt Securities, the quality ratings
assigned to other debt obligations of a Borrower may not be a determining
factor, since they will often be subordinated to the Corporate Loans or
Corporate Debt Securities. Instead, the Sub-advisor performs its own independent
credit analysis of the Borrower, and of the collateral structure for the loan or
security. In making this analysis, the Sub-advisor utilizes any offering
materials and in the case of Corporate Loans, information prepared and supplied
by the Agent Bank, Lender or Participant from whom the Fund purchases its
Participation Interest in a Corporate Loan. The Sub-advisor's analysis will
continue on an ongoing basis for any Corporate Loans and Corporate Debt
Securities in which the Fund has invested. Although the Sub-advisor will use due
care in making such analysis, there can be no assurance that such analysis will
disclose factors which may impair the value of the Corporate Loan or Corporate
Debt Security.
Corporate Loans and Corporate Debt Securities made in connection with highly
leveraged transactions are subject to greater credit risks than other Corporate
Loans and Corporate Debt Securities in which the Fund may invest. These credit
risks include a greater possibility of default or bankruptcy of the Borrower and
the assertion that the pledging of collateral to secure the loan constituted a
fraudulent conveyance or preferential transfer which can be nullified or
subordinated to the rights of other creditors of the Borrower under applicable
law. Highly leveraged Corporate Loans and Corporate Debt Securities also may be
less liquid than other Corporate Loans and Corporate Debt Securities.
A Borrower also must comply with various restrictive covenants contained in
any Corporate Loan agreement between the Borrower and the lending syndicate
("Corporate Loan Agreement") or in any trust indenture or comparable document in
connection with a Corporate Debt Security ("Corporate Debt Security Document").
Such covenants, in addition to requiring the scheduled payment of interest and
principal, may include restrictions on dividend payments and other distributions
to stockholders, provisions requiring the Borrower to maintain specific
financial ratios or relationships and limits on total debt. In addition, the
Corporate Loan Agreement or Corporate Debt Security Document may contain a
covenant requiring the Borrower to prepay the Corporate Loan or Corporate Debt
Security with any excess cash flow. Excess cash flow generally includes net cash
flow after scheduled debt service payments and permitted capital expenditures,
among other things, as well as the proceeds from asset dispositions or sales of
securities. A breach of a covenant (after giving effect to any cure period) in a
Corporate Loan Agreement which is not waived by the Agent Bank and the lending
syndicate normally is an event of acceleration; i.e., the Agent Bank has the
right to demand immediate repayment in full of the outstanding Corporate Loan.
Acceleration may also occur in the case of the breach of a covenant in a
Corporate Debt Security Document.
It is expected that a majority of the Corporate Loans and Corporate Debt
Securities held by the Fund will have stated maturities ranging from three to
ten years. However, such Corporate Loans and Corporate Debt Securities usually
will require, in addition to scheduled payments of interest and principal, the
prepayment of the Corporate Loan or Corporate Debt Security from excess cash
flow, as discussed above, and may permit the Borrower to prepay at its election.
The degree to which Borrowers prepay Corporate Loans and Corporate Debt
Securities, whether as a contractual requirement or at their election, may be
affected by general business conditions, the financial condition of the Borrower
and competitive conditions among lenders, among other factors. Accordingly,
prepayments cannot be predicted with accuracy. Upon a prepayment, the Fund may
receive both a prepayment penalty fee from the prepaying Borrower and a facility
fee on the purchase of a new Corporate Loan or Corporate Debt Security with the
proceeds from the prepayment of the former. Such fees may help mitigate any
adverse impact on the yield on the Fund's investments which may arise as a
result of prepayments and the reinvestment of such proceeds in Corporate Loans
or Corporate Debt Securities bearing lower interest rates.
Loans to non-U.S. Borrowers and to U.S. Borrowers with significant non-U.S.
dollar-denominated revenues may provide for conversion of all or part of the
loan from a U.S. dollar-denominated obligation into a foreign currency
obligation at the option of the Borrower. The Fund may invest in Corporate Loans
and Corporate Debt Securities which have been converted into non-U.S. dollar-
denominated obligations only when provision is made for payments to the lenders
in U.S. dollars pursuant to foreign currency swap arrangements. Foreign currency
swaps involve the exchange by the lenders, including the Fund, with another
party (the "counterparty") of the right to receive the currency in which the
loans are denominated for the right to receive U.S. dollars. The Fund will enter
into a transaction subject to a foreign currency swap only if, at the time of
entering into such swap, the outstanding debt obligations of the counterparty
are investment grade, i.e., rated BBB or A-3 or higher by Standard & Poor's or
Baa or P-3 or higher by Moody's or determined to be of comparable quality in the
judgment of the Sub-advisor. The amounts of U.S. dollar payments to be received
by the lenders and the foreign currency payments to be received by the
counterparty are fixed at the time the swap arrangement is entered into.
Accordingly, the swap protects the Fund from the fluctuations in exchange rates
and locks in the right to receive payments under the loan in a predetermined
amount of U.S. dollars. If there is a default by the counterparty, the Fund will
have contractual remedies pursuant to the swap arrangements; however, the U.S.
dollar value of the Fund's right to foreign currency payments under the loan
will be subject to fluctuations in the applicable exchange rate to the extent
that a replacement swap arrangement is
9
<PAGE> 12
unavailable or the Fund is unable to recover damages from the defaulting
counterparty. If the Borrower defaults on or prepays the underlying Corporate
Loan or Corporate Debt Security, the Fund may be required pursuant to the swap
arrangements to compensate the counterparty to the extent of fluctuations in
exchange rates adverse to the counterparty. In the event of such a default or
prepayment, an amount of cash or high grade liquid debt securities having an
aggregate net asset value at least equal to the amount of compensation that must
be paid to the counterparty pursuant to the swap arrangements will be maintained
in a segregated account by the Fund's custodian.
DESCRIPTION OF PARTICIPATION INTERESTS AND ASSIGNMENTS
A Corporate Loan in which the Fund may invest typically is originated,
negotiated and structured by a syndicate of Lenders consisting of commercial
banks, thrift institutions, insurance companies, finance companies or other
financial institutions, which is administered on behalf of the syndicate by an
Agent Bank. The investment of the Fund in a Corporate Loan may take the form of
Participation Interests or Assignments. Participation Interests may be acquired
from a Lender or other Participants. If the Fund purchases a Participation
Interest either from a Lender or a Participant, the Fund will not have
established any direct contractual relationship with the Borrower. The Fund
would be required to rely on the Lender or the Participant that sold the
Participation Interest not only for the enforcement of the Fund's rights against
the Borrower but also for the receipt and processing of payments due to the Fund
under the Corporate Loans. The Fund is thus subject to the credit risk of both
the Borrower and a Participant. Lenders and Participants interposed between the
Fund and a Borrower, together with Agent Banks, are referred to herein as
"Intermediate Participants."
On the other hand, if the Fund purchases an Assignment from a Lender, the Fund
will generally become a "Lender" for purposes of the relevant loan agreement,
with direct contractual rights thereunder and under any related collateral
security documents in favor of the Lenders. An Assignment from a Lender gives
the Fund the right to receive payments of principal and interest and other
amounts directly from the Borrower and to enforce its rights as a Lender
directly against the Borrower. The Fund will not act as an Agent Bank guarantor,
sole negotiator or sole structuror with respect to a Corporate Loan.
Because it may be necessary to assert through an Intermediate Participant such
rights as may exist against the Borrower, in the event the Borrower fails to pay
principal and interest when due, the Fund may be subject to delays, expenses and
risks that are greater than those that would be involved if the Fund could
enforce its rights directly against the Borrower. Moreover, under the terms of a
Participation, the Fund may be regarded as a creditor of the Intermediate
Participant (rather than of the Borrower), so that the Fund may also be subject
to the risk that the Intermediate Participant may become insolvent. Similar
risks may arise with respect to the Agent Bank, as described below. Further, in
the event of the bankruptcy or insolvency of the Borrower, the obligation of the
Borrower to repay the Corporate Loan may be subject to certain defenses that can
be asserted by such Borrower as a result of improper conduct by the Agent Bank
or Intermediate Participant. The Fund will invest in Corporate Loans only if, at
the time of investment, all outstanding debt obligations of the Agent Bank and
Intermediate Participants are investment grade, i.e., rated BBB or A-3 or higher
by Standard & Poor's or Baa or P-3 or higher by Moody's or determined to be of
comparable quality in the judgment of the Sub-advisor.
The Fund has no current intention of investing more than 20% of its assets in
the obligations of Borrowers in any single industry. However, because the Fund
will regard the issuer of a Corporate Loan as including the Agent Bank and any
Intermediate Participant as well as the Borrower, the Fund may be deemed to be
concentrated in securities of issuers in the industry group consisting of
financial institutions and their holding companies, including commercial banks,
thrift institutions, insurance companies and finance companies. As a result, the
Fund is subject to certain risks associated with such institutions. Banking and
thrift institutions are subject to extensive governmental regulations which may
limit both the amounts and types of loans and other financial commitments which
such institutions may make and the interest rates and fees which such
institutions may charge. The profitability of these institutions is largely
dependent on the availability and cost of capital funds, and has shown
significant recent fluctuation as a result of volatile interest rate levels. In
addition, general economic conditions are important to the operations of these
institutions, with exposure to credit losses resulting from possible financial
difficulties of borrowers potentially having an adverse effect. Insurance
companies are also affected by economic and financial conditions and are subject
to extensive government regulation, including rate regulation. The property and
casualty companies may be exposed to material risks, including reserve
inadequacy, latent health exposure and inability to collect from their
reinsurance carriers. The financial services area is currently undergoing
relatively rapid change as existing distinctions between financial service
segments become less clear. In this regard, recent business combinations have
included insurance, finance and securities brokerage under single ownership.
Moreover, under recently enacted federal laws, banks, securities firms,
insurance companies, and other firms engaged in financial activities may be
affiliated in financial holding company structures.
In a typical Corporate Loan, the Agent Bank administers the terms of the
Corporate Loan Agreement and is responsible for the collection of principal and
interest and fee payments from the Borrower and the apportionment of these
payments to the credit of all lenders which are parties to the Corporate Loan
Agreement. The Fund generally will rely on the Agent Bank or an Intermediate
Participant to collect its portion of the payments on the Corporate Loan.
Furthermore, the Fund will rely on the Agent Bank to use appropriate creditor
remedies against the Borrower. Typically, under Corporate Loan Agreements, the
Agent Bank is given broad discretion in enforcing the Corporate Loan Agreement,
and is obligated to use only the same care it would use in the management of its
own property. The Borrower compensates the Agent Bank for these services. Such
compensation may include special fees paid on structuring and funding the
Corporate Loan and other fees paid on a continuing basis.
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<PAGE> 13
In the event that an Agent Bank becomes insolvent, or has a receiver,
conservator, or similar official appointed for it by the appropriate bank
regulatory authority or becomes a debtor in a bankruptcy proceeding, assets held
by the Agent Bank under the Corporate Loan Agreement should remain available to
holders of Corporate Loans. If, however, assets held by the Agent Bank for the
benefit of the Fund were determined by an appropriate regulatory authority or
court to be subject to the claims of the Agent Bank's general or secured
creditors, the Fund might incur certain costs and delays in realizing payment on
a Corporate Loan or suffer a loss of principal and/or interest. In situations
involving Intermediate Participants, similar risks may arise as described above.
Intermediate Participants may have certain obligations pursuant to a Corporate
Loan Agreement, which may include the obligation to make future advances to the
Borrower in connection with revolving credit facilities in certain
circumstances. The Fund currently intends to reserve against such contingent
obligations by segregating sufficient investments in high quality, short-term,
liquid instruments. The Fund will not invest in Corporate Loans that would
require the Fund to make any additional investments in connection with such
future advances if such commitments would exceed 20% of the Fund's total assets
or would cause the Fund to fail to meet the diversification requirements
described under "Investment Objective and Policies."
ILLIQUID SECURITIES
Some Corporate Loans and Corporate Debt Securities are, at present, not
readily marketable and may be subject to restrictions on resale. Although
Corporate Loans and Corporate Debt Securities are transferred among certain
financial institutions, as described above, certain of the Corporate Loans and
Corporate Debt Securities in which the Fund invests do not have the liquidity of
conventional investment grade debt securities traded in the secondary market and
may be considered illiquid. As the market for Corporate Loans and Corporate Debt
Securities matures, the Sub-advisor expects that liquidity will continue to
improve. The Fund has no limitation on the amount of its investments which are
not readily marketable or are subject to restrictions on resale. Such
investments, which may be considered illiquid, may affect the Fund's ability to
realize the net asset value in the event of a voluntary or involuntary
liquidation of its assets. See "Net Asset Value" for information with respect to
the valuation of illiquid Corporate Loans and Corporate Debt Securities.
OTHER INVESTMENT POLICIES
The Fund has adopted certain other policies as set forth below:
BORROWING. The Fund is authorized to borrow money in amounts of up to 33 1/3%
of the value of its total assets at the time of such borrowings. Borrowings by
the Fund create an opportunity for greater total return but, at the same time,
increase exposure to capital risk. In addition, borrowed funds are subject to
interest costs that may offset or exceed the return earned on the borrowed
funds. The Fund has no current intention of borrowing to finance additional
investments. See "Special Considerations and Risk Factors -- Effects of
Borrowing."
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
respect to its permitted investments but currently intends to do so only with
member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. Under a repurchase agreement, the Fund buys a security at
one price and simultaneously promises to sell that same security back to the
seller at a higher price. The Fund's repurchase agreements will provide that the
value of the collateral underlying the repurchase agreement will always be at
least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement, and will be marked to market daily. The repurchase
date usually is within seven days of the original purchase date. Repurchase
agreements are deemed to be loans under the 1940 Act. In all cases, the
Sub-advisor must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of the
bankruptcy (or other insolvency proceeding) of the other party to a repurchase
agreement, the Fund might experience delays in recovering its cash. To the
extent that, in the meantime, the value of the securities the Fund purchases may
have declined, the Fund could experience a loss.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio with a value not exceeding 33 1/3% of its total
assets to banks, brokers and other financial institutions and receive collateral
in cash or securities issued or guaranteed by the U.S. Government. Such
collateral will be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities. This limitation is a
fundamental policy, and it may not be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, as defined in
the 1940 Act. The purpose of such loans is to permit the borrower to use such
securities for delivery to purchasers when such borrower has sold short. If cash
collateral is received by the Fund, it is invested in short-term money market
securities, and a portion of the yield received in respect of such investment is
retained by the Fund. Alternatively, if securities are delivered to the Fund as
collateral, the Fund and the borrower negotiate a rate for the loaned premium to
be received by the Fund for lending its portfolio securities. In either event,
the total yield on the Fund is increased by loans of its securities. The Fund
will have the right to regain record ownership of loaned securities to exercise
beneficial rights such as voting rights, subscription rights and rights to
dividends, interest or other distributions. Such loans are terminable at any
time. The Fund may pay reasonable finder's, administrative and custodial fees in
connection with such loans. In the event that the borrower defaults on its
obligation to return borrowed securities, because of insolvency or otherwise,
the Fund could experience delays and costs in gaining access to the collateral
and could suffer a loss to the extent that the value of the collateral falls
below the market value of the borrowed securities.
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<PAGE> 14
"WHEN ISSUED" AND "DELAYED DELIVERY" TRANSACTIONS. The Fund may also purchase
and sell interests in Corporate Loans and Corporate Debt Securities and other
portfolio securities on a "when issued" and "delayed delivery" basis. No income
accrues to the Fund on such interests or securities in connection with such
transactions prior to the date the Fund actually takes delivery of such
interests or securities. These transactions are subject to market fluctuation;
the value of the interests in Corporate Loans and Corporate Debt Securities and
other portfolio debt securities at delivery may be more or less than their
purchase price, and yield generally available on such interests or securities
when delivery occurs may be higher than yields on the interests or securities
obtained pursuant to such transactions. Because the Fund relies on the buyer or
seller, as the case may be, to consummate the transaction, failure by the other
party to complete the transaction may result in the Fund missing the opportunity
of obtaining a price or yield considered to be advantageous. When the Fund is
the buyer in such a transaction, however, it will segregate with its custodian,
cash or other liquid assets having an aggregate value equal to the amount of
such purchase commitments until payment is made. The Fund will make commitments
to purchase such interests or securities on such basis only with the intention
of actually acquiring these interests or securities, but the Fund may sell such
interests or securities prior to the settlement date if such sale is considered
to be advisable. To the extent the Fund engaged in "when issued" and "delayed
delivery" transactions, it will do so for the purpose of acquiring interests or
securities for the Fund consistent with the Fund's investment objective and
policies and not for the purpose of investment leverage. No specific limitation
exists as to the percentage of the Fund's assets which may be used to acquire
securities on a "when issued" or "delayed delivery" basis.
INTEREST RATE HEDGING TRANSACTIONS. Certain federal income tax requirements
may limit the Fund's ability to engage in interest rate hedging transactions.
Gains from transactions in interest rate hedges distributed to stockholders will
be taxable as ordinary income or, in certain circumstances, as long-term capital
gains. See "Taxes."
The Fund will enter into interest rate swaps in order to hedge all of its
fixed rate Corporate Loans and Corporate Debt Securities against fluctuations in
interest rates. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, such
as an exchange of fixed rate payments for floating rate payments. For example,
if the Fund holds a Corporate Loan or Corporate Debt Security with an interest
rate that is reset only once each year, it may swap the right to receive
interest at this fixed rate for the right to receive interest at a rate that is
reset every week. This would enable the Fund to offset a decline in the value of
the Corporate Loan or Corporate Debt Security due to rising interest rates, but
would also limit its ability to benefit from falling interest rates.
Inasmuch as these interest rate hedging transactions are entered into for good
faith hedging purposes, the Sub-advisor believes that such obligations do not
constitute senior securities and, accordingly, will not treat them as being
subject to its borrowing restrictions. The Fund usually will enter into interest
rate swaps on a net basis, i.e., the two payment streams are netted out, with
the Fund receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of the Fund's obligations over
its entitlements with respect to each interest rate swap will be accrued on a
daily basis, and an amount of cash or other liquid assets having an aggregate
net asset value at least equal to the accrued excess will be segregated by the
Fund's custodian. If the interest rate swap transaction is entered into on other
than a net basis, the full amount of the Fund's obligations will be accrued on a
daily basis, and the full amount of the Fund's obligations will be segregated by
the Fund's custodian. The Fund will not enter into any interest rate hedging
transaction unless the Sub-advisor considers the credit quality of the unsecured
senior debt or the claims-paying ability of the other party thereto to be
investment grade. If there is a default by the other party to such a
transaction, the Fund will have contractual remedies pursuant to the agreements
related to the transaction but such remedies may be subject to bankruptcy and
insolvency laws which could affect the Fund's rights as a creditor. The swap
market has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, many portions of the swap market
have become relatively liquid in comparison with other similar instruments
traded in the interbank market. In addition, although the terms of interest rate
swaps may provide for termination, there can be no assurance the Fund will be
able to terminate an interest rate swap or to sell or offset interest rate caps
or floors that it has purchased.
The use of interest rate hedges is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio transactions. If the Sub-advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of the Fund would diminish compared with what it would
have been if these investment techniques were not used.
Except as noted above, there is no limit on the amount of interest rate
hedging transactions that may be entered into by the Fund. These transactions do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate hedges is limited to
the net amount of interest payments that the Fund is contractually obligated to
make. If the Corporate Loan underlying an interest rate swap is prepaid and the
Fund continues to be obligated to make payments to the other party to the swap,
the Fund would have to make such payments from another source. If the other
party to an interest rate swap defaults, the Fund's risk of loss consists of the
net amount of interest payments that the Fund contractually is entitled to
receive. Since interest rate transactions are individually negotiated, the
Sub-advisor expects to achieve an acceptable degree of correlation between the
Fund's rights to receive interest on Participation Interests and its rights and
obligations to receive and pay interest pursuant to interest rate swaps.
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<PAGE> 15
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INVESTMENT RESTRICTIONS
The following are fundamental investment restrictions of the Fund and may not
be changed without the approval of the holders of a majority of the Fund's
outstanding Shares (which for this purpose and under the 1940 Act means the
lesser of (i) 67% of the Shares represented at a meeting at which more than 50%
of the outstanding Shares are represented or (ii) more than 50% of the
outstanding Shares). The Fund may not:
1. Borrow money or issue senior securities, except as permitted by
Section 18 of the 1940 Act.
2. Purchase or sell real estate; provided that the Fund may invest in
securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
3. Underwrite securities of other issuers except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in selling
portfolio securities.
4. Make loans to other persons, except that the Fund may invest in
loans (including Assignments and Participations, and including secured or
unsecured Corporate Loans), purchase debt securities, enter into repurchase
agreements, and lend its portfolio securities.
5. Invest more than 25% of its total assets in the securities of
issuers in any one industry; provided that this limitation shall not apply
with respect to obligations issued or guaranteed by the U.S. Government or
by its agencies or instrumentalities; and provided further that the Fund
may invest more than 25% of its assets in securities of issuers in the
industry group consisting of financial institutions and their holding
companies, including commercial banks, thrift institutions, insurance
companies and finance companies. For purposes of this restriction, the term
"issuer" includes the Borrower, the Agent Bank and any Intermediate
Participant (as defined under "Investment Objective and
Policies -- Description of Participation Interests and Assignments").
6. Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments.
An additional investment restriction adopted by the Fund, which may be changed
by the Fund's Board of Trustees, provides that the Fund may not mortgage,
pledge, hypothecate or in any manner transfer, as security for indebtedness, any
securities owned or held by the Fund except as may be necessary in connection
with hedging techniques involving interest rate transactions, foreign currency
swap transactions relating to non-U.S. dollar-denominated loans and permitted
borrowings by the Fund.
If a percentage restriction on investment policies or the investment or use of
assets set forth above is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing values will not be
considered a violation.
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SPECIAL CONSIDERATIONS AND RISK FACTORS
EFFECTS OF BORROWING. The Fund may borrow money in amounts up to 33 1/3% of
the value of its total assets to finance Repurchase Offers, for temporary,
extraordinary or emergency purposes, or for the purpose of financing additional
investments. See "Repurchase Offers." The Fund may borrow to finance additional
investments only when it believes that the return that may be earned on
investments purchased with the proceeds of such borrowings or offerings will
exceed the costs, including debt service and dividend obligations, associated
with such borrowings. However, to the extent such costs exceed the return on the
additional investments, the return realized by the Fund's Shareholders will be
adversely affected.
Capital raised through borrowing is subject to interest costs or dividend
payments which may or may not exceed the interest paid on the assets purchased.
In addition, the Fund also may be required to maintain minimum average balances
in connection with borrowings or to pay a commitment or other fee to maintain a
line of credit. Either of these requirements will increase the cost of borrowing
over the stated interest rate. Borrowing can create an opportunity for greater
income per Share, but such borrowing is also a speculative technique that will
increase the Fund's exposure to capital risk. Such risks may be reduced through
the use of borrowings that have floating rates of interest. Unless the income
and appreciation, if any, on assets acquired with borrowed funds exceeds the
costs of borrowing, the use of borrowing will diminish the investment
performance of the Fund, as compared to what it would have been without
leverage.
The Fund, along with certain other investment companies advised by AIM, have
entered into a committed, unsecured line of credit with a syndicate of banks in
the maximum aggregate principal amount of $1 billion. The interest paid under
the line of credit is based on one of several rates, to be selected at the
option of the Fund, including an adjusted Eurodollar rate based on the LIBOR, a
rate based on the Federal Funds rate, and a daily rate based on the prime rate.
The Fund expects to repay any amount borrowed under the line of credit with the
proceeds of sales of additional Fund Shares or sales of portfolio securities
held by the Fund.
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<PAGE> 16
Under the 1940 Act, once the Fund incurs indebtedness, it must immediately
have asset coverage of 300% of the aggregate outstanding principal balance of
indebtedness in place. Additionally, the 1940 Act requires that, before the Fund
declares any dividend or other distribution upon any class of Shares, or
purchases any such Shares, it have in place asset coverage of at least 300% of
the aggregate indebtedness of the Fund, after deducting the amount of such
dividend, distribution, or purchase price.
The Fund's willingness to borrow money for investment purposes, and the amount
it borrows depends upon many factors, the most important of which are investment
outlook, market conditions and interest rates. Successful use of a leveraging
strategy depends on the Sub-advisor's ability to predict correctly interest
rates and market movements, and a leveraging strategy may not be successful
during any period in which it is employed.
CREDIT RISK. Corporate Loans and Corporate Debt Securities may constitute
substantially all of the Fund's investments. Corporate Loans and Corporate Debt
Securities are primarily dependent upon the creditworthiness of the Borrower for
payment of interest and principal. If the Fund doesn't receive scheduled
interest or principal payments on a Corporate Loan or Corporate Debt Security it
may adversely affect the income of the Fund or the value of its investments,
which may in turn reduce the amount of dividends or the net asset value of the
shares of the Fund. The Fund's ability to receive payment of principal of and
interest on a Corporate Loan or a Corporate Debt Security also depends upon the
creditworthiness of any institution interposed between the Fund and the
Borrower. To reduce credit risk, the Sub-advisor actively manages the Fund as
described above.
Corporate Loans and Corporate Debt Securities made in connection with
leveraged buy-outs, recapitalizations and other highly leveraged transactions
are subject to greater credit risks than many of the other Corporate Loans and
Corporate Debt Securities in which the Fund may invest. These credit risks
include the possibility of default on the Corporate Loan or Corporate Debt
Security or bankruptcy of the Borrower. The value of such Corporate Loans and
Corporate Debt Securities are also subject to a greater degree of volatility in
response to interest rate fluctuations and may be less liquid than other
Corporate Loans and Corporate Debt Securities.
Although Corporate Loans and Corporate Debt Securities in which the Fund
invests generally hold the most senior position in the capitalization structure
of the Borrowers, the capitalization of many Borrowers also includes
non-investment grade subordinated debt. During periods of deteriorating economic
conditions, a Borrower may experience difficulty in meeting its payment
obligations under such bonds and other subordinated debt obligations. Such
difficulties may detract from the Borrower's perceived creditworthiness or its
ability to obtain financing to cover short-term cash flow needs and may force
the Borrower into bankruptcy or other forms of credit restructuring.
COLLATERAL IMPAIRMENT. Corporate Loans and Corporate Debt Securities
(excluding Unsecured Corporate Loans and Unsecured Corporate Debt Securities)
will be secured unless (i) the Fund's security interest in the collateral is
invalidated for any reason by a court or (ii) the collateral is fully released
under the terms of a loan agreement as the creditworthiness of the Borrower
improves. The liquidation of collateral may not satisfy the Borrower's
obligation in the event of nonpayment of scheduled interest or principal and
that collateral may not be readily liquidated. The value of collateral is
generally determined by reference to: (i) financial statements of the Borrower,
(ii) an independent appraisal performed at the request of the Agent Bank at the
time the Corporate Loan was initially made, (iii) the market value of such
collateral (e.g., cash or securities) if it is readily ascertainable, and/or
(iv) other customary valuation techniques considered appropriate in the judgment
of the Sub-advisor. Collateral is generally valued on the basis of the
Borrower's status as a going concern and such valuation may exceed the immediate
liquidation value of the collateral.
Collateral may include: (i) working capital assets, such as accounts
receivable and inventory; (ii) tangible fixed assets, such as real property,
buildings, and equipment; (iii) intangible assets, such as trademarks and patent
rights (but excluding goodwill); and (iv) security interests in shares of stock
of subsidiaries or affiliates. Corporate Loans and Corporate Debt Securities
collateralized by the stock of the Borrower's subsidiaries and other affiliates
are subject to the risk that the stock will decline in value. Such declines in
value, whether a result of bankruptcy proceedings or otherwise, could cause the
Corporate Loans or Corporate Debt Securities to become undercollateralized or
unsecured. Most credit agreements do not formally require Borrowers to pledge
additional collateral.
There may be temporary periods in which the principal asset held by a Borrower
is the stock of a related company, which may not legally be pledged to secure a
Corporate Loan or Corporate Debt Security. During such periods, the Corporate
Loan or Corporate Debt Security will temporarily be unsecured, until the legal
restriction on pledging the stock has been lifted or the stock is exchanged for
other assets that may be pledged as collateral for the Corporate Loan or
Corporate Debt Security. The Borrower's ability to dispose of such securities,
other than in connection with such pledge or exchange, is strictly limited for
the protection of the holders of Corporate Loans.
The shareholders or owners of non-public companies may provide as collateral
for Corporate Loans secured guarantees and/or security interests in assets that
they own as individuals. These Corporate Loans may be fully secured by the
assets of such shareholders or owners, even if they are not otherwise
collateralized by any assets of the Borrower.
If a Borrower becomes involved in bankruptcy proceedings, a court may
invalidate the Fund's security interest in the Corporate Loan or Corporate Debt
Security collateral or subordinate the Fund's rights under the Corporate Loan or
Corporate Debt Security to the interests of the Borrower's unsecured creditors.
Such an action could be based, for example, on a "fraudulent conveyance" claim
to the effect that the Borrower did not receive fair consideration for granting
the security interest in the Corporate Loan or Corporate Debt Security
collateral to the Fund. For Corporate Loans or Corporate Debt Securities made in
connection with a highly leveraged
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<PAGE> 17
transaction, consideration for granting a security interest may be deemed
inadequate if the proceeds of the Corporate Loan or Corporate Debt Security were
not received or retained by the Borrower, but were instead paid to other persons
(such as shareholders of the Borrower) in an amount which left the Borrower
insolvent or without sufficient working capital. There are also other events,
such as the failure to perfect a security interest due to faulty documentation
or faulty official filings, which could lead to the invalidation of the Fund's
security interest in Corporate Loan or Corporate Debt Security collateral. If
the Fund's security interest in Corporate Loan or Corporate Debt Security
collateral is invalidated or the Corporate Loan or Corporate Debt Security is
subordinated to other debt of a Borrower in bankruptcy or other proceedings, it
is unlikely that the Fund would be able to recover the full amount of the
principal and interest due on the Corporate Loan or Corporate Debt Security.
INVESTMENTS IN LOWER RATED SECURITIES. The Fund may invest all or
substantially all of its assets in Corporate Loans, Corporate Debt Securities or
other securities that are rated below investment grade by Moody's, comparably
rated by another NRSRO, or, if unrated, determined by the Sub-advisor to be of
equivalent quality. Debt rated Baa by Moody's is considered by Moody's to have
speculative characteristics. Debt rated Ba or B by Moody's is regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
While such lower quality debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Securities rated Ba and lower are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds," and
involve a high degree of risk. The Sub-advisor does not expect to invest in any
securities rated lower than B3 at the time of investment. If Corporate Loans or
Corporate Debt Securities are downgraded, the Sub-advisor will consider whether
it will dispose of such Corporate Loans or Corporate Debt Securities.
Ratings of debt securities represent the rating agency's opinion regarding
their quality and are not a guarantee of quality. Rating agencies attempt to
evaluate the safety of principal and interest payments and do not evaluate the
risks of fluctuations in market value. Also, rating agencies may fail to make
timely changes in credit quality in response to subsequent events, so that an
issuer's current financial condition may be better or worse than a rating
indicates. See "Appendix A -- Description of Debt Securities Ratings" for a full
discussion of Moody's ratings.
The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. During an economic downturn or a sustained period of
rising interest rates, issuers of lower quality debt securities may not have
sufficient revenues to meet their interest payment obligations. Specific
developments affecting the issuer, such as the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing may adversely affect the issuer's ability to service its debt
obligations.
EFFECT OF INTEREST RATE CHANGES. Generally, changes in interest rates may
affect the market value of debt investments, resulting in changes in the net
asset value of the shares of funds investing in such investments. Portfolios
consisting primarily of floating and variable rate Corporate Loans, Corporate
Debt Securities, Unsecured Corporate Loans, Unsecured Corporate Debt Securities,
and short-term instruments are expected to experience less significant
fluctuations in value as a result of interest rate changes than portfolios of
fixed rate obligations. However, prepayments of principal by Borrowers (whether
as a result of a decline in interest rates or excess cash flow) may require that
the Fund replace its Corporate Loans, Corporate Debt Securities or other
investments with lower yielding securities, which may adversely affect the net
asset value of the Fund.
ILLIQUID INVESTMENTS AND REPURCHASE OFFERS. Certain of the Corporate Loans and
Corporate Debt Securities in which the Fund may invest are considered illiquid,
which may impair the Fund's ability to realize the full value of its assets in
the event of a voluntary or involuntary liquidation of such assets. To the
extent that such investments are illiquid, the Fund may have difficulty
disposing of portfolio securities. The Fund's Board of Trustees may consider the
liquidity of the Fund's securities in determining for what percentage of the
Fund's outstanding Shares each quarterly Repurchase Offer should be made. See
"Determination of Net Asset Value" for information with respect to the valuation
of illiquid Corporate Loans.
ANTI-TAKEOVER PROVISIONS. The Fund's Agreement and Declaration of Trust
include provisions that could have the effect of limiting the ability of other
entities or persons to acquire control of the Fund or to change the composition
of its Board of Trustees. These provisions could have the effect of depriving
Shareholders of opportunities to sell their shares at a premium over prevailing
market prices by discouraging third parties from seeking to obtain control of
the Fund. See "Description of Shares -- Certain Anti-Takeover Provisions of the
Agreement and Declaration of Trust."
PORTFOLIO MANAGEMENT AND OTHER CONSIDERATIONS. If short-term interest rates or
other market conditions change to the point where the Fund's leverage could
adversely affect Shareholders, or in anticipation of such changes, the Fund may
attempt to shorten the average maturity of its investment portfolio. Shortening
the portfolio's average maturity would tend to offset the negative impact of
leverage on Shareholders.
CONCENTRATION. The Fund is registered as a "non-diversified" investment
company so that it may invest more than 5% of its assets in the obligations of
any single issuer. This is subject to the diversification requirements of
Subchapter M of the Code, which is applicable to the Fund. Since the Fund may
invest a relatively high percentage of its assets in the obligations of a
limited number of
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<PAGE> 18
issuers, the Fund may be more susceptible than a more widely diversified fund to
any single economic, political or regulatory occurrence. However, the Fund has
no current intention of investing more than 15% of its assets in the obligations
of any single Borrower.
Although the Fund may, consistent with its fundamental limitations, invest up
to 25% of its total assets in the obligations of Borrowers in any single
industry, the Sub-advisor has no current intention of investing more than 20% of
the Fund's assets in the obligations of Borrowers in any single industry.
However, because the Fund regards the issuer of a Corporate Loan as including
the Agent Bank and any Intermediate Participant as well as the Borrower, the
Fund may be considered to be concentrated in securities of issuers in the
industry group consisting of financial institutions and their holding companies,
including commercial banks, thrift institutions, insurance companies and finance
companies. As a result, the Fund is subject to certain risks associated with
such institutions, including, among other things, changes in governmental
regulation, interest rate levels and general economic conditions.
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PURCHASE OF SHARES -- MULTIPLE PRICING SYSTEM
The Fund continuously offers its Shares through securities dealers that have
entered into selected dealer agreements with the Distributor. During any
continuous offering, Shares of the Fund may be purchased through such selected
dealers.
The Fund offers its Shares at a price equal to the next determined net asset
value per share without a front-end sales charge. As to purchase orders received
by securities dealers prior to the close of business on the New York Stock
Exchange, Inc. (the "NYSE") (generally, 4:00 p.m., New York time), which
includes orders received after the close of business on the previous day, the
applicable offering price will be based on the net asset value determined as of
the close of business on the NYSE on that day. If the purchase orders are not
received by the Distributor prior to the close of business on the NYSE, such
orders shall be deemed received on the next business day. Any order may be
rejected by the Distributor or the Fund. The Fund or the Distributor may suspend
the continuous offering of the Fund's Shares at any time in response to
conditions in the securities markets or otherwise and may thereafter resume such
offering from time to time. Neither the Distributor nor the dealers are
permitted to withhold placing orders to benefit themselves by a price change.
The Distributor is required to advise the Fund promptly of all purchase orders
and cause payments for Shares to be delivered promptly to the Fund.
Due to the administrative complexities associated with a continuous offering,
administrative errors may result in the Distributor or an affiliate
inadvertently acquiring nominal numbers (in no event in excess of 5%) of Shares
which it may wish to resell. Such Shares will not be subject to any investment
restriction and may be resold pursuant to this Prospectus.
The Fund offers two classes of Shares -- Class B and Class C. Each Share class
has its own sales charge and expense structure. Determining which Share class is
best for you depends in large part on the length of time you intend to hold your
investment. Based on your personal situation, your financial advisor can help
you decide which class of Shares makes the most sense for you.
CLASS B SHARES. Purchases of Class B Shares are at the Fund's net asset value.
Class B Shares have no front-end sales charge, but carry an EWC that is imposed
only on Shares sold prior to four years from their date of purchase. The EWC
declines each year and eventually disappears after four years. See "Early
Withdrawal Charges." Class B Shares also carry a 0.25% annual distribution and
service fee.
The Distributor compensates selected dealers at a rate of 3.0% of amounts of
Class B Shares sold. If the Shares remain outstanding after twelve months from
the date of their original purchase, the Distributor will additionally
compensate such dealers quarterly at an annual rate based on a percentage of the
value of such Shares sold by such dealers and remaining outstanding, and based
on the number of years the Shares have been outstanding: First year -- 0.00%;
Second year -- 0.10%; Third year -- 0.15%; Fourth year -- 0.20%; Fifth and
following years -- 0.25%.
CLASS C SHARES. Purchases of Class C Shares are also at the Fund's net asset
value. Although Class C Shares have no front-end sales charge, they have an EWC
of 1.0% that is applied to Shares that are sold within the first year after they
are purchased. The EWC on Class C shares disappears after one year. Class C
Shares also carry a 0.75% annual distribution and service fee (0.25% of which
the Distributor has agreed to waive).
The Distributor compensates selected dealers at a rate of 1.00% of amounts of
Class C Shares sold. If the Shares remain outstanding after twelve months from
the date of their original purchase, the Distributor will additionally
compensate such dealers quarterly at an annual rate of 0.50% of the value of
such Shares sold by such dealers and remaining outstanding.
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EARLY WITHDRAWAL CHARGE
As discussed above, an EWC to recover distribution expenses incurred by the
Distributor will be charged against the Shareholder's investment account and
paid to the Distributor in connection with most Class B Shares held for less
than four years, and most Class C Shares held for less than one year, that are
accepted by the Fund for repurchase pursuant to a Repurchase Offer. The EWC will
be imposed on those Shares accepted for repurchase based on an amount equal to
the lesser of the then current net asset value of the Shares or the original
purchase price of the Shares being repurchased. Accordingly, the EWC is not
imposed on increases in the net asset value
16
<PAGE> 19
above the initial purchase price. In addition, the EWC is not imposed on Shares
derived from reinvestment of dividends or capital gains distributions. In
determining whether an EWC is payable, it is assumed that the acceptance of an
offer to repurchase pursuant to a Repurchase Offer would be made from the
Shareholder's earliest purchase of Shares. Thus, in determining whether an EWC
is applicable to a repurchase of Shares, the calculation will be determined in
the manner that results in the lowest possible amount being charged.
The chart below indicates the respective EWCs for Class B and Class C Shares.
CLASS B SHARES
<TABLE>
<CAPTION>
EARLY
HOLDING PERIOD WITHDRAWAL
AFTER PURCHASE CHARGE
- -------------- ----------
<S> <C>
Through First Year.......................................... 3.0%
Through Second Year......................................... 2.5%
Through Third Year.......................................... 2.0%
Through Fourth Year......................................... 1.0%
Longer than Four Years...................................... 0.0%
</TABLE>
CLASS C SHARES
<TABLE>
<CAPTION>
EARLY
HOLDING PERIOD WITHDRAWAL
AFTER PURCHASE CHARGE
- -------------- ----------
<S> <C>
Through First Year.......................................... 1.0%
Longer than One Year........................................ 0.0%
</TABLE>
- --------------------------------------------------------------------------------
WAIVERS OF EARLY WITHDRAWAL CHARGE
EWCs will be waived with respect to the following purchasers because there is
a reduced sales effort involved in sales to these purchasers:
- AIM Management and its affiliates, or their clients;
- Any retired officer, director or employee (and members of their immediate
family) of AIM Management, its affiliates or The AIM Family of Funds, and
any foundation, trust or employee benefit plan established exclusively for
the benefit of, or by such persons;
- Any current or retired officer, director, or employee (and members of their
immediate family), of CIGNA Corporation or its affiliates, or of PFPC Inc.
(formerly First Data Investor Services Group); and any deferred compensation
plan for directors of investment companies sponsored by CIGNA Investments,
Inc. or its affiliates;
- Purchases through approved fee-based programs; and
- Employee benefit plans designated as purchasers as defined above, and
non-qualified plans offered in conjunction therewith, provided the initial
investment in the plan(s) is at least $1 million; the employer-sponsored
plan(s) has at least 100 eligible employees; or all plan transactions are
executed through a single omnibus account and the financial institution or
service organization has entered into the appropriate agreements with the
Distributor.
As used above, immediate family includes an individual and his or her spouse,
children, parents and parents of spouse.
EWCs will also not apply to the following:
- Repurchases following the death or post-purchase disability of (1) any
registered shareholders on an account or (2) a settlor of a living trust, of
Shares held in the account at the time of death or initial determination of
post-purchase disability;
- Certain distributions from individual retirement accounts, Section 403(b)
retirement plans, Section 457 deferred compensation plans and Section 401
qualified plans;
- Liquidation by the Fund when the account value falls below the minimum
required size of $500; and
- Investment accounts of AIM.
17
<PAGE> 20
- --------------------------------------------------------------------------------
DISTRIBUTION PLANS
Each Class of Shares is authorized under a distribution plan (collectively,
the "Plans") to use the assets attributable to a Class to finance certain
activities relating to the distribution of Shares to investors. These include
marketing and other activities to support the distribution of the Class B and
Class C Shares and Shareholder services provided by selected dealers. The Plans
were approved and reviewed in a manner consistent with Rule 12b-1 under the 1940
Act, which regulates the manner in which an open-end investment company may
directly or indirectly bear the expenses of distributing its shares.
Under the Plans, the Fund pays the Distributor monthly distribution and
service fees at an annual rate of 0.25% of average daily net assets attributable
to Class B Shares and 0.75% of average daily net assets attributable to Class C
Shares, respectively. (The Distributor has agreed to waive 0.25% of the Class C
distribution and service fee.) The service fee component will not exceed 0.25%,
and any amounts not paid as service fees constitute asset-based sales charges.
Activities that may be financed under the Class B Plan and the Class C Plan
include, but are not limited to: printing of prospectuses and reports for other
than existing Shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Fund or by a vote of the
Shareholders of the majority of the outstanding Shares of applicable Class.
Under the Plans, certain financial institutions that have entered into service
agreements and that sell Shares of the Fund on an agency basis may receive
payments from the Fund pursuant to the respective Plans. AIM Distributors does
not act as principal, but rather as agent, for the Fund in making such payments.
Financial intermediaries and any other person entitled to receive compensation
for selling Fund Shares may receive different compensation for selling Shares of
one Class over another.
- --------------------------------------------------------------------------------
REPURCHASE OFFERS
As a matter of fundamental policy which cannot be changed without Shareholder
approval, the Fund is required in the months of February, May, August, and
November to conduct Repurchase Offers in which the Fund will offer to repurchase
at least 5% and up to 25% of its Shares. (The Fund may also make a discretionary
repurchase offer once every two years but has no current intention to do so.) In
each Repurchase Offer, the repurchase price will be the net asset value
determined not more than 14 days following the repurchase request deadline and
payment for all shares repurchased pursuant to these offers will be made not
later than 7 days after the repurchase pricing date. Under normal circumstances,
it is expected that net asset value will be determined on the repurchase request
deadline and payment for shares tendered will be made within [3] business days
after such deadline. During the period the Repurchase Offer is open,
Shareholders may obtain the current net asset value by calling 1-800-959-4246.
At least 21 days prior to the repurchase request deadline the Fund will mail
written notice to each Shareholder setting forth the number of Shares the Fund
will repurchase, the repurchase request deadline and other terms of the offer to
repurchase, and the procedures for Shareholders to follow to request a
repurchase. The repurchase request deadline will be strictly observed.
Shareholders and financial intermediaries failing to submit repurchase requests
in good order by such deadline will be unable to liquidate shares until a
subsequent Repurchase Offer.
If more Shares are tendered for repurchase than the Fund has offered to
repurchase, the Board may, but is not obligated to, increase the number of
Shares to be repurchased by 2% of the Fund Shares outstanding; if there are
still more Shares tendered than are offered for repurchase, Shares will be
repurchased on a pro-rata basis. Thus, in any given Repurchase Offer,
Shareholders may be unable to liquidate all or a given percentage of their
Shares. Shareholders may withdraw Shares tendered for repurchase at any time
prior to the repurchase request deadline.
Repurchase Offers and the need to fund repurchase obligations may affect the
ability of the Fund to be fully invested, which may reduce returns. Moreover,
diminution in the size of the Fund through repurchases without offsetting new
sales may result in untimely sales of portfolio securities and a higher expense
ratio, and may limit the ability of the Fund to participate in new investment
opportunities. Repurchases resulting in portfolio turnover will result in
additional expenses being borne by the Fund. The Fund may borrow to meet
repurchase obligations, which entails certain risks and costs. See "Special
Considerations and Risk Factors -- Effects of Borrowing". The Fund may also sell
portfolio securities to meet repurchase obligations which, in certain
circumstances, may adversely affect the market for Corporate Loans and Corporate
Debt Securities and reduce the Fund's value.
18
<PAGE> 21
The Fund may suspend or postpone a Repurchase Offer only: (a) if making or
effecting the Repurchase Offer would cause the Fund to lose its status as a RIC
under the code; (b) for any period during which the exchange or any market in
which the securities owned by the Fund are principally traded is closed, other
than customary weekend and holiday closings, or during which trading in such
market is restricted; (c) for any period during which an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable, or during which it is not reasonably practicable for the Fund
fairly to determine the value of its net assets; or (d) for such other periods
as the SEC may by order permit for the protection of Shareholders of the Fund.
Under the applicable rules governing the Repurchase Offers, the Fund may
deduct from a Shareholder's repurchase proceeds a fee of up to 2.00% of such
proceeds to offset expenses associated with the Repurchase Offer. The Fund has
determined not to impose a repurchase fee on any Repurchase Offer conducted
prior to March 31, 2001. Although it has no current intention to do so, the Fund
could impose such a repurchase fee thereafter.
The Fund is not aware of any secondary market for the Fund's Shares and,
accordingly, the Repurchase Offers will be the only source of liquidity for Fund
Shareholders. Nevertheless, if a secondary market develops for the Shares of the
Fund, the market price of the Shares may vary from net asset value from time to
time. Such variance may be affected by, among other factors, relative demand and
supply of Shares and the performance of the Fund, especially as it affects the
yield on and net asset value of Fund Shares.
- --------------------------------------------------------------------------------
MANAGEMENT
The Fund's Board of Trustees has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day-to-day
management services required by the Fund.
INVESTMENT MANAGEMENT
The Investment Management and Administration Contract provides that, subject
to the direction of the Board of Trustees, AIM is responsible for the management
and administration of the Fund. Pursuant to the Sub-Advisory Contract, AIM has
delegated its responsibility for the management of the Fund to the Sub-advisor.
The responsibility for making decisions to buy, sell or hold a particular
security rests with the Sub-advisor, subject to review by the Board of Trustees
and AIM.
In providing investment management for the Fund, the Sub-advisor will consider
analyses from various sources, make the necessary investment decisions, and
place orders for transactions accordingly. The Fund pays AIM a monthly fee at an
annual rate of 0.95% of the Fund's average daily net assets (i.e., the average
daily value of the total assets of the Fund, minus the sum of accrued
liabilities of the Fund). AIM pays the Sub-advisor a monthly fee at an annual
rate of 0.48% of the Fund's average daily net assets. For purposes of these
calculations, average daily net assets is determined at the end of each month on
the basis of the average net assets of the Fund for each day during the month.
The investment professionals primarily responsible for the day-to-day
management of the Fund are as follows:
<TABLE>
<CAPTION>
NAME TITLE BUSINESS EXPERIENCE
---- ----- -------------------
<S> <C> <C>
Anthony R. Clemente...... Managing Director Portfolio Manager since February, 1998. Mr.
Clemente is head of the Bank Loan Group and a
senior portfolio manager responsible for bank
loan portfolios at the Sub-advisor. For the
preceding five years, Mr. Clemente was a Vice
President in the Fixed Income Department of
Merrill Lynch Asset Management L.P. and
assisted in the portfolio management of Merrill
Lynch Senior Floating Rate Fund, Inc. and
Merrill Lynch Prime Rate Portfolio.
Kathleen Lenarcic........ Managing Director Portfolio Manager since March, 1998. Ms.
Lenarcic is a senior portfolio manager
responsible for bank loan portfolios at the
Sub-advisor. From 1995 to 1998, Ms. Lenarcic
was a portfolio manager at ING Capital
Advisors, specializing in the designs of
investment products. From 1989 to 1995, Ms.
Lenarcic was a portfolio manager and credit
analyst at the Pilgrim Group.
</TABLE>
Pursuant to the Sub-Sub-Advisory Agreement between the Sub-advisor and INVESCO
Inc., the latter acts as the investment sub-sub-advisor of the Fund. INVESCO
Inc., located at 1166 Avenue of the Americas, New York, NY 10036, is the
investment sub-sub-advisor with respect to certain of the Fund's assets, as
determined by the Sub-advisor (the "Sub-Sub-Advised Assets"). The
Sub-Sub-Advised Assets consist of certain of the Fund's cash and cash
equivalents and short-term investment grade debt obligations, but may also
include other asset classes. With respect to the Sub-Sub-Advised Assets, INVESCO
Inc. has responsibility for making decisions to buy, sell or hold a particular
security, subject to review by the Board of Trustees and AIM. In providing
investment sub-sub-advisory services for
19
<PAGE> 22
the Fund, INVESCO Inc. will consider analyses from various sources, make the
necessary investment decisions, and place orders for transactions accordingly.
The Sub-advisor (and not the Fund) pays INVESCO Inc. a monthly fee for
investment sub-sub-advisory services at the annual rate of 0.48% of the Fund's
average daily net assets delegated to it.
Cheng-Hock Lau will provide day-to-day management of the Sub-Sub-Advised
Assets of the Fund. Mr. Hock Lau is Chief Investment Officer for Global Fixed
Income and Portfolio Manager and has been responsible for the Sub-Sub-Advised
Assets of the Fund since 1999. He has been associated with INVESCO Inc. and/or
its affiliates since 1995. He has been Chief Investment Officer for Global Fixed
Income and Portfolio Manager for INVESCO Inc. since October 1996. From July 1995
to October 1996, he was Senior Portfolio Manager for Global/International Fixed
Income for INVESCO Inc. and was employed by Chancellor Capital Management Inc.,
a predecessor of INVESCO Inc.. From 1993 to 1995, he was Senior Vice President
and Senior Portfolio Manager for Fiduciary Trust Company International.
The Sub-advisor is a subsidiary of AMVESCAP PLC. As of December 31, 1999, the
Sub-advisor had assets under management totaling approximately $ million.
INVESCO Inc. is also a subsidiary of AMVESCAP PLC. The U.S. offices of the
Sub-advisor and INVESCO Inc. are located at 1166 Avenue of the Americas, New
York, New York 10036, and 50 California Street, 27th Floor, San Francisco,
California 94111.
AIM, the Sub-advisor and INVESCO Inc. and their worldwide asset management
affiliates provide investment management and/or administrative services to
institutional, corporate and individual clients around the world. AIM, the
Sub-advisor and INVESCO Inc. are each indirect wholly owned subsidiaries of
AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM, the Sub-advisor and INVESCO Inc. draw upon the expertise,
personnel, data and systems of other offices, including investment offices in
Atlanta, Boston, Dallas, Denver, Louisville, Miami, Portland (Oregon),
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, the Sub-advisor employs a team approach, taking advantage of its
investment resources around the world.
Unless earlier terminated as described below, the Fund's Investment Management
and Administration Contract, the Fund's Sub-Advisory Agreement, and the Fund's
Sub-Sub-Advisory Agreement remain in effect from year to year if approved
annually (a) by the Board of Trustees of the Fund or by a majority of the
outstanding Shares of the Fund, and (b) by a majority of the Trustees who are
not parties to such contract or interested persons (as defined in the 1940 Act)
of any such party. Such contracts are not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party thereto
or by the vote of the Fund.
AIM also serves as the Fund's pricing and accounting agent. The Fund pays a
monthly fee to AIM for these services at the annualized rate of % of its
average daily net assets.
- --------------------------------------------------------------------------------
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees and executive officers of the Fund, their ages and their
principal occupations during the last five years are set forth below. Unless
otherwise indicated, the address of each Executive Officer is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046.
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH PRINCIPAL OCCUPATIONS AND BUSINESS
THE FUND AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
----------------------- ----------------------------------
<S> <C>
Robert H. Graham*, 53 Director, President and Chief Executive Officer, A I M
Trustee, Chairman of the Board Management Group Inc.; Director and President, AIM; Director
and President and Senior Vice President, A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company; Director, AMVESCAP PLC; and Trustee of
several other investment companies registered under the 1940
Act that are managed or administered by AIM.
C. Derek Anderson, 58 Senior Managing Partner Plantagenet Capital Management, LLC
Trustee (an investment partnership); Chief Executive Officer,
456 Montgomery Street Plantagenet Holdings, Ltd. (an investment banking firm);
Suite 200 Director, PremiumWear, Inc. (formerly Munsingwear, Inc.)(a
San Francisco, CA 94104 casual apparel company); Director, "R" Homes, Inc., Big
Online, Inc., Champagne Albert Le Brun and various other
privately owned companies; and Trustee of several other
investment companies registered under the 1940 Act that are
managed or administered by AIM.
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Fund and AIM as defined in the
1940 Act.
20
<PAGE> 23
<TABLE>
<CAPTION>
NAMES, POSITION(S) WITH PRINCIPAL OCCUPATIONS AND BUSINESS
THE FUND AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
----------------------- ----------------------------------
<S> <C>
Frank S. Bayley, 60 Partner, law firm of Baker & McKenzie; Trustee, The Badgley
Trustee Funds; Director and Chairman of C.D. Stimson Company (a
Two Embarcadero Center private investment company); and Trustee of several other
Suite 2400 investment companies registered under the 1940 Act that are
San Francisco, CA 94111 managed or administered by AIM.
Ruth H. Quigley, 64 Private investor; President, Quigley Friedlander & Co., Inc.
Trustee (a financial advisory services firm) from 1984 to 1986; and
1055 California Street Trustee of several other investment companies registered
San Francisco, CA 94108 under the 1940 Act that are managed or administered by AIM.
Melville B. Cox, 56 Vice President and Chief Compliance Officer, AIM, A I M
Vice President Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
Gary T. Crum, 52 Director and President, A I M Capital Management, Inc.;
Vice President Director and Executive Vice President, A I M Management
Group Inc.; Director and Senior Vice President, AIM; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
Carol F. Relihan, 45 Director, Senior Vice President, General Counsel and
Vice President Secretary, AIM; Senior Vice President, General Counsel and
Secretary, A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management Company;
General Counsel and Vice President, A I M Fund Services,
Inc.; and Vice President, A I M Capital Management, Inc. and
A I M Distributors, Inc.
Samuel D. Sirko, 40 Vice President, Assistant General Counsel and Assistant
Vice President and Secretary Secretary, AIM; and Assistant General Counsel and Assistant
Secretary, A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
Dana R. Sutton, 41 Vice President and Fund Controller, AIM; and Assistant Vice
Vice President and Treasurer President and Assistant Treasurer, Fund Management Company.
</TABLE>
The Board of Trustees of the Fund has an Audit Committee, comprised of Miss
Quigley and Messrs. Anderson and Bayley, which is responsible for reviewing
annual audits of the Fund and recommending firms to serve as independent
auditors of the Fund. Each of the officers of the Fund is also an officer of
each of the other investment companies registered under the 1940 Act that is
managed or administered by AIM. The Fund pays each Trustee who is not a
director, officer or employee of AIM and/or the Sub-advisor or any affiliated
company an annual retainer component, plus a per-meeting fee component for each
Board or committee meeting attended by such Trustee and reimburses travel and
other expenses incurred in connection with attending such meetings. Other
Trustees and officers receive no compensation or expense reimbursement from the
Fund. As of December 31, 1999, the Trustees and officers and their families as a
group owned less than 1% of the outstanding shares of the Fund. The Fund
requires no employees since AIM, the Sub-advisor and other third-party service
providers perform substantially all of the services necessary for the Fund's
operations.
- --------------------------------------------------------------------------------
FUND TRANSACTIONS
Subject to policies established by the Fund's Board of Trustees, the
Sub-advisor is responsible for the execution of the Fund's transactions and the
selection of brokers and dealers who execute such transactions on behalf of the
Fund. In executing transactions for the Fund, the Sub-advisor seeks the best net
results for the Fund, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
Although the Sub-advisor generally seeks reasonable competitive commission rates
and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. The Fund has no obligation to deal with
any broker or dealer or group of brokers in the execution of portfolio
transactions.
Consistent with the interests of the Fund, the Sub-advisor may select brokers
to execute the Fund's portfolio transactions on the basis of the research and
brokerage services they provide to the Sub-advisor for its use in managing the
Fund and its other advisory accounts. Such services may include furnishing
analyses, reports and information concerning issuers, industries, securities,
geographic regions, economic factors and trends, portfolio strategy, and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Research and
brokerage services received from such brokers are in addition to, and not in
lieu of, the services required to be performed by the Sub-advisor under the
Sub-Advisory Contract (defined above). A commission paid to such brokers may be
higher than that which another qualified broker would have charged for effecting
the same transaction, provided that the Sub-advisor determines in good faith
that such commission is reasonable in terms
21
<PAGE> 24
either of that particular transaction or the overall responsibility of the
Sub-advisor to the Fund and its other clients and that the total commissions
paid by the Fund will be reasonable in relation to the benefits received by the
Fund over the long term.
Investment decisions for the Fund and for other investment accounts managed or
sub-advised by the Sub-advisor are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts including the Fund. In such cases,
purchases or sales are allocated as to price or amount in a manner deemed fair
and equitable to all accounts involved. While in some cases this practice could
have a detrimental effect upon the price or value of the security as far as the
Fund is concerned, in other cases the Sub-advisor believes that coordination and
the ability to participate in volume transactions will be beneficial to the
Fund.
The Fund engages in trading when the Sub-advisor has concluded that the sale
of a security owned by the Fund and/or the purchase of another security can
enhance principal and/or increase income. A security may be sold to avoid any
prospective decline in market value, or a security may be purchased in
anticipation of a market rise. Consistent with the Fund's investment objective,
a security also may be sold and a comparable security purchased coincidentally
in order to take advantage of what is believed to be a disparity in the normal
yield and price relationship between the two securities.
The Fund's portfolio turnover rate is not expected to exceed 100%, but may
vary greatly from year to year and will not be a limiting factor when the
Sub-advisor deems portfolio changes appropriate. Although the Fund generally
does not intend to trade for short-term profits, the securities held by the Fund
will be sold whenever the Sub-advisor believes it is appropriate to do so,
without regard to the length of time a particular security may have been held. A
100% portfolio turnover rate would occur if the lesser of the value of purchases
or sales of the Fund's securities for a year (excluding purchases of U.S.
Treasury and other securities with a maturity at the date of purchase of one
year or less) were equal to 100% of the average monthly value of the securities,
excluding short-term investments, held by the Fund during such year. Higher
portfolio turnover involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly.
- --------------------------------------------------------------------------------
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund distributes substantially all of its net investment income. Dividends
from the Fund's net investment income are declared daily and paid monthly to
Shareholders. Substantially all of the Fund's net realized capital gains, if
any, are distributed at least annually to Shareholders. Shares accrue dividends
as long as they are outstanding (i.e., from the settlement date of a purchase
order to the settlement date of a Repurchase Offer).
Under the 1940 Act, the Fund is not permitted to incur indebtedness unless
immediately after such incurrence it has an asset coverage of at least 300% of
the aggregate outstanding principal balance of the indebtedness. Additionally,
under the 1940 Act, the Fund may not declare any dividend or other distribution
on any Class of Shares or purchase any Shares unless it has, at the time of the
declaration of any such distribution or at the time of any such purchase, asset
coverage of at least 300% of the aggregate indebtedness after deducting the
amount of such distribution, or purchase price, as the case may be. This latter
limitation could under certain circumstances impair the Fund's ability to
maintain its qualification for taxation as a RIC. See "Special Considerations
and Risk Factors -- Effects of Leverage" and "Taxes."
Dividends and other distributions to Shareholders may be automatically
reinvested in Shares pursuant to the Fund's Dividend Plan. See "Dividend
Reinvestment Plan." Dividends and other distributions will be taxable to
Shareholders whether they are reinvested in Shares or received in cash. See
"Taxes."
22
<PAGE> 25
- --------------------------------------------------------------------------------
TAXES
TAXATION OF THE FUND
The Fund intends to continue to qualify for the special tax treatment afforded
RICs under Subchapter M of the Code. In each taxable year that it so qualifies,
the Fund (but not its Shareholders) will be relieved of federal income tax on
that part of its investment company taxable income and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) that it
distributes to Shareholders. If the Fund failed to qualify for treatment as a
RIC for any taxable year, (a) it would be taxed as an ordinary corporation on
the full amount of its taxable income for that year without being able to deduct
the distributions it makes to Shareholders and (b) the Shareholders would treat
all those distributions, including distributions of net capital gain, as
dividends (that is, ordinary income) to the extent of the Fund's earnings and
profits. In addition, the Fund could be required to recognize unrealized gains,
pay substantial taxes and interest, and make substantial distributions before
requalifying for RIC treatment.
To qualify for treatment as a RIC, the Fund must distribute to its
Shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gains, and net gains from certain foreign currency transactions) and
must meet several additional requirements. Among these requirements are the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies, or other income derived with respect to its business of investing in
securities or those currencies; and (2) at the close of each quarter of the
Fund's taxable year, (i) at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities, and (ii) not more than 25% of the value of its
total assets may be invested in securities (other than U.S. Government
securities) of any one issuer.
The Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year at least 98% of its ordinary
income for that year and capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts.
Interest received by the Fund, and gains realized thereby, may be subject to
income, withholding, or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield and/or total return on its securities.
Tax conventions between certain countries and the United States may reduce or
eliminate these taxes, however, and many foreign countries do not impose taxes
on capital gains in respect of investments by foreign investors.
Gains or losses (1) from the disposition of foreign currencies, (2) on the
disposition of a debt security denominated in a foreign currency that are
attributable to fluctuations in the value of that currency between the dates of
acquisition and disposition of the security, and (3) that are attributable to
fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables or expenses or other liabilities denominated in a
foreign currency and the time it actually collects the receivables or pays the
liabilities, generally are treated as ordinary income or loss. These gains or
losses, referred to under the Code as "section 988" gains or losses, will
increase or decrease the amount of investment company taxable income available
to the Fund for distribution to Shareholders as ordinary income, rather than
affecting the amount of its net capital gain.
The federal income tax rules governing the taxation of interest rate swaps are
not entirely clear and may require the Fund to treat payments received under
such arrangements as ordinary income and to amortize payments under certain
circumstances. The Fund will limit its activity in this regard in order to
maintain its qualification as a RIC.
TAXATION OF THE SHAREHOLDERS
Dividends paid by the Fund from its investment company taxable income, whether
received in cash or reinvested in Shares pursuant to the Dividend Plan, are
taxable to the Shareholders as ordinary income to the extent of its earnings and
profits. (Any distributions in excess of the Fund's earnings and profits first
will reduce the adjusted tax basis of a Shareholder's Shares and, after that
basis is reduced to zero, will constitute capital gains to the Shareholder,
assuming the Shares are held as capital assets.) Distributions, if any, from the
Fund's net capital gain, when designated as such, are taxable to the
Shareholders as long-term capital gains, regardless of the length of time they
have owned their Shares and whether they receive them in cash or reinvest them
in Shares pursuant to the Dividend Plan. A noncorporate taxpayer's net capital
gain is taxed at a maximum rate of 20% (10% for taxpayers in the 15% marginal
tax bracket). Following the end of each calendar year, the Fund notifies the
Shareholders of the amounts of any dividends and capital gain distributions paid
(or deemed paid) by the Fund during that year.
If Shares are sold at a loss after being held for six months or less, the loss
will be treated as long-term, instead of short-term, capital loss to the extent
of any capital gain distributions received on those Shares. Distributions by the
Fund generally will not be eligible for the dividends-received deduction allowed
to corporations. Dividends and other distributions declared by the Fund in, and
payable to Shareholders of record as of a date in, October, November, or
December of any year will be deemed to have been paid by the Fund and received
by the Shareholders on December 31 of that year if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will be
taxed to Shareholders for the year in which that December 31 falls.
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<PAGE> 26
The Fund must withhold 31% from dividends, capital gain distributions, and
proceeds from sales of Shares pursuant to a Repurchase Offer, if any, payable to
any individuals and certain other noncorporate Shareholders who have not
furnished to the Fund a correct taxpayer identification number ("TIN") or a
properly completed claim for exemption on Form W-8 or W-9 ("backup
withholding"). Withholding at that rate also is required from dividends and
capital gain distributions payable to such Shareholders who otherwise are
subject to backup withholding. When establishing an account, an investor must
certify under penalty of perjury that the investor's TIN is correct and that the
investor is not otherwise subject to backup withholding.
A loss realized on a sale or exchange of Shares will be disallowed if other
Shares are acquired (whether through the reinvestment of distributions under the
Dividend Plan or otherwise) within a 61-day period beginning 30 days before and
ending 30 days after the date that the Shares are disposed of. In such a case,
the basis of the Shares acquired will be adjusted to reflect the disallowed
loss.
Dividends paid by the Fund to a Shareholder who, as to the United States, is a
nonresident alien individual or nonresident alien fiduciary of a trust or
estate, foreign corporation, or foreign partnership ("foreign Shareholder") will
be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
Shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic Shareholders will apply. Distributions of net capital gain generally
are not subject to that withholding tax, except in the case of a foreign
Shareholder who is a nonresident alien individual physically present in the
United States for more than 182 days during the taxable year and with respect to
whom the distributions are "effectively connected." Foreign Shareholders are
urged to consult their own tax advisers concerning the applicability of this
withholding tax.
REPURCHASE OFFERS
A Shareholder who, pursuant to any Repurchase Offer, tenders all Shares owned
by such Shareholder, and any Shares considered owned thereby under attribution
rules contained in the Code, will realize a taxable gain or loss depending on
such Shareholder's basis for the Shares. Such gain or loss will be treated as
capital gain or loss if the Shares are held as capital assets and will be
long-term or short-term depending on the Shareholder's holding period for the
Shares; capital gain on Shares held by a noncorporate Shareholder for more than
one year will be subject to federal income tax at the rates indicated above.
Different tax consequences may apply to tendering and non-tendering
Shareholders in connection with a Repurchase Offer, and these consequences will
be disclosed in the related offering documents. For example, if a tendering
Shareholder tenders less than all Shares owned by or attributed to such
Shareholder, and if the payment to such Shareholder does not otherwise qualify
as a sale or exchange, the proceeds received will be treated as a taxable
dividend, a return of capital, or capital gain depending on the Fund's earnings
and profits and the Shareholder's basis for the tendered Shares. Also, there is
a risk that non-tendering Shareholders may be considered to have received a
deemed distribution that may be a taxable dividend in whole or in part.
Shareholders may wish to consult their tax advisers prior to tendering.
* * * * *
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and the Shareholders. For further information,
reference should be made to the pertinent Code sections and the regulations
thereunder, which are subject to change by legislative, judicial, or
administrative action either prospectively or retroactively. Investors are urged
to consult their tax advisers regarding specific questions as to federal, state,
local, or foreign taxes. Foreign investors should consider applicable foreign
taxes in their evaluation of an investment in the Fund.
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DIVIDEND REINVESTMENT PLAN
Pursuant to the Dividend Plan, each Shareholder will be deemed to have elected
to have all dividends and other distributions, net of any applicable withholding
taxes, automatically reinvested in additional Shares, newly issued by the Fund,
unless A I M Fund Services, Inc., the Fund's transfer agent, as the Dividend
Plan Agent (the "Dividend Plan Agent"), is otherwise instructed by the
Shareholder in writing. Such dividends and other distributions will be
reinvested in Shares at the net asset value per Share next determined on their
payable date. Each Class B or Class C Shareholder may also elect to have all
dividends and/or other distributions automatically reinvested in Class B shares
or Class C shares, respectively, of mutual funds distributed by AIM Distributors
(collectively, the "AIM Funds"). The prospectus of each AIM Fund describes its
investment objectives and policies. Shareholders can obtain, without charge, a
prospectus for any AIM Fund by calling (800)347-4246 and should consider these
objectives and policies before requesting this option.
Automatic reinvestment in shares of an AIM Fund are made at net asset value
without imposition of a sales charge. Reinvestments in an AIM Fund may only be
directed to an account with the identical shareholder registration and account
number. These elections may be changed by a Shareholder at any time; to be
effective with respect to a distribution, the Shareholder or the Shareholder's
broker must contact the Dividend Plan Agent by mail or telephone at least 15
business days prior to the payment date.
Shareholders who do not participate in the Dividend Plan will receive all
dividends and other distributions in cash, net of any applicable withholding
taxes, paid in U.S. dollars by check mailed directly to the Shareholder by A I M
Fund Services, Inc., as dividend-pay-
24
<PAGE> 27
ing agent. Shareholders who do not wish to have dividends and other
distributions automatically reinvested should notify the Dividend Plan Agent at
P.O. Box 4739, Houston, TX 77210-4739. Dividends and other distributions with
respect to Shares registered in the name of a broker-dealer or other nominee
(i.e., in "street name") will be reinvested under the Dividend Plan unless such
service is not provided by the broker-dealer or nominee or the Shareholder
elects to receive dividends and other distributions in cash. A Shareholder whose
Shares are held by a broker-dealer or nominee that does not provide a dividend
reinvestment service may be required to have his Shares registered in his own
name to participate in the Dividend Plan.
There will be no charge to participants for reinvesting dividends or other
distributions. The Dividend Plan Agent's fees for the handling of reinvestment
of distributions will be paid by the Fund.
All registered holders of Shares (other than brokers and nominees) will be
mailed information regarding the Dividend Plan, including a form with which they
may elect to terminate participation in the Dividend Plan and receive further
dividends and other distributions in cash. An election to terminate
participation in the Dividend Plan must be made in writing to the Dividend Plan
Agent and should include the Shareholder's name and address as they appear on
the Share certificate. An election to terminate, until it is changed, will be
deemed to be an election by a Shareholder to take all subsequent distributions
in cash. An election will be effective only for distributions declared and
having a record date at least ten days after the date on which the election is
received.
The receipt of dividends and other distributions in Shares under the Dividend
Plan will not relieve participants of any income tax that may be payable, or tax
that may be withheld, on such distributions. See "Taxes."
Experience under the Dividend Plan may indicate that changes in the Dividend
Plan are desirable. Accordingly, the Fund and the Dividend Plan Agent reserve
the right to terminate the Dividend Plan as applied to any dividend or other
distribution paid subsequent to notice of the termination sent to the
participants in the Dividend Plan at least 30 days before the record date for
the distribution. The Dividend Plan also may be amended by the Fund or the
Dividend Plan Agent, but (except when necessary or appropriate to comply with
applicable law, rules or policies of a regulatory authority) only by at least 30
days' written notice to participants in the Dividend Plan. All correspondence
concerning the Dividend Plan should be directed to the Dividend Plan Agent, P.O.
Box 4739 Houston, TX 77210-4739.
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AUTOMATIC INVESTMENT PLAN
Investors may purchase Shares through the Automatic Investment Plan. Under
this plan, an amount specified by the stockholder of $50 or more (or $25 for
Individual Retirement Accounts, Code Section 403(b)(7) custodial accounts and
other tax-qualified employer-sponsored retirement accounts) on a monthly or
quarterly basis will be sent to A I M Fund Services, Inc. from the investor's
bank for investment in the Fund. Participants in the Automatic Investment Plan
should not elect to receive dividends or other distributions from the Fund in
cash. Investors should contact their brokers or A I M Fund Services, Inc. for
more information.
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EXCHANGE PRIVILEGE
Shareholders of the Fund whose Shares are repurchased during a Repurchase
Offer may exchange those Shares at net asset value for shares of the same Class
of AIM Funds that are subject to a contingent deferred sales charge. Fund
Shareholders will not be able to participate in this exchange privilege at any
time other than in connection with a Repurchase Offer. No EWC will be imposed on
Shareholders choosing to exchange their Fund Shares for shares of any such AIM
Fund; however, the exchanging Shareholders will be subject to a contingent
deferred sales charge on any such AIM Fund equivalent to the EWC on Shares of
the Fund. Thus, shares of such AIM Fund may be subject to a contingent deferred
sales charge upon a subsequent redemption from the AIM Fund. The purchase of
shares of such AIM Fund will be deemed to have occurred at the time of the
initial purchase of the Fund's Shares. Holders of shares of other AIM Funds will
not be permitted to exchange those shares for Shares of the Fund.
The prospectus for each AIM Fund describes its investment objectives and
policies. Shareholders can obtain, without charge, a prospectus by calling (800)
347-4246 and should consider these objectives and policies carefully before
requesting an exchange. Each exchange must involve proceeds from Shares of the
Fund that have a net asset value of at least $500. An exchange is a taxable
event and may result in a taxable gain or loss. See "Taxes -- Tender Offers."
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DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per Share is determined Monday through Friday as of
the close of regular trading on the NYSE (generally, 4:00 p.m., New York time),
on each day during which the NYSE is open. The NYSE is not open on New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. For purposes of
determining the net asset value of a Share, the Fund's uninvested assets plus
the value of its securities and any cash or other assets (including interest
accumulated but not yet received) allocated to each Class minus all liabilities
(including accrued expenses) of the Fund allocated to each Class is divided by
the total number of each Class' Shares outstanding at such time. Expenses,
including the fees payable to the Sub-advisor, are accrued daily.
25
<PAGE> 28
The Sub-advisor values the Corporate Loans and Corporate Debt Securities in
accordance with guidelines adopted and periodically reviewed by the Fund's Board
of Trustees. Under the Fund's current guidelines, Corporate Loans and Corporate
Debt Securities for which an active secondary market exists to a reliable degree
in the opinion of the Sub-advisor and for which the Sub-advisor can obtain one
or more quotations from banks or dealers in Corporate Loans and Corporate Debt
Securities will be valued by the Sub-advisor utilizing bid quotes of the market.
For Corporate Loans and Corporate Debt Securities for which an active secondary
market does not exist to a reliable degree in the opinion of the Sub-advisor, or
for which the Sub-advisor believes that the bid quotes do not accurately reflect
fair value, such Corporate Loans and Corporate Debt Securities will be valued by
the Sub-advisor at fair value, which is intended to approximate market value. In
valuing a Corporate Loan or Corporate Debt Security at fair value, the
Sub-advisor will consider, among other factors, (i) the creditworthiness of the
Borrower and any Intermediate Participants, (ii) the current interest rate,
period until next interest rate reset and maturity of the Corporate Loan or
Corporate Debt Security, (iii) recent prices in the market for instruments of
similar quality, rate, period until next interest rate reset and maturity, and
(iv) supply and demand in the market. The Sub-advisor believes that Intermediate
Participants selling Corporate Loans or otherwise involved in a Corporate Loan
transaction may tend, in valuing Corporate Loans for their own accounts, to be
less sensitive to interest rate and credit quality changes and, accordingly, the
Sub-advisor may not rely solely on such valuations in valuing the Corporate
Loans for the Fund's account.
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DESCRIPTION OF SHARES
Pursuant to the Fund's Agreement and Declaration of Trust, the Fund may issue
an unlimited number of Shares. The Fund currently offers Class B and Class C
Shares. Each Share of the Fund has a par value of $0.01 per Share, represents an
equal proportionate interest in the Fund with other Shares of the Fund, and is
entitled to such dividends and distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees. Each Share of the Fund is equal in earnings, assets and voting
privileges except that each Class normally has exclusive voting rights with
respect to its distribution plan and bears the expenses, if any related to the
distribution of its Shares. Shares of the Fund, when issued, are fully paid and
nonassessable.
On any matter submitted to a vote of Shareholders, Shares of the Fund will be
voted by the Fund's Shareholders individually when the matter affects the
interests of the Fund as a whole, such as approval of its investment management
arrangements. In addition, Shares of a particular Class of the Fund may vote on
matters affecting only that Class.
Normally there will be no annual meeting of Shareholders in any year, except
as required under the 1940 Act. Shares of the Fund do not have cumulative voting
rights, which means that the Shareholders of a majority of the Shares voting for
the election of Trustees can elect all the Trustees. A Trustee may be removed at
any meeting of the Shareholders of the Fund by a vote of the Shareholders owning
at least two-thirds of the outstanding Shares. Any Trustee may call a special
meeting of Shareholders for any purpose.
CERTAIN ANTI-TAKEOVER PROVISIONS OF THE AGREEMENT AND DECLARATION OF TRUST
The Fund presently has provisions in its Agreement and Declaration of Trust
that have the effect of limiting (i) the ability of other entities or persons to
acquire control of the Fund, (ii) the Fund's freedom to engage in certain
transactions, and (iii) the ability of the Fund's Trustees or Shareholders to
amend the Agreement and Declaration of Trust. These provisions of the Agreement
and Declaration of Trust may be regarded as "anti-takeover" provisions. Under
the Fund's Agreement and Declaration of Trust, the affirmative vote of the
holders of at least 66 2/3% (which is higher than that required under Delaware
law or the 1940 Act) of the outstanding Shares of the Fund is required generally
to authorize any of the following transactions:
(i) merger or consolidation of the Fund with or into any other
corporation;
(ii) issuance of any securities of the Fund to a Principal Shareholder
(generally, a Shareholder that beneficially owns, whether directly or
indirectly, more than 5% of the outstanding Shares of the Fund) for cash;
(iii) sale, lease or exchange of all or any substantial part of the
assets of the Fund to any entity or person (except assets having an
aggregate market value of less than $1,000,000); or
(iv) sale, lease or exchange to the Fund, in exchange for securities
of the Fund, of any assets of any entity or person (except assets having an
aggregate fair market value of less than $1,000,000).
Such vote would not be required with respect to any of the foregoing
transactions, however, when, under certain conditions, the Board of Trustees
approves the transaction. Reference is made to the Agreement and Declaration of
Trust of the Fund, on file with the SEC, for the full text of these provisions.
The provisions of the Agreement and Declaration of Trust described above and
the Fund's rights and obligations to make Repurchase Offers for its Shares could
have the effect of depriving Shareholders of opportunities to sell their Shares
at a premium over net asset value by discouraging a third party from seeking to
obtain control of the Fund in a tender offer or similar transaction. The overall
effect of these provisions is to render more difficult the accomplishment of a
merger or the assumption of control. They provide, however, the advantage of
potentially requiring persons seeking control of the Fund to negotiate with its
management regarding the price to be paid and facilitating the continuity of the
Fund's management, investment objectives and policies. The Board of Trustees of
the
26
<PAGE> 29
Fund has considered the foregoing anti-takeover provisions and concluded that
they are in the best interest of the Fund and its Shareholders.
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PERFORMANCE INFORMATION
From time to time the Fund may include its distribution rate and/or total
return for various specified time periods in advertisements or information
furnished to present or prospective Shareholders.
The distribution rate of the Fund refers to the income generated by an
investment in the Fund over a stated period. The distribution rate is calculated
by annualizing the Fund's distributions per Share during such period and
dividing the annualized distribution by the Fund's maximum offering price per
Share on the last day of such period.
The Fund also may quote annual total return and aggregate total return
performance data. Total return quotations for the specified periods will be
computed by finding the rate of return (based on net investment income and any
capital gains or losses on portfolio investments over such periods) that would
equate the initial amount invested to the redeemable value of such investment at
the end of the period.
The calculation of distribution rate and total return does not reflect the
imposition of any EWCs or the amount of any Shareholder's tax liability.
Distribution rate and total return figures are based on the Fund's historical
performance and are not intended to indicate future performance. The Fund's
distribution rate is expected to fluctuate, and its total return will vary
depending on market conditions, the Corporate Loans, Corporate Debt Securities
and other securities comprising the Fund's investments, the Fund's operating
expenses and the amount of net realized and unrealized capital gains or losses
during the period.
On occasion, the Fund may compare its yield to (1) LIBOR, quoted daily in The
Wall Street Journal, (2) the Prime Rate, quoted daily in The Wall Street Journal
as the base rate on corporate loans at large U.S. money center commercial banks,
(3) one or more averages compiled by Donoghue's Money Fund Report, a widely
recognized independent publication that monitors the performance of money market
mutual funds, (4) the average yield reported by the Bank Rate Monitor National
Index(TM) for money market deposit accounts offered by the 100 leading banks and
thrift institutions in the ten largest standard metropolitan statistical areas,
(5) yield data published by Lipper Analytical Services, Inc., or (6) the yield
on an investment in 90-day Treasury bills on a rolling basis, assuming quarterly
compounding. In addition, the Fund may compare the Prime Rate, the Donoghue's
averages and the other yield data described above to each other. As with yield
quotations, yield comparisons should not be considered indicative of the Fund's
yield or relative performance for any future period.
OTHER INFORMATION
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ORGANIZATION OF THE FUND
The Fund is a continuously offered, non-diversified, closed-end management
investment company. The Fund was organized as a Delaware business trust on
December 6, 1999. The Fund has registered under the 1940 Act. The Fund's
principal office is located at 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, and its telephone number is 1-800-347-4246.
On March , 2000, the Fund acquired the assets and assumed the liabilities of
GT Global Floating Rate Fund, Inc. (d/b/a AIM Floating Rate Fund), a Maryland
corporation (the "Old Fund"). Pursuant to an Agreement and Plan of Conversion
and Liquidation, the Old Fund changed its place and form of organization from a
Maryland corporation to a Delaware business trust through a reorganization into
the Fund.
SHAREHOLDER LIABILITY
Under Delaware law, the Fund's Shareholders enjoy the same limitations
extended to shareholders of private, for-profit corporations. There is a remote
possibility, however, that under certain circumstances Shareholders of the Fund
may be held personally liable for the Fund's obligations. However, the Fund's
Agreement and Declaration of Trust disclaims Shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Fund or
a Trustee. If a Shareholder is held personally liable for the obligations of the
Fund, the Agreement and Declaration of Trust provides that the Shareholder shall
be entitled out of the assets of the Fund (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 Fund's Bylaws and applicable
law. Thus, the risk of a Shareholder incurring financial loss on account of such
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations and where the other party was held not to be bound by
the disclaimer.
27
<PAGE> 30
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT AND REGISTRAR
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts 02171, will serve as custodian of the Fund's assets held in the
United States. A I M Fund Services, Inc. (the "Transfer Agent") will serve as
the Fund's transfer and dividend disbursing agent and registrar.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W.,
Washington, D.C. 20036-1800 acts as counsel to the Fund. Certain legal matters
in connection with the Shares offered hereby will be passed on for the Fund by
Kirkpatrick & Lockhart LLP.
INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are [Name], [Address]. [Name] will conduct
an annual audit of the Fund, assist in the preparation of the Fund's federal and
state income tax returns and consult with the Fund as to matters of accounting,
regulatory filings, and federal and state income taxation.
FURTHER INFORMATION
Further information concerning the Shares and the Fund may be found in the
Registration Statement, on file with the SEC.
28
<PAGE> 31
APPENDIX A
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DESCRIPTION OF DEBT SECURITIES RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C". Investment grade ratings are the first
four categories: Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa -- Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Ba -- Bonds which are rated Ba
are judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings. C -- Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., ("S&P")
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong. AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong. A -- An obligation rated "A" is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rated categories. BBB -- An
obligation rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation. BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and
"C" are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to adverse
conditions. BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to the obligor's inadequate capacity to meet its financial commitment on the
obligation. B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation. CCC -- An obligation rated "CCC" is
currently vulnerable to nonpayment, and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation. CC -- An obligation rated "CC" is
currently highly vulnerable to nonpayment. C -- The "C" rating may be used to
cover a situation where a bankruptcy petition has been filed or similar action
has been taken, but payments on this obligation are being continued. D -- An
obligation rated "D" is in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. The "D" rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.
A-1
<PAGE> 32
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. A-1 -- This highest category indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics will be denoted with a plus sign
(+) designation. A-2 -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the Company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the Company ranks in the
lower end of its generic rating category.
A-2
<PAGE> 33
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[To be added.]
FS-1
<PAGE> 34
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[To be added.]
FS-2
<PAGE> 35
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[To be added.]
FS-3
<PAGE> 36
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
[To be added.]
FS-4
<PAGE> 37
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[To be added.]
FS-5
<PAGE> 38
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
[To be added.]
FS-6
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[To be added.]
FS-7
<PAGE> 40
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
Sub-Sub-Advisor
INVESCO, Inc.
1166 Avenue of the Americas
New York, NY 10036
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
For more complete information about funds in The AIM Family of Funds--Registered
Trademark--, including charges and expenses, please call your financial
consultant and request a free prospectus. Please read the prospectus carefully
before you invest or send money.
FLR-PRO-1
<PAGE> 41
AIM FLOATING RATE FUND
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Financial Statements:
Report of Independent Accountants (to be filed)
Statement of Assets and Liabilities (to be filed)
(2) Exhibits:
<TABLE>
<C> <S>
(a) -- Agreement and Declaration of Trust, dated December 6,
1999 (filed herewith).
(b) -- By-Laws, dated December 6, 1999 (filed herewith).
(c) -- Voting Trust Agreements -- None.
(d) -- Instrument Defining Rights of Shareholders (filed
herewith).
(e) -- Dividend Reinvestment Plan was filed electronically as an
Exhibit to Registrant's Pre-Effective Amendment No. 2
under 33 Act No. 333-17425 on March 24, 1997 and is
hereby incorporated by reference.
(f) -- Constituent Instruments Defining the Rights of the
Holders of Debt -- None.
(g)(1) -- Form of Investment Management and Administration Contract
between Registrant and A I M Advisors, Inc. (filed
herewith).
(2) -- Form of Sub-Advisory Contract between A I M Advisors,
Inc. and INVESCO Senior Secured Management, Inc. (filed
herewith).
(3) -- Form of Sub-Sub-Advisory Contract between INVESCO Senior
Secured Management, Inc. and INVESCO, Inc. (filed
herewith).
(h)(1) -- Form of Distribution Agreement between Registrant and
A I M Distributors, Inc. (to be filed).
(2) -- Form of Selected Dealer Agreement was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 2 under 33 Act No. 333-37243
on May 27, 1998 and is hereby incorporated by reference.
(3) -- Form of Bank Agency Agreement was filed electronically as
an Exhibit to Registrant's Post-Effective Amendment No. 2
under 33 Act No. 333-37243 on May 27, 1998 and is hereby
incorporated by reference.
(i) -- Directors' or Officers' Bonus, Profit Sharing and Pension
Contracts -- None.
(j) -- Form of Custodian Contract between Registrant and State
Street Bank and Trust Company (to be filed).
(k)(1) -- Form of Transfer Agency Contract between Registrant and
A I M Fund Services, Inc. (filed herewith).
(2) -- Form of Fund Accounting and Pricing Agent Agreement
between Registrant and A I M Advisors, Inc. (to be
filed).
(3) -- Distribution Plan for Class B Shares (filed herewith).
(4) -- Distribution Plan for Class C Shares (filed herewith).
(l) -- Consent of Kirkpatrick & Lockhart LLP (to be filed).
(m) -- Consent of Non-Resident Director, Officer, Investment
Advisor or Expert -- None.
(n) -- Consent of [Name of Auditor] (to be filed).
(o) -- Financial Statements -- None.
(p) -- Initial Capital Agreements -- None.
(q) -- Retirement Plans -- None.
</TABLE>
C-1
<PAGE> 42
ITEM 25. MARKETING ARRANGEMENTS
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be incurred in connection with
the offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fees..................... $
National Association of Securities Dealers, Inc. Fees.......
Printing and Engraving Expenses.............................
Legal Fees..................................................
Accounting Expenses.........................................
Blue Sky Filing Fees and Expenses...........................
Miscellaneous Expenses......................................
--------
Total............................................. $
========
</TABLE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
State in substantially the tabular form indicated, as of a specified date
within 90 days prior to the date of filing, the number of record holders of each
class of securities of the Registrant.
<TABLE>
<CAPTION>
NUMBER OF RECORD
SHAREHOLDERS AS
OF
TITLE OF CLASS MARCH 1, 2000
-------------- ----------------
<S> <C>
Shares of Beneficial Interest, par value $0.01 per share....
</TABLE>
ITEM 29. INDEMNIFICATION
Article VIII of the Fund's Agreement and Declaration of Trust provides for
indemnification of certain persons acting on behalf of the Fund. Article VIII,
Section 8.1 provides that a Trustee, when acting in such capacity, shall not be
personally liable to any person for any act, omission, or obligation of the Fund
or any Trustee; provided, however, that nothing contained in the Fund's
Agreement and Declaration of Trust or in the Delaware Business Trust Act shall
protect any Trustee against any liability to the Fund or its 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.
Article VII, Section 2 of the Fund's Bylaws also provides that every person
who is, or has been, a Trustee or Officer of the Fund is indemnified to the
fullest extent permitted by the Delaware Business Trust Act, the Fund's Bylaws
and other applicable law.
AIM, the Fund and other investment companies managed by AIM and their
respective officers, trustees, directors and employees are insured under a joint
Mutual Fund and Investment Advisory Professional and Directors and Officers
Liability Policy, issued by ICI Mutual Insurance Company, with a [$35,000,000]
limit of liability.
Section 9 of the Investment Management and Administration Contract between the
Fund and AIM provides that AIM shall not be liable, and the Fund shall indemnify
AIM and its directors, officers and employees, for any costs or liabilities
arising from any error of judgment or mistake of law or any loss suffered by the
Fund in connection with the matters to which the Investment Management and
Administration Contract relates except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of AIM in the performance
by AIM of its duties or from reckless disregard by AIM of its obligations and
duties under the Investment Management and Administration Contract.
Section 9 of the Sub-Advisory Contract between AIM and INVESCO Senior Secured
Management, Inc. ("Sub-advisor") provides that Sub-Advisor shall not be liable
for any costs or liabilities arising from any error of judgment or any mistake
of law or any loss suffered by the Fund in connection with the matters to which
the Sub-Advisory Contract relates except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Sub-Advisor in the
performance by Sub-Advisor of its duties or from reckless disregard by
Sub-Advisor of its obligations and duties under the Sub-Advisory Contract.
Section 8 of the Sub-Sub-Advisory Contract between Sub-Advisor and INVESCO,
Inc. provides that INVESCO, Inc. shall not be liable for any costs or
liabilities arising from any error of judgment or mistake of law or any loss
suffered by the Fund in connection with the matters to which the
Sub-Sub-Advisory Contract relates except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of INVESCO, Inc. in the
performance by INVESCO, Inc. of its duties or from reckless disregard by
INVESCO, Inc. of its obligations and duties under the Sub-Sub-Advisory Contract.
C-2
<PAGE> 43
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See the material under the heading "Management" and the heading "Trustees and
Executive Officers" in the Prospectus filed as part of this Registration
Statement. Information as to the Trustees and Officers of AIM, the Sub-advisor
and INVESCO, Inc. is included in their Forms ADV (File Nos. 801-12313 and
801-10254, respectively), filed with the Commission, which information is
incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Fund will be maintained at the office of the
Fund's custodian at 1776 Heritage Drive, North Quincy, Massachusetts 02171,
except that the Fund's corporate records (its Agreement and Declaration of
Trust; Bylaws, and minutes of the meetings of its Board of Trustees and
shareholders) will be maintained at the offices of AIM at 11 Greenway Plaza,
Suite 100, Houston, TX 77046.
ITEM 32. MANAGEMENT SERVICES
None.
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend the offering of its shares until it
amends its Prospectus if:
(a) subsequent to the effective date of this Registration Statement,
the net asset value per share declines more than 10% from its net asset
value per share as of the effective date of the Registration Statement; or
(b) the net asset value increases to an amount greater than its net
proceeds as stated in the Prospectus.
(2) Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the 1933 Act; (ii)
to reflect in the prospectus any facts or events after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(b) that, for the purposes of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of those securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(3) Registrant hereby undertakes that:
(a) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant under Rule 497(h)
under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
C-3
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, Texas on this 21st day of January,
2000.
AIM FLOATING RATE FUND
By: /s/ ROBERT H. GRAHAM
-----------------------------------
Robert H. Graham
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ ROBERT H. GRAHAM Chairman, Trustee and President January 21, 2000
- ------------------------------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee January 21, 2000
- ------------------------------------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee January 21, 2000
- ------------------------------------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee January 21, 2000
- ------------------------------------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President, Treasurer and Principal January 21, 2000
- ------------------------------------------------ Financial and Accounting Officer
(Dana R. Sutton)
</TABLE>
<PAGE> 45
AIM FLOATING RATE FUND
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<S> <C>
(2)(a) -- Agreement and Declaration of Trust, dated December 6, 1999
(2)(b) -- By-laws, dated December 6, 1999
(2)(d) -- Instrument Defining Rights of Shareholders
(2)(g)(1) -- Form of Investment Management and Administration Contract between Registrant and A I M Advisors, Inc.
(2)(g)(2) -- Form of Sub-Advisory Contract between A I M Advisors, Inc. and INVESCO Senior Secured Management, Inc.
(2)(g)(3) -- Form of Sub-Sub-Advisory Contract between INVESCO Senior Secured Management, Inc. and INVESCO, Inc.
(2)(k)(1) -- Form of Transfer Agency Contract between Registrant and A I M Fund Services, Inc.
(2)(k)(3) -- Distribution Plan for Class B Shares
(2)(k)(4) -- Distribution Plan for Class C Shares
</TABLE>
<PAGE> 1
EXHIBIT (2)(a)
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> 2
(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.
2
<PAGE> 3
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).
3
<PAGE> 4
(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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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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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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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> 1
EXHIBIT (2)(b)
BYLAWS
OF
AIM FLOATING RATE FUND,
A DELAWARE BUSINESS TRUST
ADOPTED EFFECTIVE DECEMBER 9, 1999
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I OFFICES....................................................1
Section 1. Registered Office....................................1
Section 2. Other Offices........................................1
ARTICLE II TRUSTEES..................................................1
Section 1. Number................................................1
Section 2. Term.................................................1
Section 3. Vacancy..............................................1
Section 4. Delegation of Power..................................2
Section 5. Inability to Serve Full Term.........................2
Section 6. Powers...............................................2
Section 7. Meetings of the Trustees.............................2
Section 8. Regular Meetings.....................................2
Section 9. Notice of Meetings...................................3
Section 10. Quorum..............................................3
Section 11. Action Without Meeting..............................3
Section 12. Designation, Powers, and Name of Committees.........3
Section 13. Minutes of Committee................................3
Section 14. Compensation of Trustees............................3
ARTICLE III OFFICERS.................................................4
Section 1. Executive Officers...................................4
Section 2. Term of Office.......................................4
Section 3. President............................................4
Section 4. Chairman of the Board................................4
Section 5. Other Officers.......................................4
Section 6. Secretary............................................5
Section 7. Treasurer............................................5
Section 8. Surety Bond..........................................5
ARTICLE IV MEETINGS OF SHAREHOLDERS..................................5
Section 1. Purpose..............................................5
Section 2. Nominations of Trustees..............................6
Section 3. Election of Trustees.................................6
Section 4. Notice of Meetings...................................6
Section 5. Special Meetings.....................................6
Section 6. Notice of Special Meeting............................6
Section 7. Conduct of Special Meeting...........................6
Section 8. Quorum...............................................6
Section 9. Organization of Meetings.............................7
Section 10. Voting Standard.....................................7
Section 11. Voting Procedure....................................7
Section 12. Action Without Meeting..............................8
ARTICLE V NOTICES....................................................8
Section 1. Methods of Giving Notice.............................8
Section 2. Written Waiver.......................................8
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<PAGE> 3
ARTICLE VI CERTIFICATES OF SHARES....................................8
Section 1. Issuance.............................................8
Section 2. Countersignature.....................................8
Section 3. Lost Certificates....................................9
Section 4. Transfer of Shares...................................9
Section 5. Fixing Record Date...................................9
Section 6. Registered Shareholders..............................9
ARTICLE VII GENERAL PROVISIONS......................................10
Section 1. Dividends and Other Distributions...................10
Section 2. Indemnification.....................................10
Section 3. Advance Payments of Indemnifiable Expenses..........10
Section 4. Seal................................................10
Section 5. Severability........................................10
Section 6. Headings............................................11
ARTICLE VIII AMENDMENTS.............................................11
Section 1. Amendments..........................................11
ii
<PAGE> 4
BYLAWS
OF
AIM FLOATING RATE FUND,
A DELAWARE BUSINESS TRUST
Capitalized terms not specifically defined herein shall have the meanings
ascribed to them in the Trust's Agreement and Declaration of Trust
("Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of AIM Floating
Rate Fund (the "Trust") shall be in the County of New Castle, State of
Delaware.
Section 2. Other Offices. The Trust may also have offices at such
other places both within and without the State of Delaware as the Trustees may
from time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Number. The number of Trustees shall initially be one,
and thereafter shall be such number as shall be fixed from time to time by
resolution of the Board of Trustees; provided, however, that the number of
Trustees shall in no event be less than one nor more than twelve.
Section 2. Term. The Trustees shall hold office during the lifetime
of the Trust, except (a) that any Trustee may resign his trusteeship or may
retire by written instrument signed by him and delivered to the other Trustees,
which shall take effect upon such delivery or upon such later date as is
specified therein; (b) that any Trustee may be removed at any time by written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal, specifying the date when such removal shall become effective; (c)
that any Trustee who has died, become physically or mentally incapacitated by
reason of disease or otherwise, or is otherwise unable to serve, may be retired
by written instrument signed by a majority of the other Trustees, specifying
the date of his retirement; and (d) that a Trustee may be removed at any
meeting of the shareholders of the Trust.
Section 3. Vacancy. 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, a vacancy shall
occur. Whenever a vacancy in the 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
<PAGE> 5
remaining Trustees may fill such vacancy by appointing 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 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 increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee appointed pursuant to Sections 2 and 3 of
Article II of these Bylaws, or elected pursuant to Section 3 of Article IV, and
the Agreement shall have accepted this appointment in writing and agreed in
writing to be bound by the terms of the Trust Agreement, the Trust estate shall
vest in the new Trustee or Trustees, together with the continuing Trustees,
without any further act or conveyance, and he shall be deemed a Trustee
hereunder.
Section 4. Delegation of Power. 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.
Section 5. Inability to Serve Full Term. 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 the Agreement.
Section 6. Powers. 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 the 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 foreign jurisdiction
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 these Bylaws and the
Agreement, the presumption shall be in favor of a grant of power to the
Trustees.
Section 7. Meetings of the Trustees. The Trustees of the Trust may
hold meetings, both regular and special, either within or without the State of
Delaware.
Section 8. Regular Meetings. Regular meetings of the Board of
Trustees shall be held each year, at such time and place as the Board of
Trustees may determine.
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Section 9. Notice of Meetings. 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.
Section 10. Quorum. At all meetings of the Trustees, a majority of
the Trustees then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Trustees present at any meeting at
which there is a quorum shall be the act of the Board of Trustees, except as
may be otherwise specifically provided by applicable law or by the Agreement or
these Bylaws. If a quorum shall not be present at any meeting of the Board of
Trustees, the Trustees present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 11. Action Without Meeting. Unless otherwise restricted by
the Agreement or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Trustees or of any committee thereof may be taken
without a meeting by unanimous written consent of the Trustees or committee
members (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) and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 12. Designation, Powers, and Name of Committees. The Board
of Trustees may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of two or more of
the Trustees of the Trust. The Board may designate one or more Trustee as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of such committee. Each committee, to the extent provided
in the resolution, shall have and may exercise the powers of the Board of
Trustees in the management of the business and affairs of the Trust; provided,
however, that in the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such members constitute a
quorum, may unanimously appoint another member of the Board of Trustees to act
at the meeting in the place of any such absent or disqualified member. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Trustees.
Section 13. Minutes of Committee. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Trustees when
required.
Section 14. Compensation of Trustees. The Trustees as such shall be
entitled to reasonable compensation for their services as determined from time
to time by the Board of Trustees. Nothing herein shall in any way prevent the
employment of any Trustee for advisory,
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management, administrative, legal, accounting, investment banking,
underwriting, brokerage, or investment dealer or other services and the payment
for the same by the Trust.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after
the organization of the Trust. The executive officers may include a Chairman of
the Board, and shall include a President, one or more Vice Presidents (the
number thereof to be determined by the Board of Trustees), a Secretary and a
Treasurer. The Chairman of the Board, if any, shall be selected from among the
Trustees. The Board of Trustees may also in its discretion appoint Assistant
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board may determine. The Board of Trustees may fill any vacancy
which may occur in any office. Any two offices, except for those of President
and Vice President, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument on behalf of the Trust in more
than one capacity, if such instrument is required by law or by these Bylaws to
be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined
by the Board of Trustees, the officers shall serve at the pleasure of the Board
of Trustees. If the Board of Trustees in its judgment finds that the best
interests of the Trust will be served, the Board of Trustees may remove any
officer of the Trust at any time with or without cause. The Trustees may
delegate this power to the President with respect to any other officer. Such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any officer may resign from office at any time by delivering
a written resignation to the Trustees or the President. Unless otherwise
specified therein, such resignation shall take effect upon delivery.
Section 3. President. The President shall be the chief executive
officer of the Trust and, subject to the Board of Trustees, shall generally
manage the business and affairs of the Trust. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the shareholders and
the Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Trustees, and
shall undertake such other assignments as may be requested by the President.
Section 5. Other Officers. The Chairman of the Board or one or more
Vice Presidents shall have and exercise such powers and duties of the President
in the absence or inability to act of the President, as may be assigned to
them, respectively, by the Board of Trustees or, to the extent not so assigned,
by the President. In the absence or inability to act of the President, the
4
<PAGE> 8
powers and duties of the President not otherwise assigned by the Board of
Trustees or the President shall devolve upon the Chairman of the Board, or in
the Chairman's absence, the Vice Presidents in the order of their election.
Section 6. Secretary. The Secretary shall (a) have custody of the
seal of the Trust; (b) attend meetings of the shareholders, the Board of
Trustees, and any committees of Trustees and keep the minutes of such meetings
of shareholders, Board of Trustees and any committees thereof; and (c) issue
all notices of the Trust. The Secretary shall have charge of the shareholder
records and such other books and papers as the Board may direct, and shall
perform such other duties as may be incidental to the office or which are
assigned by the Board of Trustees. The Secretary shall also keep or cause to be
kept a shareholder book, which may be maintained by means of computer systems,
containing the names, alphabetically arranged, of all persons who are
shareholders of the Trust, showing their places of residence, the number and
class or series of any class of shares of beneficial interest held by them,
respectively, and the dates when they became the record owners thereof, and
such book shall be open for inspection as prescribed by the laws of the State
of Delaware.
Section 7. Treasurer. The Treasurer shall have the care and custody
of the funds and securities of the Trust and shall deposit the same in the name
of the Trust in such bank or banks or other depositories, subject to withdrawal
in such manner as these Bylaws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. Surety Bond. The Trustees may require any officer or
agent of the Trust to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940, as amended ("1940 Act") and the
rules and regulations of the Securities and Exchange Commission ("Commission")
to the Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his or her duties to
the Trust, including responsibility for negligence and for the accounting of
any of the Trust's property, funds, or securities that may come into his or her
hands.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the shareholders for the
election of Trustees shall be held at such place as may be fixed from time to
time by the Trustees, or at such other place either within or without the State
of Delaware as shall be designated from time to time by the Trustees and stated
in the notice indicating that a meeting has been called for such purpose.
Meetings of shareholders may be held for any purpose determined by the Trustees
and may be held at such time and place, within or without the State of Delaware
as shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. At all meetings of the shareholders, every shareholder of
record entitled to vote thereat shall be entitled to vote either in person or
by proxy, which term shall include proxies provided through written,
electronic, telephonic, computerized, facsimile, telecommunications, telex or
oral communication or by any other form of communication, each pursuant to such
voting procedures and through such systems as are
5
<PAGE> 9
authorized by the Trustees or one or more executive officers of the Trust.
Unless a proxy provides otherwise, such proxy is not valid more than eleven
months after its date. A proxy with respect to shares held in the name of two
or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Section 2. Nominations of Trustees. Nominations of individuals for
election to the Board of Trustees shall be made by the Board of Trustees or a
nominating committee of the Board of Trustees, if one has been established (the
"Nominating Committee"). Any shareholder of the Trust may submit names of
individuals to be considered by the Nominating Committee or the Board of
Trustees, as applicable, provided, however, (i) that such person was a
shareholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating Committee or the Board of
Trustees, as applicable, shall make the final determination of persons to be
nominated.
Section 3. Election of Trustees. All meetings of shareholders for
the purpose of electing Trustees shall be held on such date and at such time as
shall be designated from time to time by the Trustees and stated in the notice
of the meeting, at which the shareholders shall elect by a plurality vote any
number of Trustees as the notice for such meeting shall state are to be
elected, and transact such other business as may properly be brought before the
meeting in accordance with Section 1 of this Article IV.
Section 4. Notice of Meetings Written notice of any meeting stating
the place, date, and hour of the meeting shall be given to each shareholder
entitled to vote at such meeting not less than ten days before the date of the
meeting in accordance with Article V hereof.
Section 5. Special Meetings.. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by applicable law or
by the Agreement, may be called by any Trustee; provided, however, that the
Trustees shall promptly call a meeting of the shareholders solely for the
purpose of removing one or more Trustees, when requested in writing so to do by
the record holders of not less than ten percent of the outstanding shares of
the Trust.
Section 6. Notice of Special Meeting. Written notice of a special
meeting stating the place, date, and hour of the meeting and the purpose of
purposes for which the meeting is called, shall be given not less than ten days
before the date of the meeting, to each shareholder entitled to vote at such
meeting.
Section 7. Conduct of Special Meeting. Business transacted at any
special meeting of shareholders shall be limited to the purpose stated in the
notice.
Section 8. Quorum. The holders of one-third of the shares of
beneficial interests that are issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
at all meetings of the shareholders for the transaction of business except as
otherwise provided by applicable law or by the Agreement. If, however, such
quorum
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shall not be present or represented at any meeting of the shareholders, the
vote of the holders of a majority of shares cast shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. Organization of Meetings.
(a) The Chairman of the Board of Trustees shall preside at
each meeting of shareholders. In the absence of the Chairman of the Board, the
meeting shall be chaired by the President, or if the President shall not be
present, by a Vice President. In the absence of all such officers, the meeting
shall be chaired by a person elected for such purpose at the meeting. The
Secretary of the Trust, if present, shall act as Secretary of such meetings,
or if the Secretary is not present, an Assistant Secretary of the Trust shall
so act, and if no Assistant Secretary is present, then a person designated by
the Secretary of the Trust shall so act, and if the Secretary has not
designated a person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Trustees of the Trust shall be entitled to
make such rules and regulations for the conduct of meetings of shareholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Trustees, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing: an agenda or order of business
for the meeting; rules and procedures for maintaining order at the meeting and
the safety of those present; limitations on participation in such meeting to
shareholders of record of the Trust and their duly authorized and constituted
proxies, and such other persons as the chairman shall permit; restrictions on
entry to the meeting after the time fixed for the commencement thereof;
limitations on the time allotted to questions or comments by participants; and
regulation of the opening and closing of the polls for balloting on matters
which are to be voted on by ballot, unless and to the extent the Board of
Trustees or the chairman of the meeting determines that meetings of
shareholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
Section 10. Voting Standard. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares cast shall decide
any question brought before such meeting, unless the question is one on which,
by express provision of applicable law, the Agreement, these Bylaws, or
applicable contract, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 11. Voting Procedure. Each whole share shall be entitled to
one vote, and each fractional share shall be entitled to a proportionate
fractional vote. 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 such Portfolios (or
Classes) shall be entitled to vote thereon.
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<PAGE> 11
Section 12. Action Without Meeting. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
shareholders of the Trust, or any action which may be taken at any meeting of
such shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of any such action without a meeting by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions
of applicable law or of the Agreement or of these Bylaws, notice is required to
be given to any Trustee or shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given
orally in person, or by telephone (promptly confirmed in writing) or in
writing, by mail addressed to such Trustee or shareholder, at his address as it
appears on the records of the Trust, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same shall be deposited
in the United States mail. Notice to Trustees or members of a committee may
also be given by telex, telegram, telecopier or via overnight courier. If sent
by telex or telecopier, notice to a Trustee or member of a committee shall be
deemed to be given upon transmittal; if sent by telegram, notice to a Trustee
or member of a committee shall be deemed to be given when the telegram, so
addressed, is delivered to the telegraph company, and if sent via overnight
courier, notice to a Trustee or member of a committee shall be deemed to be
given when delivered against a receipt therefor.
Section 2. Written Waiver. Whenever any notice is required to be
given under the provisions of applicable law or of the Agreement or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. The Trust may, in its sole discretion, issue a
certificate to any shareholder, signed by, or in the name of the Trust by, the
President, certifying the number of shares owned by him, her or it in a Class
or Portfolio of the Trust. No Shareholder shall have the right to demand or
require that a certificate be issued to him, her or it.
Section 2. Countersignature. Where a certificate is countersigned
(1) by a transfer agent other than the Trust or its employee, or, (2) by a
registrar other than the Trust or its employee, the signature of the Trustee
may be a facsimile.
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Section 3. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates therefore issued by the Trust alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Trustees may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Trust a bond in such sum as it may direct as indemnity against any
claim that may be made against the Trust with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such rules as
they consider appropriate for the transfer of shares and similar matters. To
the extent certificates are issued in accordance with Section 1 of this Article
VI, upon surrender to the Trust or the transfer agent of the Trust of such
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 5. Fixing Record Date. In order that the Trustees may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution of allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of beneficial interests
or for the purpose of any other lawful action, the Board of Trustees may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Trustees, and
which record date shall not be more than ninety nor less than ten days before
the date of such meeting, nor more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Trustees for
action by shareholder consent in writing without a meeting, nor more than
ninety days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Trustees may fix a new record date for the adjourned meeting.
Section 6. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice hereof, except as otherwise provided
by the laws of Delaware.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends and Other 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.
Section 2. Indemnification. Every person who is, or has been, a
Trustee or officer of the Trust shall be indemnified by the Trust to the
fullest extent permitted by the Delaware Business Trust Act, these Bylaws and
other applicable law.
Section 3. Advance Payments of Indemnifiable Expenses. To the
maximum extent permitted by the Delaware Act and other applicable law, the
Trust or applicable Portfolio may advance to a Covered Person, in connection
with the preparation and presentation of a defense to any claim, action, suit,
or proceeding, expenses for which the Covered Person would ultimately be
entitled to indemnification; provided that the Trust or applicable Portfolio
has received an undertaking by or on behalf of such Covered Person that such
amount will be paid over by him to the Trust or applicable Portfolio if it is
ultimately determined that he is not entitled to indemnification for such
expenses, and further provided that (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments, or (iii) either a majority of
the Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust nor parties to the matter, or independent legal counsel in a written
opinion shall have determined, based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that there is reason to believe that
such Covered Person will not be disqualified from indemnification for such
expenses.
Section 4. Seal. The business seal shall have inscribed thereon the
name of the business trust, the year of its organization and the word "Business
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the corporate seal of the Trust to any
document requiring the same.
Section 5. Severability. The provisions of these Bylaws are
severable. If the Board of Trustees determines, with the advice of counsel,
that any provision hereof conflicts with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code, or other applicable laws and
regulations, the conflicting provision shall be deemed never to have
constituted a part of these Bylaws; provided, however, that such determination
shall not affect any of the remaining provisions of these Bylaws or render
invalid or improper any action taken or omitted prior to such determination. If
any provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
these Bylaws.
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Section 6. Headings. Headings are placed in these Bylaws for
convenience of reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed at
any regular or special meeting of the Board of Trustees without prior notice.
These Bylaws may also be altered or repealed at any special meeting of the
shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
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Exhibit (2)(d)
AIM FLOATING RATE FUND (THE "REGISTRANT")
The Registrant's Agreement and Declaration of Trust provides as follows:
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).
(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.
<PAGE> 2
(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 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
<PAGE> 3
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.
The Registrant's By-Laws provide as follows:
Article IV - Meetings of Shareholders
Section 1. Voting Standard. When a quorum is present at any meeting,
the vote of the holders of a majority of the shares cast shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of applicable law, the Agreement, these Bylaws, or applicable
contract, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 2. Voting Procedure. Each whole share shall be entitled to one
vote, and each fractional share shall be entitled to a proportionate fractional
vote. 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 such Portfolios (or Classes) shall be
entitled to vote thereon.
<PAGE> 1
EXHIBIT (2)(g)(1)
AIM FLOATING RATE FUND
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
AIM FLOATING RATE FUND
AND
A I M ADVISORS, INC.
Contract made as of _______________, 2000, between AIM Floating Rate
Fund ("Fund"), a Delaware business trust, and A I M Advisors, Inc. (the
"Adviser"), a Delaware corporation.
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as a closed-end management investment company;
and
WHEREAS the Fund desires to retain Adviser as investment manager and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Fund, and Adviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Adviser as investment manager and
administrator for the period and on the terms set forth in this Contract.
Adviser accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Fund's Board of Trustees
("Board"), Adviser will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and other investments will be purchased, retained or
sold by the Fund, and the brokers and dealers through whom trades will be
executed.
(b) Adviser agrees that in placing orders with brokers and dealers it
will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of the
Fund or provide the Fund's or Adviser's other clients with research, analysis,
advice and similar services. Adviser may pay to brokers and dealers, in return
for research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to Adviser's determining in good faith that
such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of Adviser to the Fund and its
other clients and that the total commissions or spreads paid by the Fund will be
reasonable in relation to the benefits to
1
<PAGE> 2
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to Adviser or any affiliated person thereof except in
accordance with the federal securities laws and the rules and regulations
thereunder and any exemptive orders currently in effect. Whenever Adviser
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other accounts advised by Adviser, such orders will be
allocated as to price and amount among all such accounts in a manner believed to
be equitable to each account. The Fund recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Fund, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the Fund are the property
of the Fund, agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any records which it maintains for the Fund and which are required
to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to
surrender promptly to the Fund any records which it maintains for the Fund upon
request by the Fund.
3. Duties as Administrator. Adviser will administer the affairs of the Fund
subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of the Fund,
including the oversight of transfer agency and custodial services, except as
hereinafter set forth; provided, however, that nothing herein contained shall be
deemed to relieve or deprive the Board of its responsibility for control of the
conduct of the affairs of the Fund.
(b) At Adviser's expense, Adviser will provide the Fund with such
corporate, administrative and clerical personnel (including officers of the
Fund) and services as are reasonably deemed necessary or advisable by the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of the Fund's proxy material,
tax returns and required reports with or to the Fund's shareholders, the
Securities and Exchange Commission and other appropriate federal or state
regulatory authorities.
(d) Adviser will provide the Fund with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. Further Duties. In all matters relating to the performance of this Contract,
Adviser will act in conformity with the Agreement and Declaration of Trust,
By-Laws and Registration Statement of the Fund and with the instructions and
directions of the Board and will comply with the requirements of the 1940 Act,
the rules thereunder, and all other applicable federal and state laws and
regulations.
2
<PAGE> 3
5. Delegation of Adviser's Duties as Investment Manager and Administrator. With
respect to the Fund, Adviser may enter into one or more contracts ("Sub-Advisory
or Sub-Administration Contract") with a Sub-Adviser or Sub-Administrator in
which Adviser delegates to such sub-adviser or sub-administrator the performance
of any or all of the services specified in Paragraphs 2 and 3 of this Contract,
provided that: (i) each Sub-Advisory and Sub-Administration Contract imposes on
the sub-adviser or sub-administrator bound thereby all the duties and conditions
to which Adviser is subject with respect to the services under Paragraphs 2, 3
and 4 of this Contract; (ii) each Sub-Advisory and Sub-Administration Contract
meets all requirements of the 1940 Act and rules thereunder, and (iii) Adviser
shall not enter into a Sub-Advisory or Sub-Administration Contract unless it is
approved by the Board prior to implementation.
6. Services Not Exclusive. The services furnished by Adviser hereunder are not
to be deemed exclusive and Adviser shall be free to furnish similar services to
others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officer or employee of Adviser, who may also be a Trustee, officer or employee
of the Fund, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, the Fund will bear all expenses,
not specifically assumed by Adviser.
(b) Expenses borne by the Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therein; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Fund; (v) costs incurred in connection with the
issuance, sale or repurchase of the Fund's shares of beneficial interest; (vi)
filing fees and expenses relating to the registration and qualification for the
Fund's shares and the Fund under federal and/or state securities laws and
maintaining such registrations and qualifications; (vii) expenses of preparing
and filing reports and other documents with governmental and regulatory
agencies; (viii) fees and salaries payable to the Fund's Trustees who are not
parties to this Contract or interested persons of any such party ("Independent
Trustees"); (ix) all expenses incurred in connection with the Independent
Trustees' services, including travel expenses; (x) taxes (including any income
or franchise taxes) and governmental fees; (xi) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (xii) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund for violation of any law; (xiii) interest
charges; (xiv) legal, accounting and auditing expenses, including legal fees of
special counsel for the Independent Trustees; (xv) charges of
3
<PAGE> 4
custodians, transfer agents, pricing agents and other agents; (xvi) costs of
preparing share certificates; (xvii) expenses of setting in type, printing and
mailing prospectuses and supplements thereto, reports, notices and proxy
materials for existing shareholders; (xviii) expenses of obtaining and
maintaining securities exchange listing of the Fund's shares of beneficial
interest; (xix) any extraordinary expenses (including fees and disbursements of
counsel, costs of actions, suits or proceedings to which the Fund is a party and
the expenses the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, employees and agents) incurred by the
Fund; (xx) fees, voluntary assessments and other expenses incurred in connection
with membership in investment company organizations; (xxi) costs of mailing and
tabulating proxies and costs of meetings of shareholders, the Board and any
committees thereof; (xxii) the cost of investment company literature and other
publications provided by the portfolio to its Trustees and officers; and (xxiii)
costs of mailing, stationery and communications equipment.
(c) Adviser will assume the cost of any compensation for services
provided to the Fund received by the officers of the Fund and by the Trustees of
the Fund who are not Independent Trustees.
(d) The payment or assumption by Adviser of any expense of the Fund
that Adviser is not required by this Contract to pay or assume shall not
obligate Adviser to pay or assume the same or any similar expense of the Fund on
any subsequent occasion.
8. Compensation.
(a) For the services provided to the Fund under this Contract, the Fund
shall pay the Adviser an annual fee, payable monthly, based upon the average
daily net assets of the Fund as forth in Appendix A attached hereto. Such
compensation shall be paid solely from the assets of the Fund.
(b) The fee shall be computed weekly and paid monthly to Adviser on or
before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Adviser and Indemnification. Adviser shall not be
liable and the Fund shall indemnify Adviser and its directors, officers and
employees, for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund in connection with the matters
to which this Contract relates except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of Adviser in the performance by
Adviser of its duties or from reckless disregard by Adviser of its
4
<PAGE> 5
obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Fund shall be deemed, when rendering
services to the Fund or acting with respect to any business of the Fund, to be
rendering such service to or acting solely for the Fund and not as an officer,
partner, employee, or agent or one under the control or direction of Adviser
even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date here above
written, provided that this Contract shall not take effect with respect to the
Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to the Fund this Contract shall continue automatically
for successive periods not to exceed twelve months each, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, with respect to the Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Adviser or by Adviser at
any time, without the payment of any penalty, on sixty days' written notice to
the Fund. This Contract will automatically terminate in the event of its
assignment.
11. Amendment of this Contract. No provision of this Contract may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware (without regard to Delaware conflict or choice of law
provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. License Agreement. The Fund shall have the non-exclusive right to use the
name "AIM" to designate the Fund or any current or future series of shares only
so long as A I M Advisors, Inc. serves as investment manager or adviser to the
Fund with respect to such series of shares.
5
<PAGE> 6
14. Limitation of Shareholder Liability. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Fund personally,
but shall only bind the assets and property of the Fund, as provided in the
Fund's Agreement and Declaration of Trust. The execution and delivery of this
Contract have been authorized by the Trustees of the Fund and shareholders of
the Fund, and this Contract has been executed and delivered by an authorized
officer of the Fund acting as such; neither such authorization by such Trustees
and shareholders nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund, as
provided in the Fund's Agreement and Declaration of Trust.
15. Miscellaneous. The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this Contract
shall be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Contract shall not be affected thereby. This Contract
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors. As used in this Contract, the terms "majority of
the outstanding voting securities," "interested person," "assignment," "broker,"
"dealer," "investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: AIM FLOATING RATE FUND
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
Attest: A I M ADVISORS, INC.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
6
<PAGE> 7
APPENDIX A
TO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
AIM FLOATING RATE FUND
The Fund shall pay the Adviser, out of the assets of the Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee of 0.95% of the Fund's average daily net assets for the calendar
year, computed in the manner used for the determination of the Fund's net asset
value.
7
<PAGE> 1
EXHIBIT (2)(g)(2)
AIM FLOATING RATE FUND
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO SENIOR SECURED MANAGEMENT, INC.
Contract made as of _______________________, 2000, between A I M
Advisors, Inc., a Delaware corporation ("Adviser"), and INVESCO Senior Secured
Management, Inc., a New York corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and
Administration Contract with AIM Floating Rate Fund ("Fund"), a closed-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser to furnish
certain advisory services to the Fund, and Sub-Adviser is willing to furnish
such services;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser as sub-adviser of
the Fund for the period and on the terms set forth in this Contract. Sub-Adviser
accepts such appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of the Fund's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for the Fund, including investment research and management, with respect
to all securities and investments and cash equivalents of the Fund. The
Sub-Adviser will determine from time to time what securities and investments
will be purchased, retained or sold by the Fund, and the brokers and dealers
through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers and
dealers, it will attempt to obtain the best net results in terms of price and
execution. Consistent with this obligation, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Fund's, Adviser's, or Sub-Adviser's other clients with
research, analysis, advice and similar services. The Sub-Adviser may pay, in
return for such research and analysis, a higher commission or
<PAGE> 2
spread than may be charged by other brokers and dealers, subject to the
Sub-Adviser's determining in good faith that such commission or spread is
reasonable in terms either of the particular transaction or of the overall
responsibility of the Sub-Adviser to the Fund and its other clients and that the
total commissions or spreads paid by the Fund will be reasonable in relation to
the benefits to the Fund over the long term. In no instance will portfolio
securities be purchased from or sold to the Sub-Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder and any exemptive orders currently in effect.
Whenever the Sub-Adviser simultaneously places orders to purchase or sell the
same security on behalf of the Fund and one or more other accounts advised by
the Sub-Adviser, such orders will be allocated as to price and amount among all
such accounts in a manner believed to be equitable to each account. The Fund
recognizes that in some cases this procedure may adversely affect the results
obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records with respect to
the securities transactions of the Fund, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Fund, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Fund and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Fund any records which it maintains
for the Fund upon request by the Fund.
3. Further Duties. In all matters relating to the performance of this
Contract, Sub-Adviser will act in conformity with the Agreement and Declaration
of Trust, By-Laws and Registration Statement of the Fund and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
4. Delegation of Sub-Adviser's Duties as Sub-Adviser. With respect to
the Fund, Sub-Adviser may enter into one or more contracts ("Sub-Sub-Advisory
Contracts") with a sub-sub-adviser in which Sub-Adviser delegates to such
sub-sub-adviser the performance of any or all of the services specified in
Paragraph 2 of this Contract, provided that: (i) each Sub-Sub-Advisory Contract
imposes on the sub-sub-adviser bound thereby all the duties and conditions to
which Sub-Adviser is subject with respect to the services under Paragraphs 2 and
3 of this Contract; (ii) each Sub-Sub-Advisory Contract meets all requirements
of the 1940 Act and rules thereunder, and (iii) Adviser shall not enter into a
Sub-Sub-Advisory Contract unless it is approved by the Board prior to
implementation.
5. Services Not Exclusive. The services furnished by Sub-Adviser
hereunder are not to be deemed exclusive and Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of
2
<PAGE> 3
Sub-Adviser, who may also be a Trustee, officer or employee of the Fund, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
6. Expenses.
(a) During the term of this Contract, the Fund will bear all expenses
not specifically assumed by Sub-Adviser.
(b) Expenses borne by the Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therein; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Adviser under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Fund; (v) costs incurred in connection
with the issuance, sale or repurchase of the Fund's shares of beneficial
interest; (vi) filing fees and expenses relating to the registration and
qualification for the Fund's shares and the Fund under federal and/or state
securities laws and maintaining such registrations and qualifications; (vii)
expenses of preparing and filing reports and other documents with governmental
and regulatory agencies; (viii) fees and salaries payable to the Fund's Trustees
who are not parties to this Contract or interested persons of any such party
("Independent Trustees"); (ix) all expenses incurred in connection with the
Independent Trustees' services, including travel expenses; (x) taxes (including
any income or franchise taxes) and governmental fees; (xi) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (xii) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Fund for violation of any
law; (xiii) interest charges; (xiv) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Trustees; (xv)
charges of custodians, transfer agents, pricing agents and other agents; (xvi)
expenses of disbursing dividends and distributions; (xvii) costs of preparing
share certificates; (xviii) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, reports, notices and proxy materials for
existing shareholders; (xix) expenses of obtaining and maintaining securities
exchange listing of the Fund's shares of beneficial interest; (xx) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Fund is a party and the expenses the
Fund may incur as a result of its legal obligation to provide indemnification to
its officers, Trustees, employees and agents) incurred by the Fund; (xxi) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (xxii) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xxiii) the cost of investment company literature and other
publications provided by the Fund to its Trustees and officers; and (xxiv) costs
of mailing, stationery and communications equipment.
(c) The payment or assumption by Sub-Adviser of any expense of the Fund
that Sub-Adviser is not required by this Contract to pay or assume shall not
obligate
3
<PAGE> 4
Sub-Adviser to pay or assume the same or any similar expense of the Fund on any
subsequent occasion.
7. Compensation.
(a) For the services provided to the Fund under this Contract, Adviser
will pay Sub-Adviser a fee, computed weekly and paid monthly, as set forth in
Appendix A hereto.
(b) The fee shall be computed weekly and paid monthly to Sub-Adviser on
or before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. Limitation of Liability of Sub-Adviser and Indemnification.
Sub-Adviser shall not be liable for any costs or liabilities arising from any
error of judgment or mistake of law or any loss suffered by the Fund in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance by Sub-Adviser of its duties or from reckless
disregard by Sub-Adviser of its obligations and duties under this Contract. Any
person, even though also an officer, partner, employee, or agent of Sub-Adviser,
who may be or become a Trustee, officer, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting with respect to any
business of the Fund to be rendering such service to or acting solely for the
Fund and not as an officer, partner, employee, or agent or one under the control
or direction of Sub-Adviser even though paid by it.
9. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect unless it has first
been approved (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Fund's outstanding voting securities, when required
by the 1940 Act.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods
not to exceed twelve months each, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Board or by vote of a majority of the outstanding
voting securities of the Fund.
4
<PAGE> 5
(c) Notwithstanding the foregoing, this Contract may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Fund on sixty days'
written notice to Sub-Adviser or by Sub-Adviser at any time, without the payment
of any penalty, on sixty days' written notice to the Fund. This Contract will
automatically terminate in the event of its assignment.
10. Amendment. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
11. Governing Law. This Contract shall be construed in accordance with
the laws of the State of Delaware (without regard to Delaware conflict or choice
of law provisions) and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
12. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
A I M ADVISORS, INC.
Attest: By:
--------------------------- ---------------------------
Name:
Title:
INVESCO SENIOR SECURED MANAGEMENT, INC.
Attest: By:
--------------------------- ---------------------------
Name:
Title:
6
<PAGE> 7
APPENDIX A
TO
SUB-ADVISORY CONTRACT
The Adviser shall pay the Sub-Adviser, as full compensation for all
services rendered and all facilities furnished hereunder, a sub-advisory fee of
0.48% of the Fund's average daily net assets for the calendar year, computed in
the manner used for the determination of the Fund's net asset value.
7
<PAGE> 1
EXHIBIT (2)(g)(3)
AIM FLOATING RATE FUND
SUB-SUB-ADVISORY CONTRACT
BETWEEN
INVESCO SENIOR SECURED MANAGEMENT, INC.
AND
INVESCO, INC.
Contract made as of ___________, 2000, between INVESCO Senior Secured
Management, Inc., a New York corporation ("Sub-Adviser"), and INVESCO, Inc., a
Delaware corporation ("Secondary Sub-Adviser").
WHEREAS Sub-Adviser has entered into a Sub-Advisory Contract with A I M
Advisors, Inc. ("Adviser") with respect to AIM Floating Rate Fund ("Fund"), a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"); and
WHEREAS Sub-Adviser desires to retain Secondary Sub-Adviser as
sub-sub-adviser to furnish certain advisory services to the Fund, and Secondary
Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Sub-Adviser hereby appoints Secondary Sub-Adviser as
sub-sub-adviser of the Fund for the period and on the terms set forth in this
Contract. Secondary Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Sub-Adviser.
(a) Subject to the supervision of the Fund's Board of Trustees
("Board"), Adviser, and the Sub-Adviser, the Secondary Sub-Adviser will provide
a continuous investment program for the Fund, including investment research and
management, for a portion of the investments of the Fund to be determined by the
Sub-Adviser (the "Sub-Sub-Advised Assets"). The Secondary Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold with respect to the Sub-Sub-Advised Assets of the
Fund. The Secondary Sub-Adviser will be responsible for placing purchase and
sell orders for such investments and for other related transactions. The
Secondary Sub-Adviser will provide services under this Agreement in accordance
with the Fund's investment objectives, policies and restrictions as stated in
the Fund's registration statement.
(b) The Secondary Sub-Adviser agrees that, in placing orders with
brokers and dealers, it will attempt to obtain the best net result, in terms of
price and execution.
1
<PAGE> 2
Consistent with this obligation, the Secondary Sub-Adviser may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Fund's, Adviser's, Sub-Adviser's or Secondary
Sub-Adviser's other clients with research, analysis, advice and similar
services. The Secondary Sub-Adviser may pay to brokers and dealers, in return
for such research and analysis services, a higher commission or spread than may
be charged by other brokers and dealers, subject to the Secondary Sub-Adviser
determining in good faith that such commission or spread is reasonable in terms
either of the particular transaction or of the overall responsibility of the
Secondary Sub-Adviser to the Fund and its other clients and that the total
commissions or spreads paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long term. In no instance will Fund securities be
purchased from or sold to the Secondary Sub-Adviser, or any affiliated person
thereof, except in accordance with the federal securities laws and the rules and
regulations thereunder and any exemptive orders currently in effect. Whenever
the Secondary Sub-Adviser simultaneously places orders to purchase or sell the
same security on behalf of the Fund and one or more other accounts advised by
the Secondary Sub-Adviser, such orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable to each account.
The Fund recognizes that in some cases this procedure may adversely affect the
results obtained for the Fund.
(c) The Secondary Sub-Adviser will maintain all books and records with
respect to the securities transactions of the Fund, and will furnish the Board,
Adviser, and Sub-Adviser with such periodic and special reports as the Board,
Adviser, or Sub-Adviser reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Secondary Sub-Adviser hereby
agrees that all records which it maintains for the Fund are the property of the
Fund, agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any records which it maintains for the Fund and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Fund any records which it maintains for the Fund upon request by
the Fund.
(d) The Secondary Sub-Adviser will provide the Board, the Adviser, and
the Sub-Adviser on a regular basis with economic and investment analyses and
reports and make available to the Board, the Adviser, and the Sub-Adviser upon
request any economic, statistical and investment services normally available to
institutional or other customers of the Secondary Sub-Adviser.
3. Further Duties. In all matters relating to the performance of this
Contract, Secondary Sub-Adviser will act in conformity with the Agreement and
Declaration of Trust, By-Laws and Registration Statement of the Fund and with
the instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder, and all other applicable
federal and state laws and regulations.
4. Services Not Exclusive. The services furnished by Secondary
Sub-Adviser hereunder are not to be deemed exclusive and Secondary Sub-Adviser
shall be free to furnish similar services to others so long as its services
under this Contract are not
2
<PAGE> 3
impaired thereby. Nothing in this Contract shall limit or restrict the right of
any director, officer or employee of Secondary Sub-Adviser, who may also be a
Trustee, officer or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar nature or a dissimilar nature.
5. Expenses.
(a) During the term of this Contract, the Fund will bear all expenses
not specifically assumed by Secondary Sub-Adviser.
(b) Expenses borne by the Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therein; (ii) fees payable to and expenses incurred on behalf of the Fund by
Adviser under this Contract; (iii) investment consulting fees and related costs;
(iv) expenses of organizing the Fund; (v) costs incurred in connection with the
issuance, sale or repurchase of the Fund's shares of beneficial interest; (vi)
filing fees and expenses relating to the registration and qualification for the
Fund's shares and the Fund under federal and/or state securities laws and
maintaining such registrations and qualifications; (vii) expenses of preparing
and filing reports and other documents with governmental and regulatory
agencies; (viii) fees and salaries payable to the Fund's Trustees who are not
parties to this Contract or interested persons of any such party ("Independent
Trustees"); (ix) all expenses incurred in connection with the Independent
Trustees' services, including travel expenses; (x) taxes (including any income
or franchise taxes) and governmental fees; (xi) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds; (xii) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund for violation of any law; (xiii) interest
charges; (xiv) legal, accounting and auditing expenses, including legal fees of
special counsel for the Independent Trustees; (xv) charges of custodians,
transfer agents, pricing agents and other agents; (xvi) costs of preparing share
certificates; (xvii) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, reports, notices and proxy materials for
existing shareholders; (xviii) expenses of obtaining and maintaining securities
exchange listing of the Fund's shares of beneficial interest; (xix) any
extraordinary expenses (including fees and disbursements of counsel, costs of
actions, suits or proceedings to which the Fund is a party and the expenses the
Fund may incur as a result of its legal obligation to provide indemnification to
its officers, Trustees, employees and agents) incurred by the Fund; (xx) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (xxi) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xxii) the cost of investment company literature and other publications
provided by the Fund to its Trustees and officers; and (xxiii) costs of mailing,
stationery and communications equipment.
3
<PAGE> 4
(c) The payment or assumption by Secondary Sub-Adviser of any expense
of the Fund that Secondary Sub-Adviser is not required by this Contract to pay
or assume shall not obligate Secondary Sub-Adviser to pay or assume the same or
any similar expense of the Fund on any subsequent occasion.
6. Compensation.
(a) For the services provided to the Fund under this Contract,
Sub-Adviser will pay Secondary Sub-Adviser a fee, computed weekly and paid
monthly, as set forth in Appendix A hereto.
(b) The fee shall be computed weekly and paid monthly to Secondary Sub-
Adviser on or before the last business day of the next succeeding calendar
month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7. Limitation of Liability of Secondary Sub-Adviser and
Indemnification. Secondary Sub-Adviser shall not be liable for any costs or
liabilities arising from any error of judgment or mistake of law or any loss
suffered by the Fund in connection with the matters to which this Contract
relates except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of Secondary Sub-Adviser in the performance by Secondary
Sub-Adviser of its duties or from reckless disregard by Secondary Sub-Adviser of
its obligations and duties under this Contract. Any person, even though also an
officer, partner, employee, or agent of Secondary Sub-Adviser, who may be or
become a Trustee, officer, employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting with respect to any business of the
Fund to be rendering such service to or acting solely for the Fund and not as an
officer, partner, employee, or agent or one under the control or direction of
Secondary Sub-Adviser even though paid by it.
8. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect unless it has first
been approved (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods
not to exceed twelve months each, provided that such continuance is specifically
approved at least annually (i) by a vote
4
<PAGE> 5
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Fund on sixty days'
written notice to Secondary Sub- Adviser or by Secondary Sub-Adviser at any
time, without the payment of any penalty, on sixty days' written notice to the
Fund. This Contract will automatically terminate in the event of its assignment.
9. Amendment. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
10. Governing Law. This Contract shall be construed in accordance with
the laws of the State of Delaware (without regard to Delaware conflict or choice
of law provisions) and the 1940 Act. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
11. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Contract is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
INVESCO SENIOR SECURED MANAGEMENT,
INC.
Attest: By:
----------------------------- -------------------------------
Name:
Title:
INVESCO, INC.
Attest: By:
----------------------------- -------------------------------
Name:
Assistant Secretary Title:
6
<PAGE> 7
APPENDIX A
TO
SUB-SUB-ADVISORY CONTRACT
The Sub-Adviser shall pay the Secondary Sub-Adviser, as full compensation for
all services rendered and all facilities furnished hereunder, a sub-sub-advisory
fee of 0.48% of the portion of the Fund's average daily net assets for the
calendar year that is delegated to the Secondary Sub-Adviser. The Fund's average
daily net assets shall be computed in the manner used for the determination of
the Fund's net asset value.
7
<PAGE> 1
EXHIBIT (2)(k)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM FLOATING RATE FUND
AND
A I M FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT............................................ 1
ARTICLE 2 FEES AND EXPENSES............................................................................. 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT.......................................... 2
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND.................................................... 3
ARTICLE 5 INDEMNIFICATION............................................................................... 3
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT.................................................. 4
ARTICLE 7 TERMINATION OF AGREEMENT...................................................................... 5
ARTICLE 8 ADDITIONAL FUNDS.............................................................................. 5
ARTICLE 9 ASSIGNMENT.................................................................................... 5
ARTICLE 10 AMENDMENT..................................................................................... 6
ARTICLE 11 TEXAS LAW TO APPLY............................................................................ 6
ARTICLE 12 MERGER OF AGREEMENT........................................................................... 6
ARTICLE 13 COUNTERPARTS.................................................................................. 6
ARTICLE 14 LIMITATION OF SHAREHOLDER LIABILITY........................................................... 6
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the __ day of March, 2000, by and between AIM
FLOATING RATE FUND, a Delaware business trust, having its principal office and
place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the
"Fund"), and A I M Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities and
Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue shares in separate series and
classes, with each such series representing interests in a separate portfolio of
securities and other assets and each such class having different distribution
arrangements; and
WHEREAS, the Fund on behalf of each class of each of the portfolios thereof
(the "Portfolios") desires to appoint the Transfer Agent as its transfer agent,
and agent in connection with certain other activities, with respect to the
Portfolios, and the Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints the Transfer Agent to act as, and the Transfer
Agent agrees to act as, its transfer agent for the authorized and issued shares
of beneficial interest of the Fund representing interests in each class of each
of the respective Portfolios ("Shares"), dividend disbursing agent, and agent in
connection with any accumulation or similar plans provided to shareholders of
each of the Portfolios (the "Shareholders"), including without limitation any
periodic investment plan or periodic withdrawal program, as provided in the
currently effective prospectus and statement of additional information (the
"Prospectus") of the Fund on behalf of the Portfolios.
1.02 The Transfer Agent agrees that it will perform the following services:
(a) The Transfer Agent shall, in accordance with procedures established
from time to time by agreement between the Fund on behalf of each of the
Portfolios, as applicable, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Agreement and Declaration of Trust and Bylaws of the Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) receive for acceptance repurchase offers from A I M
Distributors, Inc., a Shareholder or a broker, dealer or other
agent authorized to act on behalf of a Shareholder in a
transaction involving Shares, repurchase the number of shares
indicated thereon from the repurchasing Shareholder's account
and deliver the appropriate documentation thereof to the
Custodian;
(iv) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the Fund;
1
<PAGE> 4
(v) effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the Shares;
(vii) maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of Shares
which are authorized, based upon data provided to it by the
Fund, and issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with the
total number of Shares which are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph (a), the
Transfer Agent shall perform the customary services of a transfer agent,
including but not limited to: maintaining all Shareholder accounts, mailing
Shareholder reports and prospectuses to current Shareholders, preparing and
mailing confirmation forms and statements of accounts to Shareholders for all
purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services in Article
1 may be established from time to time by agreement between the Fund on behalf
of each Portfolio and the Transfer Agent. The Transfer Agent may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Transfer Agent fees
as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Transfer Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse the Transfer Agent for out-of-pocket expenses or advances incurred
by the Transfer Agent for the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Transfer Agent at the request or
with the consent of the Fund, will be reimbursed by the Fund on behalf of the
applicable Shares.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees
and reimbursable expenses following the mailing of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all Shareholder accounts shall be advanced to the Transfer Agent by
the Fund at least seven (7) days prior to the mailing date of such materials.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of the state of Delaware.
2
<PAGE> 5
3.02 It is duly qualified to carry on its business in Delaware and in
Texas.
3.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3.06 It is registered as a Transfer Agent as required by the federal
securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business corporation duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Agreement and Declaration
of Trust and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.04 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended
on behalf of each of the Portfolios is currently effective and will remain
effective, with respect to all Shares of the Fund being offered for sale.
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio, indemnify and hold the Transfer Agent
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to:
(a) all actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct;
(b) the Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Transfer Agent or its agents or subcontractors
and/or furnished to it or performed by on behalf of the Fund, and (ii) have been
prepared, maintained and/or performed by the Fund or any other person or firm on
behalf of the Fund; provided such actions are taken in good faith and without
negligence or willful misconduct;
3
<PAGE> 6
(d) the reliance on, or the carrying out by the Transfer Agent or its
agents or subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio; provided such actions are taken in good faith and
without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Transfer Agent as result of the Transfer Agent's lack
of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the Fund
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Transfer Agent
under this Agreement, and the Transfer Agent and its agents or subcontractors
shall not be liable to and shall be indemnified by the Fund on behalf of the
applicable Portfolio for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Transfer Agent shall be
protected and indemnified in acting upon any paper or document furnished by or
on behalf of the Fund, reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction, information, data,
records or documents provided to the Transfer Agent or its agents or
subcontractors by machine readable input, telex, CRT data entry or other similar
means authorized by the Fund, and shall not be held to have notice of any change
of authority of any person, until receipt of written notice thereof from the
Fund.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article
5 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of each of the Portfolios
promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Trustees of the Fund
authorizing the appointment of the Transfer Agent and the execution and delivery
of this Agreement; and
(b) a copy of the Agreement and Declaration of Trust and By-Laws of the
Fund and all amendments thereto.
4
<PAGE> 7
6.02 The Transfer Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Transfer Agent agrees that all such records
prepared or maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty (60) days
written notice to the other.
7.02 Should the Fund exercise its right to terminate this Agreement, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund on behalf of the applicable Portfolios. Additionally, the
Transfer Agent reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the average of
three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of Shares in
addition to the Portfolios with respect to which it desires to have the Transfer
Agent render services as transfer agent under the terms hereof, it shall so
notify the Transfer Agent in writing, and if the Transfer Agent agrees in
writing to provide such services, such series of Shares shall become a Portfolio
hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
5
<PAGE> 8
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
ARTICLE 14
LIMITATION OF SHAREHOLDER LIABILITY
14.01 Notice is hereby given that this Agreement is being executed by the
Fund by a duly authorized officer thereof acting as such as not individually.
The obligations of this Agreement are not binding upon any of the Trustees,
officers, shareholders or the investment advisor of the Fund individually but
are binding only upon the assets and property belonging to the Fund, on its own
behalf or on behalf of a Portfolio, for the benefit of which the Trustees or
officers have caused this Agreement to be executed.
6
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
AIM FLOATING RATE FUND
By:
-------------------------------------
President
ATTEST:
- -----------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:
-------------------------------------
President
ATTEST:
- -----------------------------------
Assistant Secretary
7
<PAGE> 10
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $.70 per shareholder
account that is closed during any monthly period. Both fees shall be billed
by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of the
annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ----------
<S> <C>
Class B $24.85*
Class C $24.85*
</TABLE>
* This fee includes all out of pocket expenses, the annualized credit,
Consumer Price Index increase, Balance Credit and Remote Services Fee
discussed below. Currently, therefore, paragraphs 2, 3, and 5 below do not
apply. Paragraph 4 does not apply for 1998, however the IRA Annual
Maintenance Fee will be charged beginning in 1999.
2. The Transfer Agent shall provide the various mutual funds that are advised
by A I M Advisors, Inc. or its affiliates and distributed by A I M
Distributors, Inc. (the "AIM Funds") with an annualized credit to the
monthly billings of (a) $1.50 for each open account in excess of 100,000
open AIM Funds Accounts up to and including 125,000 open AIM Funds
Accounts; (b) $1.75 for each open account in excess of 125,000 open AIM
Funds Accounts up to and including 150,000 open AIM Funds Accounts; (c)
$2.00 for each open AIM Funds Account in excess of 150,000 open AIM Funds
Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25 for
each open AIM Funds Account in excess of 200,000 open AIM Funds Accounts up
to and including 500,000 open AIM Funds Accounts; (e) $2.50 for each open
AIM Funds Account in excess of 500,000 open AIM Funds Accounts up to and
including 1,000,000 open AIM Funds Accounts; and (f) $3.00 for each open
AIM Funds Account in excess of 1,000,000 open AIM Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of the
Remote Services Agreement with The Shareholder Services Group, Inc., and on
each subsequent anniversary date, the per account fees shall each be
increased by a percentage amount equal to the percentage increase in the
then current Consumer Price Index (all urban consumers) or its successor
index, though in no event shall such increase be greater than a 7% increase
over the previous fees.
4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year (paid by
investor per tax I.D. number).
Balance Credit The total fees due to the Transfer Agent
from all funds affiliated with the Fund
shall be reduced by an amount equal to
one half of investment income earned by
the Transfer Agent on the DDA balances of
the disbursement accounts for those
funds.
Remote Services Fee $3.60 per open account per year, payable
monthly and $1.80 per closed account per
year, payable monthly
8
<PAGE> 11
5. OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation, certificates, envelopes,
checks, stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease, maintenance
and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Banking charges, including without limitation incoming and outgoing
wire charges @ $8.00 per wire
- Rendering fees as billed
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- Third party audit reviews
- All client specific Systems enhancements will be at the Funds' cost.
- Certificate Insurance
- Such other miscellaneous expenses reasonably incurred by the Transfer
Agent in performing its duties and responsibilities under this
Agreement
- Checkwriting fee of $.75 per check redemption.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that such
expenses are not otherwise properly borne by the Transfer Agent as part of
its duties and obligations under the Agreement.
9
<PAGE> 1
EXHIBIT (2)(k)(3)
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> 2
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> 3
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> 4
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> 5
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> 1
EXHIBIT (2)(k)(4)
DISTRIBUTION PLAN
OF
AIM FLOATING RATE FUND
(CLASS C SHARES)
SECTION 1. AIM Floating Rate Fund (the "Fund"), a Delaware business
trust, may pay for distribution of its Class C Shares ("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-XXXXX], dated [DATE], according to the terms of this Distribution Plan
(the "Plan").
SECTION 2. The Fund may incur expenses for and pay A I M
Distributors, Inc. (the "Distributor") for distribution of the Shares from time
to time at the rates set forth in Schedule A hereto applied to the average
daily net assets of the Shares subject to any applicable limitations imposed
from time to time by the Conduct Rules of NASD Regulation, Inc. All such
payments are the legal obligation of the Fund and not of the Distributor or its
designee.
SECTION 3. Amounts set forth in Schedule A 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
Schedule A may also be used to finance payments of service fees under a
shareholder service arrangement to be established by the Distributor in
accordance with Section 4, and 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.
SECTION 4.
(a) Amounts expended by the Fund under the Plan may 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 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 the Distributor or its designee.
<PAGE> 2
(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
in 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, reports and notices to Customers who
hold Shares; and (ix) providing such other information and administrative
services as the Fund or the Customer may reasonably request.
(c) The Distributor may also enter into Bank Shareholder Service
Agreements substantially in the form attached hereto as Exhibit B ("Bank
Agreements") with selected banks and financial institutions acting in an agency
capacity for their customers ("Banks"). Banks acting in such capacity will
provide some or all of the shareholder services to their customers as set forth
in the Bank Agreements from time to time.
(d) The Distributor may also enter into Agency Pricing Agreements
substantially in the form attached hereto as Exhibit C ("Pricing Agreements")
with selected retirement plan service providers acting in an agency capacity
for their customers ("Retirement Plan Providers"). Retirement Plan Providers
acting in such capacity will provide some or all of the shareholder services to
their customers as set forth in the Pricing Agreements from time to time.
(e) The Distributor may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit D ("Bank Trust
Department Agreements and Brokers for Bank Trust Department Agreements") with
selected bank trust departments and brokers for bank trust departments. Such
bank trust departments and brokers for bank trust departments will provide some
or all of the shareholder services to their customers as set forth in the Bank
Trust Department Agreements and Brokers for Bank Trust Department Agreements
from time to time.
SECTION 5. This Plan shall not take effect with respect to any
Shares until it has been approved, together with any related agreements, by
votes of the majority of both the Board of Trustees of the Fund, and 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 "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or such agreements.
2
<PAGE> 3
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. The Distributor shall provide 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 at
any time by vote of a majority of the Disinterested Trustees, or by a vote of
at least a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund. Upon termination of this Plan, the obligation of the
Fund to make payments pursuant to this Plan 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.
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
without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of at least a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund, 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.
SECTION 10. This Plan may not be amended with respect to the Shares
to increase materially the amount of distribution expenses provided for in
Schedule A hereof unless approved by a vote of at least a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Shares, and
no material amendment to the Plan with respect to the Shares 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,
3
<PAGE> 4
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 C Shares)
Attest: By:
---------------------- -------------------------------------
Samuel D. Sirko, Secretary Robert H. Graham, Chairman and President
Effective as of [DATE].
4
<PAGE> 5
SCHEDULE A
TO
DISTRIBUTION PLAN
OF
AIM FLOATING RATE FUND
(CLASS C SHARES)
DISTRIBUTION FEE
MAXIMUM
ASSET-BASED MAXIMUM MAXIMUM
FUND SALES CHARGE SERVICE FEE AGGREGATE FEE
- ---- ------------ ----------- -------------
AIM Floating Rate Fund 0.75% 0.25% 0.75%
THIS PLAN REFERS TO EXHIBITS A-D, WHICH RELATE TO AGREEMENTS THAT THE
DISTRIBUTOR MAY ENTER INTO WITH THIRD PARTIES. FORMS OF THESE AGREEMENTS HAVE
NOT BEEN INCLUDED WITH THIS PLAN.
5
