<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AIM SUMMIT FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
AIM SUMMIT FUND, INC.
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE SHAREHOLDERS:
AIM Summit Fund, Inc. (the fund) is holding a special meeting of
shareholders on Wednesday, May 3, 2000 at 3:00 p.m., Central time. The place of
the meeting is the fund's offices at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
The purposes of the meeting are as follows:
(1) To elect ten directors, each of whom will serve until his or her successor
is elected and qualified.
(2) To approve the adoption of a Distribution Plan for the Class I shares of the
fund pursuant to Rule 12b-1 under the Investment Company Act of 1940.
(3) To approve a Plan of Recapitalization pursuant to which the Charter of the
fund will be amended to reclassify the Class II shares of the fund as Class
I shares of the fund.
(4) To approve an Agreement and Plan of Reorganization which provides for the
reorganization of the fund as a Delaware business trust.
(5) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(6) To approve changing the fundamental investment restrictions for the fund.
(7) To ratify the selection of KPMG LLP as independent accountants for the fund
for the fiscal year ending in 2000.
(8) To transact such other business as may properly come before the meeting.
You may vote at the meeting if you are the record owner of shares of the
fund as of the close of business on February 18, 2000. If you attend the
meeting, you may vote your shares in person. If you expect to attend the meeting
in person, please notify the fund by calling 1-800-952-3502. If you do not
expect to attend the meeting, please fill in, date, sign and return the proxy
card in the enclosed envelope which requires no postage if mailed in the United
States.
<PAGE> 3
It is important that you return your signed proxy card promptly so that a
quorum may be assured. If we do not hear from you after a reasonable amount of
time, you may receive a telephone call from our proxy solicitor, Shareholder
Communications Corporation, reminding you to vote your shares.
Thank you for your cooperation and continued support.
By order of the Board,
Carol F. Relihan
Secretary
March 13, 2000
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<PAGE> 4
AIM SUMMIT FUND, INC.
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
Toll Free: (800) 454-0327
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PROXY STATEMENT
DATED MARCH 13, 2000
- --------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 3, 2000
WHO IS ASKING FOR MY VOTE?
The Board of Directors (the Board) of AIM Summit Fund, Inc. (the fund) is
sending you this proxy statement and the enclosed proxy card. The Board is
soliciting your proxy to vote at the 2000 special meeting of shareholders of the
fund (the meeting).
WHEN AND WHERE WILL THE MEETING BE HELD?
The meeting will be held at the fund's offices, 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, at 3:00 p.m., Central time, on Wednesday, May 3,
2000. If you expect to attend the meeting in person, please notify the fund by
calling 1-800-952-3502.
WHAT PROPOSALS WILL BE PRESENTED?
The following list summarizes each proposal to be presented at the meeting
and the class of the fund's shares that the Board is soliciting with respect to
each proposal:
<TABLE>
<CAPTION>
PROPOSAL AFFECTED CLASS
-------- --------------
<S> <C> <C>
1. Electing Directors. All Classes
2. Approving a Distribution Plan for the Class I Class I
shares.
3. Approving a Plan of Recapitalization that will Class II
reclassify Class II shares of the fund as Class I
shares.
4. Approving a Plan of Reorganization which provides All Classes
for the reorganization of the fund as a Delaware
business trust.
5. Approving a new advisory agreement with A I M All Classes
Advisors, Inc.
6. Changing the fund's fundamental investment All Classes
restrictions.
7. Ratifying the Board's selection of independent All Classes
accountants.
8. Considering other matters. All Classes
</TABLE>
1
<PAGE> 5
WHO IS ELIGIBLE TO VOTE?
The Board is sending this proxy statement, the attached notice of meeting
and the enclosed proxy card on or about March 13, 2000 to all shareholders
entitled to vote. Shareholders who owned shares of common stock of any class of
the fund at the close of business on February 18, 2000 (the record date) are
entitled to vote. On the record date there were shares of the fund's common
stock issued and outstanding, consisting of Class I shares and
Class II shares. Each share of common stock that you own entitles you to one
vote on each proposal set forth in the list above (a fractional share has a
fractional vote).
WHAT ARE THE DIFFERENT WAYS I CAN VOTE?
Voting by Proxy
Whether you plan to attend the meeting or not, the Board urges you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the meeting and vote.
The Board has named Robert H. Graham and Gary T. Crum as proxies. If you
properly fill in your proxy card and send it to the fund in time to vote, your
proxy will vote your shares as you have directed. If you sign the proxy card but
do not make specific choices, your proxy will vote your shares with respect to
Proposals 1 through 7 as recommended by the Board.
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this proxy statement was printed, the
Board knew of no matters that needed to be acted on at the meeting other than
those discussed in this proxy statement.
If you appoint a proxy, you may revoke it at any time before it is
exercised. You can do this by sending in another proxy with a later date or by
notifying the fund's secretary in writing before the meeting that you have
revoked your proxy.
Voting in Person
If you do attend the meeting and wish to vote in person, you will be given
a ballot when you arrive. However, if your shares are held in an AIM Summit
Investors Plan, you must bring a letter from the custodian for the plan
indicating that you are the beneficial owner of the shares on the record date
and authorizing you to vote.
Voting by Telephone
You may vote by telephone if you are contacted by Shareholder Communication
Corporation.
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<PAGE> 6
Instructing the Custodian for Your AIM Summit Investors Plan
Class I shares of the fund are sold to the public primarily through AIM
Summit Investors Plans I and Class II shares of the fund are sold to the public
primarily through AIM Summit Investors Plans II. Almost all of the Class I and
Class II shares of the fund are held by the custodian under these plans.
If you are a participant in a plan, you will have been furnished with a
notice of the special shareholders meeting along with this proxy statement and
an instruction card. The custodian will vote the shares of the fund held in your
account as you instruct on the voting instruction card. If the voting
instruction card is validly executed and returned without specification of a
choice, the shares will be voted in favor of the proposals listed above. The
custodian will vote shares for which no valid voting instructions have been
received in the same proportion as it votes shares for which it has received
instructions. You may attend the meeting in person, and if you desire to vote in
person the shares held in your account, you may make written request to the
custodian prior to the meeting for a proxy which will permit the shares to be
voted in person.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board recommends that shareholders vote FOR each of the proposals
described in this proxy statement.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of shareholders is necessary to hold a valid meeting. The presence
in person or by proxy of shareholders entitled to cast a majority of all votes
entitled to be cast at the meeting shall constitute a quorum at all meetings of
the shareholders, except with respect to any matter which by law or the Charter
of the fund requires the separate approval of one or more classes or series of
the capital stock of the fund, in which case the holders of one-third of the
shares of each such class or series (or of such classes or series voting
together as a single class) entitled to vote on the matter shall constitute a
quorum. Because the custodian under AIM Summit Investors Plans I and AIM Summit
Investors Plans II holds almost all of the shares of the fund and is required to
vote those shares in the manner described above, the fund expects that a quorum
for the meeting will be present.
WHAT IS THE VOTE NECESSARY TO APPROVE EACH PROPOSAL?
The affirmative vote of a plurality of votes cast is necessary to elect the
directors, meaning that the nominees receiving the most votes will be elected
(Proposal 1). In an uncontested election of directors, the plurality requirement
is not a factor.
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<PAGE> 7
The affirmative vote of a majority of the outstanding shares of the fund
entitled to vote at the meeting is required to approve the Plan of
Recapitalization and the Plan of Reorganization (Proposals 3 and 4). Abstentions
will not count as votes cast and will have the effect of votes against Proposals
3 and 4.
The affirmative vote of a majority of the outstanding voting securities of
the fund, as defined in the Investment Company Act of 1940, as amended (the 1940
Act), is required to:
- approve the Distribution Plan (Proposal 2);
- approve the fund's new advisory agreement (Proposal 5); and
- approve changing the investment restrictions for the fund (Proposal 6).
The 1940 Act defines a majority of the outstanding voting securities of a
fund (a 1940 Act majority) as the lesser of (a) the vote of holders of 67% or
more of the voting securities of the fund present in person or by proxy, if the
holders of more than 50% of the outstanding voting securities of the fund are
present in person or by proxy, or (b) the vote of the holders of more than 50%
of the outstanding voting securities of the fund. Abstentions will not count as
votes cast and will have the effect of votes against Proposals 2, 5 and 6.
The affirmative vote of a majority of votes cast is necessary to ratify the
selection of KPMG LLP as your fund's independent accountants (Proposal 7). For
Proposal 7, abstentions will not count as votes cast and will have no effect on
the outcome of the vote.
CAN THE MEETING BE ADJOURNED?
The proxies may propose to adjourn the meeting to permit further
solicitation of proxies or for other purposes. Any such adjournment will require
the affirmative vote of a majority of the votes cast.
HOW CAN I OBTAIN MORE INFORMATION ABOUT THE FUND?
UPON YOUR REQUEST, THE FUND WILL FURNISH YOU A FREE COPY OF ITS MOST RECENT
ANNUAL REPORT AND THE MOST RECENT SEMIANNUAL REPORT SUCCEEDING THE ANNUAL
REPORT, IF ANY. YOU SHOULD DIRECT YOUR REQUEST TO A I M DISTRIBUTORS, INC. AT 11
GREENWAY PLAZA, SUITE 100, HOUSTON, TX 77046-1173 OR BY CALLING 1-800-995-4246.
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<PAGE> 8
PROPOSAL 1: ELECTION OF DIRECTORS
WHO VOTES ON THIS PROPOSAL?
Proposal 1 applies to all shareholders of the fund.
WHO ARE THE NOMINEES FOR DIRECTOR?
For election of directors at the meeting, the Board has approved the
nomination of Charles T. Bauer, Bruce L. Crockett, Owen Daly II, Edward K. Dunn,
Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis,
Lewis F. Pennock and Louis S. Sklar, each to serve as director until his or her
successor is elected and qualified.
The proxies will vote for the election of these nominees unless you
withhold authority to vote for any or all of them in the proxy. Each of the
nominees has indicated that he or she is willing to serve as a director. If any
or all of the nominees should become unavailable for election due to events not
now known or anticipated, the persons named as proxies will vote for such other
nominee or nominees as the directors who are not interested persons of the fund,
as defined in the 1940 Act (the independent directors), may recommend.
All of the nominees presently are directors of the company. The nominees
also serve as directors, trustees or officers of the following open-end
management investment companies advised or managed by A I M Advisors, Inc.
(AIM): AIM Advisor Funds, Inc., AIM Equity Funds, Inc., AIM Funds Group, AIM
International Funds, Inc., AIM Investment Securities Funds, AIM Special
Opportunities Funds, AIM Summit Fund, Inc., AIM Tax-Exempt Funds, Inc., AIM
Variable Insurance Funds, Inc., Short-Term Investments Co., Short-Term
Investments Trust and Tax-Free Investments Co. (these investment companies and
their series portfolios, if any, are referred to collectively as the AIM funds).
Robert H. Graham also serves as a director or trustee and officer of other open-
end and closed-end management investment companies managed or advised by AIM. No
director or nominee is a party adverse to the company or any of its affiliates
in any material pending legal proceedings, nor does any director or nominee have
an interest materially adverse to the company.
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<PAGE> 9
The following table sets forth information concerning the nominees:
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE DIRECTOR SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------------ ----------------------------------------
<S> <C> <C>
*Charles T. Bauer (81) February 17, 1982 Director and Chairman, A I M Management
11 Greenway Plaza Group Inc.; A I M Advisors, Inc., A I M
Suite 100 Capital Management, Inc.; A I M
Houston, TX 77046-1173 Distributors, Inc.; A I M Fund Services,
Inc. and Fund Management Company; and
Executive Vice Chairman and Director,
AMVESCAP PLC.
Bruce L. Crockett (55) December 8, 1992 Director, ACE Limited (insurance
906 Frome Lane company). Formerly, Director, President
McLean, VA 22102 and Chief Executive Officer, COMSAT
Corporation; and Chairman, Board of
Governors of INTELSAT (international
communications company).
Owen Daly II (75) February 18, 1987 Formerly, Director, Cortland Trust Inc.
Six Blythewood Road (investment company), Baltimore, MD 21210
CF & I Steel Corp., Monumental
Life Insurance Company and Monumental
General Insurance Company; and Chairman
of the Board of Equitable
Bancorporation.
Edward K. Dunn, Jr. (64) March 10, 1998 Chairman of the Board of Directors,
2 Hopkins Plaza Mercantile Mortgage Corporation.
8th Floor, Suite 805 Formerly, Vice Chairman of the Board of
Baltimore, MD 21201 Directors and President and Chief
Operating Officer, Mercantile-Safe
Deposit & Trust Co.; and President,
Mercantile Bankshares.
Jack M. Fields (48) March 11, 1997 Chief Executive Officer, Texana Global,
Jetero Plaza, Suite E Inc. (foreign trading company) and
8810 Will Clayton Parkway Twenty-First Century Group, Inc. (a
Humble, TX 77338 governmental affairs company); and
Director, Telscape International and
Administaff. Formerly, Member of the
U.S. House of Representatives.
**Carl Frischling (63) February 17, 1982 Partner, Kramer Levin Naftalis & Frankel
919 Third Avenue LLP (law firm). Formerly Partner, Reid &
New York, NY 10022 Priest (law firm).
</TABLE>
* Mr. Bauer is an interested person of AIM and the fund, as defined in the 1940
Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
** Mr. Frischling is an interested person of the fund, as defined in the 1940
Act, primarily because of payments received by his law firm from the fund
for services to the independent directors of the fund.
6
<PAGE> 10
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE DIRECTOR SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------------ ----------------------------------------
<S> <C> <C>
***Robert H. Graham (53) May 10, 1994 Director, President and Chief Executive
11 Greenway Plaza Officer, A I M Management Group Inc.;
Suite 100 Director and President, A I M Advisors,
Houston, TX 77046-1173 Inc.; Director 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; and Director and Chief
Executive Officer, Managed Products,
AMVESCAP PLC.
Prema Mathai-Davis (49) September 10, 1998 Chief Executive Officer, YWCA of the
350 Fifth Avenue, Suite U.S.A.
301
New York, NY 10118
Lewis F. Pennock (57) April 21, 1982 Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
Louis S. Sklar (60) September 27, 1989 Executive Vice President, Development
The Williams Tower and Operations, Hines Interests Limited
50th Floor Partnership (real estate development).
2800 Post Oak Boulevard
Houston, TX 77056
</TABLE>
*** Mr. Graham is an interested person of AIM and the fund, as defined in the
1940 Act, primarily because of his positions with AIM and its affiliated
companies, as set forth above, and through his ownership of stock of
AMVESCAP PLC, which, through A I M Management Group Inc., owns all of the
outstanding stock of AIM.
WHAT ARE THE RESPONSIBILITIES OF THE BOARD?
The Board is responsible for the general oversight of the fund's business
and for assuring that the fund is managed in the best interests of the fund's
shareholders. The Board periodically reviews the fund's investment performance
as well as the quality of other services provided to the fund and its
shareholders by each of the fund's service providers, including AIM and its
affiliates. At least annually, the Board reviews the fees paid by the fund for
these services and the overall level of the fund's operating expenses.
WHY ARE DIRECTORS BEING ELECTED AT THE PRESENT TIME?
Under the 1940 Act, the Board may fill vacancies on the Board or appoint
new directors only if, immediately thereafter, at least two-thirds of the
directors will have been elected by shareholders. Currently, seven of the
company's ten directors have been elected by shareholders. As directors retire,
resign or otherwise cease their service as directors in the future, the company
may be unable to fill the vacancies created by such action because three of the
company's ten directors have not been elected by shareholders. To provide the
Board with the flexibility to fill vacancies created when directors cease their
service as directors, and in light of the fact that only seven of the company's
directors have
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<PAGE> 11
been elected by shareholders, the Board believes it is appropriate for
shareholders to elect directors at the present time.
HOW LONG CAN DIRECTORS SERVE ON THE BOARD?
Directors generally hold office until their successors are elected and
qualified. Pursuant to a policy adopted by the Board in 1992, each duly elected
or appointed independent director may continue to serve as a director until
December 31 of the year in which the director turns 72. Independent directors
who were 65 or older and serving on the board of one or more of the AIM funds
when the policy was adopted in 1992 may continue to serve until December 31 of
the year in which the director turns 75. A director of the fund may resign or be
removed for cause by a vote of the holders of a majority of the outstanding
shares of the fund at any time. A majority of the Board may extend from time to
time the retirement date of a director. The Board has agreed to extend the
retirement date of Mr. Daly, who otherwise would have retired December 31, 2000,
to December 31, 2001. In making this decision, the Board took into account Mr.
Daly's experience and active participation as a director.
WHAT ARE SOME OF THE WAYS IN WHICH THE BOARD REPRESENTS MY INTERESTS?
The Board seeks to represent shareholder interests by:
- reviewing the fund's investment performance with the fund's managers;
- reviewing the quality of the various other services provided to the fund
and its shareholders by each of the fund's service providers, including
AIM and its affiliates;
- discussing with senior management of AIM steps being taken to address any
performance deficiencies;
- reviewing the fees paid to AIM and its affiliates to ensure that such
fees remain reasonable and competitive with those of other mutual funds,
while at the same time providing sufficient resources to continue to
provide high-quality services in the future;
- monitoring potential conflicts between the fund and AIM and its
affiliates to ensure that the fund continues to be managed in the best
interests of its shareholders; and
- monitoring potential conflicts among the AIM funds to ensure that
shareholders continue to realize the benefits of participation in a large
and diverse family of funds.
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<PAGE> 12
WHAT ARE THE COMMITTEES OF THE BOARD?
The standing Committees of the Board are the Audit Committee, the
Capitalization Committee, the Investments Committee and the Nominating and
Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for:
- considering management's recommendations of independent accountants for
each fund and evaluating such accountants' performance, costs and
financial stability;
- with AIM, reviewing and coordinating audit plans prepared by the fund's
independent accountants and management's internal audit staff; and
- reviewing financial statements contained in periodic reports to
shareholders with the fund's independent accountants and management.
The members of the Capitalization Committee are Messrs. Bauer, Graham
(Chairman) and Pennock. The Capitalization Committee is responsible for:
- increasing or decreasing the aggregate number of shares of any class of
the fund's common stock by classifying and reclassifying the fund's
authorized but unissued shares of common stock, up to the fund's
authorized capital;
- fixing the terms of such classified or reclassified shares of common
stock; and
- issuing such classified or reclassified shares of common stock upon the
terms set forth in the fund's prospectus, up to the fund's authorized
capital.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly,
Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The
Investments Committee is responsible for:
- overseeing AIM's investment related compliance systems and procedures to
ensure their continued adequacy; and
- considering and acting, on an interim basis between meetings of the full
Board, on investment related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing
matters.
9
<PAGE> 13
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for:
- considering and nominating individuals to stand for election as
independent directors as long as the fund maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act;
- reviewing from time to time the compensation payable to the independent
directors; and
- making recommendations to the Board regarding matters related to
compensation, including deferred compensation plans and retirement plans
for the independent directors.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as directors, provided (i) that such
person is a shareholder of record at the time he or she submits such names and
is entitled to vote at the meeting of shareholders at which directors will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
HOW OFTEN DOES THE BOARD MEET?
The Board typically conducts regular meetings nine times a year to review
the operations of the fund and of the other AIM funds. Typically, five of these
nine meetings are held in person, each over a two-day period. One or more
Committees of the Board generally meet in conjunction with each in-person
meeting of the Board. In addition, the Board or any Committee may hold special
meetings by telephone or in person to discuss specific matters that may require
action prior to the next regular meeting.
During the fiscal year ended October 31, 1999, the Board held 9 meetings,
the Audit Committee held 5 meetings, the Investments Committee held 4 meetings
and the Nominating and Compensation Committee held 5 meetings. The
Capitalization Committee did not meet. All of the current directors and
Committee members then serving attended at least 75% of the meetings of the
Board and applicable Committees, if any, held during the fiscal year ended
October 31, 1999.
WHAT ARE THE DIRECTORS PAID FOR THEIR SERVICES?
Each director is reimbursed for expenses incurred in connection with each
meeting of the Board or any Committee attended. Each director who is not also an
officer of the fund is compensated for his or her services according to a fee
schedule which recognizes the fact that such director also serves as a director
or trustee of all of the other AIM funds. Each such director receives a fee,
allocated
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<PAGE> 14
among the AIM funds for which he or she serves as a director or trustee, which
consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued for
each director:
<TABLE>
<CAPTION>
TOTAL
RETIREMENT BENEFITS COMPENSATION
AGGREGATE COMPENSATION ACCRUED BY ALL FROM ALL
DIRECTOR FROM THE FUND(1) AIM FUNDS(2) AIM FUNDS(3)
- -------- ---------------------- ------------------- ------------
<S> <C> <C> <C>
Charles T. Bauer..... $ 0 $ 0 $ 0
Bruce L. Crockett.... 2,045 37,485 103,500
Owen Daly II......... 2,045 122,898 103,500
Edward K. Dunn
Jr. ............... 2,045 0 103,500
Jack M. Fields....... 2,004 15,826 101,500
Carl Frischling(4)... 2,035 97,791 103,500
Robert H. Graham..... 0 0 0
John F. Kroeger(5)... 0 107,896 0
Prema Mathai-Davis... 2,045 0 101,500
Lewis F. Pennock..... 2,035 45,766 103,500
Ian W. Robinson(6)... 858 94,442 25,000
Louis S. Sklar....... 2,035 90,232 101,500
</TABLE>
(1) The total amount of compensation deferred by all directors of the fund
during the fiscal year ended October 31, 1999, including earnings thereon,
was $13,529.
(2) During the fiscal year ended October 31, 1999, the total amount of expenses
allocated to the fund in respect of such retirement benefits was $13,895.
Data reflects compensation for the calendar year ended December 31, 1999.
Accruals for 1999 are based on actuarial projections from 1998.
(3) Each director serves as director or trustee of at least 12 registered
investment companies advised by AIM. Data reflects compensation earned
during the calendar year ended December 31, 1999.
(4) During the fiscal year ended October 31, 1999, the fund paid $8,316 in legal
fees to Mr. Frischling's law firm, Kramer Levin Naftalis & Frankel LLP, for
services rendered to the independent directors of the fund.
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On that
date, he became a consultant to the fund. Mr. Kroeger passed away on
November 26, 1998. Mr. Kroeger's widow will receive his pension as described
below under "AIM Funds Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a director until March 12, 1999, when he retired.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/
Trustees, each director (who is not an employee of any of the AIM funds, A I M
Management Group Inc. (AIM Management) or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board. Pursuant to such
retirement plan, a director becomes eligible to retire and to receive full
benefits under the plan when he or she has attained age 65 and has completed at
least five years of continuous service with one or more of the regulated
investment companies managed, administered or distributed by AIM or its
affiliates (the applicable AIM funds). Each eligible director is entitled to
receive an annual
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<PAGE> 15
benefit from the applicable AIM funds commencing on the first day of the
calendar quarter coincident with or following his or her date of retirement
equal to a maximum of 75% of the annual retainer paid or accrued by the
applicable AIM funds for such director during the twelve-month period
immediately preceding the director's retirement (including amounts deferred
under a separate agreement between the applicable AIM funds and the director)
and based on the number of such director's years of service (not in excess of 10
years of service) completed with respect to any of the applicable AIM funds.
Such benefit is payable to each eligible director in quarterly installments. If
an eligible director dies after attaining the normal retirement date but before
receipt of all benefits under the plan, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director for no more than ten years beginning the first day of
the calendar quarter following the date of the director's death. Payments under
the plan are not secured or funded by any applicable AIM fund.
Set forth below is a table that shows the estimated annual benefits payable
to an eligible director upon retirement assuming the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 18, 11, 10 and 1 years,
respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL
RETIREMENT
COMPENSATION
PAID BY ALL
NUMBER OF YEARS OF SERVICE APPLICABLE
WITH THE APPLICABLE AIM FUNDS AIM FUNDS
- ----------------------------- ------------
<S> <C>
10............................. $67,500
9............................. $60,750
8............................. $54,000
7............................. $47,250
6............................. $40,500
5............................. $33,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the
deferring directors) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring directors may elect to defer receipt
of up to 100% of their compensation payable by the fund, and such amounts are
placed into a deferral account. Currently, the deferring directors may select
various AIM funds in which all or part of their deferral accounts shall be
deemed to be invested. Distributions from the deferring directors' accounts will
be paid in cash, in generally equal quarterly installments over a period of five
(5) or ten
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<PAGE> 16
(10) years (depending on the agreement) beginning on the date the deferring
director's retirement benefits commence under the plan. The Board, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the fund.
If a deferring director dies prior to the distribution of amounts in his
deferral account, the balance of the deferral account will be distributed to his
designated beneficiary in a single lump sum payment as soon as practicable after
such deferring director's death. The agreements are not funded and, with respect
to the payments of amounts held in the deferral accounts, the deferring
directors have the status of unsecured creditors of the fund and of each other
AIM fund from which they are deferring compensation.
WHAT ARE OFFICERS PAID FOR THEIR SERVICES?
The company does not pay its officers for the services they provide to the
company. Instead, the officers, who are also officers or employees of AIM or its
affiliates, are compensated by AIM Management or its affiliates.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 1?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2: APPROVAL OF A DISTRIBUTION PLAN FOR
THE CLASS I SHARES OF THE FUND
WHO VOTES ON THIS PROPOSAL?
Proposal 2 applies only to holders of Class I shares of the fund.
WHAT AM I BEING ASKED TO APPROVE?
The Board has adopted, and you are being asked to approve, a distribution
plan for the Class I shares pursuant to Rule 12b-1 under the 1940 Act which will
allow fees and expenses associated with the sale and distribution of Class I
shares to be paid from the assets of the fund attributable to the Class I
shares. A copy of the distribution plan is in Appendix A. The proposed
distribution plan provides that payments at the maximum rate of 0.30% per annum
of the average daily net assets of the Class I shares will be made as
compensation to the fund's distributor, A I M Distributors, Inc., for any
activity that is primarily intended to result in the sale of Class I shares. AIM
Distributors has agreed contractually to waive a portion of the fees to be paid
under the proposed distribution plan and will be paid only 0.10% per annum of
the average daily net assets of Class I shares held in AIM Summit Investors
Plans I. AIM Distributors has also agreed
13
<PAGE> 17
contractually that its fee waiver may not be revised or revoked without approval
of the Class I shareholders. If the Distribution Plan is approved, AIM
Distributors will waive the creation and sales charge for AIM Summit Investors
Plans I participants for all investments made after the 12th investment.
WHAT ARE THE REASONS FOR THE PROPOSED 12B-1 PLAN?
The proposed distribution plan provides for payments to the distributor to
cover fees charged by dealers and financial institutions for services provided
to their customers who own Class I shares and to cover costs incurred by the
distributor in selling Class I shares. Because the 12b-1 plan includes a program
which provides for periodic payments to selected dealers and financial
institutions who furnish continuing shareholder services to their customers, it
is expected that shareholders will benefit from an increased level of personal
shareholder services with respect to their ownership of Class I shares. The
Board also believes that the use of fund assets to pay distribution fees and
expenses should benefit shareholders by facilitating sales of Class I shares and
reducing the level of share redemptions, thereby increasing the assets of the
fund, achieving economies of scale and reducing expense ratios. However, the use
of fund assets to pay shareholder servicing and distribution fees will increase
the cost of an investment in Class I shares over time.
THE DISTRIBUTION PLAN
The proposed distribution plan for the Class I shares (the Distribution
Plan) is designed to implement a shareholder servicing program which provides
for periodic payments to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class I shares and to compensate the distributor for promotional and other
sales-related costs.
Pursuant to a shareholder servicing program, the distributor may enter into
shareholder servicing agreements with investment dealers selected from time to
time by the distributor for the provision of distribution assistance in
connection with the sale of Class I shares to such dealers' customers, and for
the provision of continuing personal shareholder services to customers who may
from time to time directly or beneficially own Class I shares. The distribution
assistance and continuing personal shareholder services to be rendered by
dealers under the shareholder service agreements may include:
- distributing sales literature;
- answering routine customer inquiries concerning the fund;
- assisting customers in changing dividend options, account designations
and addresses, and in enrolling in any of several special investment
plans offered in connection with the purchase of the Class I shares;
14
<PAGE> 18
- assisting in the establishment and maintenance of customer accounts and
records and in the processing of purchase and redemption transactions;
- investing dividends and any capital gains distributions automatically in
Class I shares; and
- providing such other information and services as the fund or the customer
may reasonably request.
Activities appropriate for financing under the Distribution Plan include:
- printing of prospectuses and statements of additional information and
reports for other than existing shareholders;
- overhead;
- preparation and distribution of advertising material and sales
literature;
- expenses 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
- costs of administering the Distribution Plan.
Payments to dealers and other financial institutions that provide
continuing personal shareholder services to their customers who beneficially own
Class I shares, in amounts of up to 0.25% of the average daily net assets of
Class I Shares, are characterized as a service fee. Payments to dealers and
other financial institutions in excess of such amount are characterized as an
asset-based sales charge. Payments pursuant to the Distribution Plans are
subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers Regulation, Inc.
Under the Distribution Plan, financial institutions which have entered into
service agreements and which sell Class I shares on an agency basis may receive
payments from the fund. The distributor does not act as principal, but rather as
agent for the fund, in making shareholder servicing payments to dealers and
financial institutions under the Distribution Plan. These payments are an
obligation of the fund on behalf of the Class I shares and not of the
distributor.
AIM Distributors has contractually agreed to waive a portion of the fee
under the Distribution Plan and will be paid only 0.10% of the average daily net
assets attributable to Class I shares held in AIM Summit Investors Plans I. In
addition, the distributor may from time to time voluntarily waive or reduce any
portion of its 12b-1 fee. Voluntary fee waivers or reductions may be rescinded
at any time without further notice to investors. During periods of voluntary fee
waivers or reductions, the distributor will retain its ability to be reimbursed
for such fee prior to the end of each fiscal year. Contractual fee waivers or
reductions may not be terminated without the approval of the Board.
15
<PAGE> 19
The Distribution Plan does not obligate the fund to reimburse the
distributor for its actual expenses incurred in fulfilling its obligations under
the Distribution Plan. Thus, even if the distributor's actual expenses exceed
the fee payable at any given time, the fund will not be obligated to pay more
than that fee. If the distributor's expenses are less than the fee it receives,
it will retain the full amount of the fee.
Any change in the Distribution Plan that would increase materially the
distribution expenses paid requires shareholder approval. Otherwise, it may be
amended by the Board, by votes cast in person at a meeting called for the
purpose of voting upon such amendment.
The proposed Distribution Plan for the Class I shares is substantially the
same as the distribution plan adopted for the Class II shares on December 8,
1998. Under the distribution plan for the Class II shares, payments in the
amount of 0.30% of the average daily net assets of the fund attributable to the
Class II shares are made to AIM Distributors to cover fees charged by dealers
and financial institutions for services provided to their customers who own
Class II shares and to cover costs incurred by AIM Distributors in selling Class
II shares. During the fiscal year ended October 31, 1999, AIM Distributors
received no payments under the distribution plan for Class II shares. The
contractual waiver by AIM Distributors of payments otherwise due with respect to
Class I shares is applicable only to Class I shares held in AIM Summit Investors
Plans I.
WHAT PAYMENTS WILL BE MADE FROM FUND ASSETS UNDER THE DISTRIBUTION PLAN?
In order to understand the payments that will be made under the
Distribution Plan, it is important to remember that Class I shares of the fund
were sold to the public primarily through AIM Summit Investor Plans I, and that
Class II shares of the fund are sold to the public primarily through AIM Summit
Investors Plans II. Almost all of the shares of the fund are held by State
Street Bank and Trust Company which acts as the custodian under these plans (the
custodian).
The Distribution Plan provides that payments will be made to the
distributor in an amount equal to 0.30% per annum of the average daily net
assets of the fund attributable to the Class I shares. However, the distributor
has agreed that the fund will only pay 0.10% per annum of the average daily net
assets of the fund attributable to Class I shares held in AIM Summit Investors
Plans I. The distributor has further agreed contractually that its waiver may
not be revised or revoked without approval of the Class I shareholders. If the
Distribution Plan is approved by shareholders, and the recapitalization
described in Proposal 3 is not approved, the actual and pro forma annual
expenses of the Class I shares as a
16
<PAGE> 20
percentage of average net assets for the fiscal year-ended October 31, 1999,
would be as follows:
<TABLE>
<CAPTION>
1999 1999
ACTUAL PRO FORMA
------ ---------
<S> <C> <C>
Annual fund operating expenses (as a percentage of average
net assets)
Management Fees........................................... 0.63% 0.63%
12b-1 Fees................................................ 0.00% 0.10%
Other expenses (a)........................................ 0.12% 0.12%
---- ----
Total Class I operating expenses.................... 0.75% 0.85%
==== ====
</TABLE>
(a) Other expenses have been restated to reflect current agreements.
Proposal 3 seeks approval of a plan of recapitalization pursuant to which
the Class II shares of the fund would be reclassified as Class I shares. If
Proposal 3 is approved by shareholders, and if the recapitalization is
completed, the shares of the fund sold through AIM Summit Investors Plans II
will become Class I shares, and any shares of the fund sold in the future
through AIM Summit Investors Plans II would be Class I shares.
AIM Summit Investors Plans I was closed to new investors on August 16,
1999. Future new sales of shares of the fund are expected to be made through AIM
Summit Investors Plans II. If the recapitalization is completed, the fund would
make payments under the Distribution Plan in an amount equal to 0.30% percent
per annum of the average daily net assets of the fund attributable to shares
held directly or in AIM Summit Investors Plans II. Because almost all of the
shares of the fund now outstanding are Class I shares held in AIM Summit
Investors Plans I, the fees paid under the proposed Distribution Plan will be
significantly less than the 0.30% of the average daily net assets of the fund's
shares if the recapitalization is completed. After the recapitalization, the
amount paid under the Distribution Plan from the assets of the fund will
increase over time as more shares are held directly or in AIM Summit Investors
Plans II that are subject to the full 0.30% fee.
Participants in AIM Summit Investors Plan I are required to pay a creation
and sales charge to A I M Distributors, Inc. in connection with each monthly
investment under the plan in an amount per month that varies from an average of
$2.77 for a monthly investment of $50.00 to an average of $21.43 for a monthly
investment of $6,000, if investments are made regularly for 15 years. The fund
has been advised by A I M Distributors, Inc. that if the Distribution Plan is
approved, it will waive the creation and sales charge for AIM Summit Investors
Plans I participants for all investments made after the 12th investment.
WHAT FACTORS DID THE BOARD CONSIDER IN ADOPTING THE DISTRIBUTION PLAN?
At the request of AIM, the Board discussed adoption of the proposed
Distribution Plan at an in-person meeting held on February 3, 2000. The Board
17
<PAGE> 21
concluded that it is in the best interests of the fund and the Class I
shareholders to adopt the Distribution Plan for the Class I shares. The Board
reached its conclusion after careful consideration of the potential costs and
benefits of the Distribution Plan to shareholders, the services to be provided
to Class I shareholders under the shareholder servicing agreements contemplated
by the Distribution Plan, whether the Distribution Plan could be expected to
assist in the marketing of fund shares and increase the level of shareholder
services and the advantages to the fund and its shareholders that might result
from growth in the fund's assets, including economies of scale and reduced
expense ratios. The Board believes that it has carefully and thoroughly examined
the questions and alternatives. In recommending that you approve the proposed
Distribution Plan, the directors, including the independent directors have
considered what they believe to be in your best interests.
WHEN WILL PROPOSAL 2 BE IMPLEMENTED?
If approved, the Distribution Plan will become effective on May 24, 2000
and unless terminated earlier in accordance with its terms, will continue in
effect as long as such continuance is approved at least annually by the Board,
including a majority of the disinterested directors.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 2?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 3: APPROVAL OF A PLAN OF RECAPITALIZATION TO RECLASSIFY THE CLASS II
SHARES OF THE FUND'S COMMON STOCK AS CLASS I SHARES
WHO VOTES ON THIS PROPOSAL?
Proposal 3 applies only to holders of Class II shares of the fund.
18
<PAGE> 22
WHAT AM I BEING ASKED TO APPROVE?
The shares of the fund's common stock are currently divided into two
classes, Class I and Class II. The Board has approved a Plan of Recapitalization
for the fund that would reclassify the Class II shares of the fund's common
stock as Class I shares (the recapitalization). If the Plan of Recapitalization
is approved by the Class I and Class II shareholders, each Class II shareholder
will receive a number of full and fractional Class I shares having an aggregate
net asset value equal to the aggregate net asset value of the Class II shares
held by the shareholder immediately prior to the recapitalization. The Fund's
Charter will be amended to reclassify the Class II shares as Class I shares of
the fund's common stock and the assets of the fund attributable to the Class II
shares will be attributed to the Class I shares.
A copy of the Plan of Recapitalization is in Appendix C. The fund will
receive an opinion of Ballard Spahr Andrews & Ingersoll, LLP, to the effect that
the recapitalization will constitute a tax-free reorganization for Federal
income tax purposes. Thus, shareholders will not have to pay any Federal income
taxes as a result of the recapitalization.
The recapitalization will not have any effect on the business operations of
the fund, or on its investment objective, policies or strategies (although the
fund's investment objective and policies may be affected if other proposals
described in this proxy statement are approved). The value of each Class I and
Class II shareholder's account immediately after the recapitalization will be
the same as the value of such shareholder's account immediately prior to the
recapitalization. The recapitalization will not be completed if the Class I
shareholders do not approve the distribution plan described in Proposal 2.
WHAT ARE THE REASONS FOR THE PROPOSED RECAPITALIZATION?
The recapitalization is expected to reduce the expenses paid by the fund
because it will no longer be necessary to pay the costs associated with
administration, record keeping, accounting and registration under the securities
laws of two separate classes of shares.
As described in Proposal 2, the Board has adopted and Class I shareholders
are being asked to approve a distribution plan for the Class I shares which will
allow fees and expenses associated with the sale and distribution of Class I
shares to be paid from the assets of the fund attributable to the Class I
shares. There are no difference between the rights and preferences of the Class
I and Class II shares and if Proposal 2 is adopted by shareholders, there will
be no difference in the fees and expenses paid in respect of this Class I and
Class II shares, although those Class I shares held in AIM Summit Investors
Plans I are only subject to distribution fee of 0.10% of average daily net
assets. Under those circumstances, the Board believes that combining the Class
II shares with the Class I shares would be in the best interests of the fund and
all of its shareholders.
19
<PAGE> 23
WHAT WILL THE PROPOSED RECAPITALIZATION INVOLVE?
To accomplish the recapitalization, the fund's Charter will be amended to
reclassify the Class II shares of the fund as Class I shares. When the amendment
becomes effective, the fund's transfer agent will establish for each Class II
shareholder an account containing the number of the fund's Class I shares having
the same aggregate net asset value as the aggregate net asset value of the Class
II shares held by the shareholder immediately prior to the effective time. Such
accounts will be identical in all respects to the accounts currently maintained
by the transfer agent for each Class II shareholder. Certificates for Class II
shares issued before the recapitalization, if any, will represent Class I shares
after the recapitalization. However, the fund normally does not issue share
certificates. At the time the shares are issued, the records of the fund will be
adjusted to show the assets that are now attributed to the Class II shares as
assets of the Class I shares. If the fund is not reorganized as a business trust
as described in Proposal 4 below, the fund's Charter will be further amended to
redesignate the Class I shares of the fund as shares of the fund's common stock.
WHAT ARE THE DIFFERENCES BETWEEN THE CLASS I AND CLASS II SHARES?
The Class I and Class II shares of the fund have equal rights and
privileges under the fund's Charter. Each share of a particular class is
entitled to one vote, to participate equally in dividends and distributions
declared by the Board with respect to the class, and upon liquidation or
dissolution of the fund, to participate proportionately in the net assets of the
fund allocable to such class remaining after satisfaction of the fund's
outstanding liabilities allocable to such class. Shareholders of the fund do not
have cumulative voting rights and there are no preemptive or conversion rights
applicable to any of the fund's shares.
Currently, the Class II shares are subject to a distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act that provides for payments to AIM
Distributors in an amount equal to 0.30% per annum of the average daily net
assets of the fund attributable to the Class II shares to cover costs incurred
in connection with distribution of the Class II shares and the provision of
services to Class II shareholders by selected broker-dealers and financial
institutions. If Proposal 2 is approved by shareholders, the Class I shares will
become subject to a distribution plan that provides for similar payments to AIM
Distributors, although the Class I shares sold pursuant to AIM Summit Investors
Plans I will only be subject to a fee of 0.10% of assets.
Class I shares are now sold primarily through AIM Summit Investors Plans I
and Class II shares are sold only through AIM Summit Investors Plans II. If the
recapitalization is approved, the prospectus for AIM Summit Investors Plans II
will be revised to provide for the purchase of Class I shares. Certain of the
charges and fees paid by participants in AIM Summit Investor Plans I will be
waived or restructured as described in the discussion of Proposal 2. AIM Summit
Investors Plans I and II will not otherwise be affected by the recapitalization.
20
<PAGE> 24
WHEN WILL PROPOSAL 3 BE IMPLEMENTED?
Assuming your approval of Proposal 3, the fund currently contemplates that
the recapitalization will occur immediately before the closing of the
reorganization described in Proposal 4 below. However, the recapitalization is
not contingent upon approval or completion of the reorganization, and the
recapitalization may be completed on another date if circumstances warrant. The
recapitalization will not be completed if the distribution plan for the Class I
shares described in Proposal 2 is not approved by shareholders.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 3?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 4: APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION TO REORGANIZE
THE FUND AS A DELAWARE BUSINESS TRUST
WHO VOTES ON THIS PROPOSAL?
Proposal 4 applies to all shareholders of the fund.
WHAT AM I BEING ASKED TO APPROVE?
The fund currently is organized as a Maryland corporation. The Board has
approved an Agreement and Plan of Reorganization (the plan), which provides for
a transaction (the reorganization) to convert the fund to a series of shares of
beneficial interest (a new fund) of a newly created open-end management
investment company organized as a business trust (the trust) under the Delaware
Business Trust Act. Under the plan, the fund will transfer all its assets to the
new fund in exchange solely for voting shares of beneficial interest in the new
fund and the new fund's assumption of all the fund's liabilities. A form of the
plan relating to the proposed reorganization is in Appendix B. If Proposal 4 is
not approved by the shareholders, the fund will continue to operate as a
Maryland corporation.
The reorganization is being proposed primarily to modernize the
organizational documents under which the fund operates. AIM and the Board
believe that a number of benefits will be available to the fund and its
shareholders once these documents conform to those of other AIM funds. The
operations of the new fund following the reorganization will be substantially
similar to those of the fund, except that the new fund's advisory agreement will
conform to the changes proposed in Proposal 5, to the extent Proposal 5 is
approved, and the fundamental investment restrictions for the new fund will
conform to the changes proposed in Proposal 6, to the extent that Proposal 6 is
approved. Finally, as described below,
21
<PAGE> 25
the trust's Agreement and Declaration of Trust differs from the fund's Charter
in certain respects that are expected to improve the fund's operations.
WHAT ARE THE REASONS FOR THE PROPOSED REORGANIZATION?
The reorganization is being proposed because, as noted above, AIM and the
Board believe that the Delaware business trust organizational form offers a
number of advantages over the Maryland corporate organizational form. As a
result of these advantages, the Delaware business trust organizational form has
been increasingly used by mutual funds, including many AIM funds.
The Delaware business trust organizational form offers greater flexibility
than the Maryland corporate form. A Maryland corporation is governed by the
detailed requirements imposed by Maryland corporate law and by the terms of its
Charter. A Delaware business trust is subject to fewer statutory requirements.
The trust will be governed primarily by the terms of an Agreement and
Declaration of Trust (trust instrument). In particular, the trust will have
greater flexibility to conduct business without the necessity of engaging in
expensive proxy solicitations to shareholders. For example, under Maryland
corporation law, amendments to the fund's Charter would typically require
shareholder approval. Under Delaware law, unless the trust instrument of a
Delaware business trust provides otherwise, amendments to it may be made without
first obtaining shareholder approval. In addition, unlike Maryland corporation
law, which restricts the delegation of a board of directors' functions, Delaware
law permits the board of trustees of a Delaware business trust to delegate
certain of its responsibilities. For example, the board of trustees of a
Delaware business trust may delegate the responsibility of declaring dividends
to duly empowered committees of the board or to appropriate officers. Finally,
Delaware law permits the trustees to adapt a Delaware business trust to future
contingencies. For example, the trustees may, without a shareholder vote, change
a Delaware business trust's domicile or organizational form. In contrast, under
Maryland corporation law, a company's board of directors would be required to
obtain shareholder approval prior to changing domicile or organizational form.
The reorganization will also have certain other effects on the fund, its
shareholders and management, which are described below under the heading "How
Will the Trust Compare to the Fund?"
WHAT WILL THE PROPOSED REORGANIZATION INVOLVE?
To accomplish the reorganization, the trust has been formed as a Delaware
business trust pursuant to its trust instrument, and a new fund has been
established as a series of the trust. On the closing date, the fund will
transfer all of its assets to the new fund in exchange solely for a number of
full and fractional shares of the new fund equal to the number of full and
fractional shares of common stock of the fund then outstanding and the new
fund's assumption of the fund's liabilities. If the recapitalization described
in Proposal 3 is not completed,
22
<PAGE> 26
the trust will designate two classes of shares of the new fund, and will issue
to the fund a number of full and fractional Class I shares of the new fund equal
to the full and fractional number of Class I shares of the fund then
outstanding, and a full and fractional number of Class II shares of the new fund
equal to the number of Class II shares of the fund then outstanding. Immediately
thereafter, the fund will distribute those new fund shares to its shareholders
in complete liquidation and will, as soon as practicable thereafter, be
terminated. Upon completion of the reorganization, each shareholder of the fund
will be the owner of full and fractional shares of the new fund equal in number
and aggregate net asset value to the shares he or she held in the fund.
The obligations of the fund and the trust under the plan are subject to
various conditions stated therein. To provide against unforeseen events, the
plan may be terminated or amended at any time prior to the closing of the
reorganization by action of the Board, notwithstanding the approval of the plan
by the shareholders of the fund. However, no amendments may be made that would
materially adversely affect the interests of shareholders of the fund. The fund
and the trust may at any time waive compliance with any condition contained in
the plan, provided that the waiver does not materially adversely affect the
interests of shareholders of the fund.
The plan authorizes the fund to acquire one share of the new fund and, as
the sole shareholder of the trust prior to the reorganization, to do each of the
following:
- Approve with respect to the new fund a new investment advisory agreement
that will be substantially identical to that described in Proposal 5.
Information on the new advisory agreement, including a description of the
differences between it and the current advisory agreement, is set forth
below under Proposal 5. A form of the new advisory agreement is in
Appendix D. If Proposal 5 is not approved by shareholders, the trust will
approve an investment advisory agreement for the new fund that is
substantially identical to the fund's existing investment advisory
agreement;
- Assuming that Proposal 5 is approved by shareholders, approve with
respect to the new fund a new administrative services agreement with AIM
that will be substantially identical to the fund's existing
administrative services agreement with AIM, except for the changes
described in Proposal 5. If Proposal 5 is not approved by shareholders,
the trust will approve an administrative services agreement with AIM that
is substantially identical to the fund's existing administrative services
agreement;
- Approve with respect to the new fund a new distribution agreement with
A I M Distributors, Inc. The proposed distribution agreements will
provide for substantially the same distribution services as currently
provided by A I M Distributors, Inc.;
23
<PAGE> 27
- Approve a new distribution plan pursuant to Rule 12b-1 under the 1940 Act
with respect to the new fund that will be substantially identical to the
corresponding current fund's existing distribution plan for its Class II
shares and proposed distribution plan for its Class I shares;
- Assuming that the recapitalization described in Proposal 3 is completed,
approve with respect to the new fund a custodian agreement with State
Street Bank and Trust Company and a transfer agency and servicing
agreement with A I M Fund Services, Inc., each of which currently
provides such services to the fund. If the recapitalization described in
Proposal 3 is not completed, the trust will approve a custodian agreement
with State Street Bank and Trust Company and a transfer agency and
servicing agreement with A I M Fund Services, Inc. for each class of the
shares of the new fund in a form substantially identical to those
current in effect for the fund;
- Elect the directors of the fund as the trustees of the trust to serve
without limit in time, except as they may resign or be removed by action
of the trust's trustees or shareholders, and except as they retire in
accordance with the trust's retirement policy for trustees. The trust's
retirement policy for trustees is substantially identical to the
company's retirement policy for directors;
- Ratify the selection of KPMG LLP, the accountants for the fund, as the
independent public accountants for the new fund; and
- Approve such other agreements and plans as are necessary for the new
fund's operation as a series of an open-end management investment
company.
The trust's transfer agent will establish for each shareholder an account
containing the appropriate number of shares of the new fund. Such accounts will
be identical in all respects to the accounts currently maintained by the fund's
transfer agent for each shareholder of the fund. Shares held in the fund
accounts will automatically be designated as shares of the new fund.
Certificates for fund shares issued before the reorganization will represent
shares of the new fund after the reorganization. The trust will not normally
issue share certificates. Any account options or privileges on accounts of
shareholders under the current fund will be replicated on the new fund accounts.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION?
The fund and the trust will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP to the effect that the reorganization will constitute a tax-free
reorganization under section 368(a) of the Internal Revenue Code of 1986,
as amended. Accordingly, the fund, the new fund and the shareholders of the new
fund will recognize no gain or loss for federal income tax purposes as a result
of the reorganization. Shareholders of the fund should consult their tax
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advisers regarding the effect, if any, of the reorganization in light of their
individual circumstances and as to state and local consequences, if any, of the
reorganization.
WILL I HAVE APPRAISAL RIGHTS?
Appraisal rights are not available to shareholders. However, shareholders
retain the right to redeem their shares of the fund or the new fund, as the case
may be, at any time before or after the reorganization.
HOW WILL THE TRUST COMPARE TO THE FUND?
Structure of the Trust
The trust has been established under the laws of the State of Delaware by
the filing of a certificate of trust in the office of the Secretary of State of
Delaware. The trust has established the new fund as a series of its shares of
beneficial interest having identical designations as the fund's reclassified
common stock. The new fund will have the same investment objective, policies and
restrictions as the fund, except that the new fund's fundamental restrictions
will conform to the changes proposed in Proposal 6 (assuming approval of the
Proposal by the shareholders). If Proposal 6 is not approved by shareholders,
the new fund will continue to be subject to the fund's existing fundamental
restrictions, as applicable. The trust's fiscal year is the same as that of the
fund. The trust will not have any operations prior to the reorganization.
Initially, the fund will be the sole shareholder of the trust.
As a Delaware business trust, the trust's operations are governed by its
trust instrument and Bylaws and applicable Delaware law rather than by the
fund's Charter and Amended and Restated Bylaws and applicable Maryland law.
Certain differences between the two domiciles and organizational forms are
summarized below. The operations of the trust will continue to be subject to the
provisions of the 1940 Act and the rules and regulations thereunder.
Trustees and Officers of the Trust
Subject to the provisions of the trust instrument, the business of the
trust will be managed by its trustees, who serve indefinite terms and who have
all powers necessary or convenient to carry out their responsibilities. The
responsibilities, powers, and fiduciary duties of the trustees are substantially
the same as those of the directors of the fund.
The trustees of the trust would be those persons elected at this meeting to
serve as directors of the fund. Information concerning the nominees for election
as directors of the fund, all of whom presently serve in such positions, is set
above under Proposal 1. The current officers of the fund, as well as certain AIM
personnel, have been elected to serve as officers of the trust and the current
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officers of the fund will perform the same functions on behalf of the trust
following the reorganization that they now perform on behalf of the fund.
Shares of the Trust
The beneficial interests in the new fund will be represented by
transferable shares, par value $0.001 per share. Shareholders do not have the
right to demand or require the trust to issue share certificates, although the
trust, in its sole discretion, may issue them. The trustees have the power under
the trust instrument to establish new series and classes of shares; the fund's
directors currently have a similar right. The trust instrument permits the
trustees to issue an unlimited number of shares of each class and series. The
fund is authorized to issue only the number of shares specified in the Charter
and may issue additional shares only with Board approval and after payment of a
fee to the State of Maryland on any additional shares authorized.
The fund currently has two classes of shares: Class I and Class II. The
trust has established for the new fund only a single class of its shares having
the rights and preferences identical to those of Class I shares of the fund. If
the recapitalization described in Proposal 3 is not approved by shareholders and
completed, the trust will establish Class I and Class II shares of the new fund
that will be issued to the fund for distribution to its Class I and Class II
shareholders, respectively.
Shareholder Meeting Requirements
Maryland law provides that a special meeting of shareholders shall be
called upon the written request of shareholders holding 25% of the fund's
shares. The fund's Amended and Restated Bylaws allow a special meeting of
shareholders to be called upon the written request of shareholders holding 10%
of the fund's shares. The trust's Bylaws provide that a special meeting of
shareholders for the purpose of voting on the removal of any trustee may be
called by the holders of 10% or more of the outstanding shares of the trust.
The trust, like the fund, will operate as an open-end management investment
company registered with the Securities and Exchange Commission (SEC) under the
1940 Act. As permitted by SEC rules, the trust will adopt as its own the
registration statement of the fund. Shareholders of the new fund therefore will
have the power to vote at special meetings with respect to, among other things,
changes in any fundamental investment objectives and the fundamental
restrictions and policies of the new fund; approval of certain changes to
investment advisory contracts and plans of distribution; and additional matters
relating to the trust required by the 1940 Act.
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Shareholder Voting Rights
Under Maryland law, shareholders of the company have the right to vote on
the following matters: the substantive amendment or complete restatement of the
company's Charter; generally, a consolidation, merger or share exchange
involving the company or a transfer of the company's assets not in the ordinary
course of business; and the voluntary or, in some cases, involuntary dissolution
of the company.
Shareholders of the trust will have only those voting rights that are
explicitly set forth in the trust instrument. Under the trust instrument,
shareholders of the trust have the right to vote on the following matters: the
election or removal of trustees, provided that a meeting of shareholders has
been called for that purpose; the termination of the trust or any fund or class,
provided that a meeting of shareholders has been called for that purpose and
unless there are fewer than 100 holders of record of the trust or such
terminating fund or class; the sale of all or substantially all of the assets of
the trust or any fund or class, unless the primary purpose of such sale is to
change the trust's domicile or organizational form; under certain circumstances,
the merger or consolidation of the trust or any fund or class with and into
another company or with and into another fund or class of the trust; and the
amendment of the section of the trust instrument that governs shareholders'
voting rights.
Removal of Directors and Trustees
The fund's Charter permits removal of a director prior to the expiration of
his or her term of office for cause, and not otherwise, by the affirmative vote
of a majority of all votes entitled to be cast for the election of directors.
Under the trust's trust instrument, a trustee may be removed by a written
instrument, signed by at least two-thirds of the number of trustees prior to
such removal, or by the affirmative vote of holders of two-thirds of the trust's
outstanding shares at a special meeting called for that purpose.
Shareholders' Rights of Inspection
Maryland law provides generally that persons who have been shareholders of
record for six months or more and who own of record at least 5% of the fund's
outstanding shares of any class may inspect the fund's books of account and
stock ledger. Under the trust's trust instrument and Bylaws, new fund
shareholders who have held shares of record for at least six months and who hold
at least 5% of the outstanding shares of the new fund are permitted, upon
written request, to inspect a list of the shareholders of the fund.
Shareholder Liability
Maryland law provides that a shareholder is not obligated to the fund with
respect to the stock held therein, except to the extent that (1) the
subscription
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price or other agreed consideration for the stock has not been paid (subject to
limited exceptions); (2) the shareholder knowingly accepted an illegal
distribution; or (3) the shareholder is subject to any liability imposed by law
upon the dissolution, voluntary or involuntary, of the fund.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations; however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the trust instrument disclaims
shareholder liability for acts or obligations of the trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the trust or the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the trust. The trust instrument provides for indemnification out
of the property of the new fund for all losses and expenses of any shareholder
of such new fund held liable on account of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss due to shareholder
liability is limited to circumstances in which the new fund would be unable to
meet its obligations and the complaining party was held not to be bound by the
liability disclaimer.
Liability of Directors and Trustees
Under its Charter, the fund limits the liability of and indemnifies its
present and past directors and officers to the maximum extent permitted by
Maryland law and the 1940 Act. Directors may be personally liable to the fund by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of their duties or by reason of reckless disregard of their duties as directors.
In the event of any litigation or other proceeding against a director or officer
of the fund, Maryland law permits the fund to indemnify the director or officer
for certain expenses and to advance money for such expenses unless (a) it is
established that the act or omission of the director or officer was material to
the matter giving rise to the proceeding and the act or omission was committed
in bad faith or was the result of active and deliberate dishonesty; (b) the
director or officer actually received an improper personal benefit in money,
property or services; or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe the act or omission was
unlawful.
The trust instrument provides indemnification for current and former
trustees, officers, employees and agents of the trust to the fullest extent
permitted by Delaware law, the trust's Bylaws and other applicable law. Trustees
of the trust may be personally liable to the trust and its shareholders by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of their duties or by reason of reckless disregard of their duties as trustees.
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Amendment of Charter and Trust Instrument
Under the fund's Charter and Maryland law, the Charter may be amended upon
(a) adoption by the Board of a resolution setting forth the proposed amendment
and declaring that such amendment is advisable and (b) approval of such
resolution by the holders of a majority of the fund's outstanding shares. The
trust instrument may be amended by a majority of the trustees without any
shareholder vote, except that the shareholders will have the right to vote on
any amendment that affects their voting rights, that reduces the indemnification
provided to shareholders or former shareholders, that is required to have
shareholder approval by law or by the trust's registration statement, or that is
submitted to the shareholders by the trustees.
---------------------
The foregoing is only a summary of certain differences between and among
the fund's Charter and Amended and Restated Bylaws and Maryland law and the
trust instrument and the trust's Bylaws and Delaware law. It is not a complete
list of the differences. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of the
Charter and Amended and Restated Bylaws of the fund, and of the trust instrument
and the trust's Bylaws are available to shareholders without charge upon written
request to the fund or the trust.
WHEN WILL PROPOSAL 4 BE IMPLEMENTED?
Assuming your approval of Proposal 4, the fund currently contemplates that
the reorganization will close on May 24, 2000. However, the reorganization may
close on another date if circumstances warrant.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 4?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSAL 5: APPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT
WHO VOTES ON THIS PROPOSAL?
Proposal 5 applies to all shareholders of the fund.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve a new advisory agreement between AIM
and the fund. The Board is asking you to vote on this new agreement because the
fund may amend its advisory agreement only with shareholder approval. A form of
the fund's proposed Master Investment Advisory Agreement
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is in Appendix D. The proposed advisory agreement amends the current advisory
agreement primarily by:
- omitting references to the provision of administrative services to the
fund;
- omitting certain expense limitations that are no longer applicable;
- clarifying existing non-exclusivity provisions;
- clarifying existing delegation provisions;
- adding provisions regarding affiliated brokerage;
- adding certain provisions to fully implement the funds' securities
lending program; and
- clarifying existing liability provisions.
At a meeting held on February 3, 2000, the Board voted to recommend that
you approve a proposal to adopt the new advisory agreement.
WHO IS THE FUND'S INVESTMENT ADVISOR?
AIM became the investment advisor for the fund from the date of its
inception. The current Master Investment Advisory Agreement was executed on
February 28, 1997. The current Master Investment Advisory Agreement was last
submitted to a vote of public shareholders on February 7, 1997 in connection
with a merger between A I M Management Group Inc. and a subsidiary of INVESCO
PLC. The Board, including a majority of the independent directors, last approved
the current advisory agreement on May 11, 1999.
AIM is a wholly owned subsidiary of AIM Management, a holding company that
has been engaged in the financial services business since 1976. The address of
AIM and AIM Management is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
AIM was organized in 1976, and, together with its subsidiaries, advises or
manages approximately 120 investment portfolios encompassing a broad range of
investment objectives. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. A list of the principal executive
officer and the directors of AIM is in Appendix E.
DO ANY OF THE COMPANY'S DIRECTORS OR EXECUTIVE OFFICERS HOLD POSITIONS WITH AIM?
Charles T. Bauer, Robert H. Graham, Gary T. Crum, Carol F. Relihan,
Melville B. Cox and Dana R. Sutton, all of whom are directors and/or executive
officers of the company, also are directors and/or officers of AIM. Each of them
also beneficially owns shares of AMVESCAP PLC and/or options to purchase shares
of AMVESCAP PLC.
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WHAT ARE THE TERMS OF THE CURRENT ADVISORY AGREEMENT?
Under the terms of the current advisory agreement, AIM supervises all
aspects of the fund's operations and provides investment advisory services to
the fund. AIM obtains and evaluates economic, statistical and financial
information to formulate and implement investment programs for the fund. AIM
will not be liable to the fund or its shareholders except in the case of AIM's
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
The current advisory agreement provides that the fund will pay or cause to
be paid all of their expenses not assumed by AIM, including without limitation:
- brokerage commissions;
- taxes;
- legal, accounting, auditing or governmental fees;
- the cost of preparing share certificates;
- custodian, transfer and shareholder service agent costs;
- expenses of issue, sale, redemption and repurchase of shares;
- expenses of registering and qualifying shares for sale;
- expenses relating to director and shareholder meetings;
- the cost of preparing and distributing reports and notices to
shareholders;
- the fees and other expenses incurred by the fund in connection with
membership in investment company organizations;
- the cost of printing copies of prospectuses and statements of additional
information distributed to the fund's shareholders.
The current advisory agreement will continue in effect from year to year
only if such continuance is specifically approved at least annually by (i) the
Board or the vote of a majority of the outstanding voting securities of the fund
(as defined in the 1940 Act), and (ii) the affirmative vote of a majority of
independent directors by votes cast in person at a meeting called for such
purpose. The current advisory agreement provides that the Board, a majority of
the outstanding voting securities of the fund or AIM may terminate the agreement
on 60 days' written notice without penalty. The agreement terminates
automatically in the event of its assignment.
As compensation for its services, AIM receives an annual fee, calculated
daily and paid monthly, at the annual rate of 1.00% of the first $10 million of
the fund's average daily net assets, 0.75% of the next $140 million of the
fund's average daily net assets and 0.625% of the fund's average daily net
assets in excess of $150 million. For the fiscal year ended October 31, 1999,
AIM received a fee of $15,096,393 for advisory services. As of October 31, 1999
the total net assets of the fund were $2,624,615,009.
AIM may from time to time waive or reduce its fee. AIM may rescind
voluntary fee waivers or reductions at any time without further notice to
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investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee waivers or reductions prior to
the end of each fiscal year. AIM has contractually agreed to reimburse the fund
for expenses incurred for its Class II shares so that the total expenses of the
Class II shares does not exceed 1.50% of average net assets. For the fiscal year
ended October 31, 1999, there was no expense reimbursement. AIM may not alter
those arrangements to the fund's detriment during the period stated in the
agreement between AIM and the fund. AIM may not change provisions in the current
advisory agreement imposing expense limitations without shareholder approval.
CAN AIM DELEGATE ANY OF ITS DUTIES UNDER THE ADVISORY AGREEMENT?
The current advisory agreement provides that AIM may delegate to a sub-
advisor certain of its obligations under the current advisory agreement. In
accordance with this provision, AIM had entered into a sub-advisory agreement
dated February 28, 1997 with Tradestreet Investment Associates, Inc. (the sub-
advisor), pursuant to which the sub-advisor agreed to provide AIM with certain
securities analyses and investment recommendations for the fund.
Since the dates of the sub-advisory agreement, AIM has developed or
acquired additional resources for and experience in conducting securities
analyses. Accordingly, AIM determined that the services of the sub-advisor were
no longer necessary to manage the fund and recommended that the Board not renew
the sub-advisory agreement. At a meeting in person held on May 11, 1999, the
Board, including a majority of the independent directors, chose not to renew the
sub-advisory agreement. The Board considered the nature and quality of services
rendered and to be rendered by AIM and AIM's qualifications regarding its
provision of the services previously provided by the sub-advisor. The
sub-advisory agreement, therefore, expired on June 30, 1999.
WHAT ADDITIONAL SERVICES ARE PROVIDED BY AIM AND ITS AFFILIATES?
AIM and its affiliates also provide additional services to the fund. AIM
provides or arranges for others to provide administrative services to the fund.
A I M Distributors, Inc. serves as the principal underwriter for the fund and
A I M Fund Services, Inc. serves as the transfer agent for the fund and provides
services to fund shareholders and other services to the fund. These companies
are wholly owned subsidiaries of AIM. Information concerning fees paid to AIM
and its affiliates for these services is in Appendix F.
WHAT ADVISORY FEES DOES AIM CHARGE FOR SIMILAR FUNDS IT MANAGES?
The advisory fee schedules for other funds advised by AIM with similar
investment objectives as the fund are in Appendix G.
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WHAT ARE THE TERMS OF THE PROPOSED ADVISORY AGREEMENT?
The primary differences between the current advisory agreement and the
proposed advisory agreement that the Board approved are:
- To omit references to the provision of administrative services to the
fund by AIM, because such services are covered by a separate
administrative services agreement between AIM and the fund;
- To omit certain expense limitations that are no longer applicable;
- To clarify non-exclusivity provisions that are set forth in the current
advisory agreement;
- To clarify delegation provisions that are set forth in the current
advisory agreement;
- To add provisions regarding affiliated brokerage;
- To add certain provisions to fully implement the fund's securities
lending program; and
- To the extent the fund operates with separate investment portfolios in
the future, to clarify that one portfolio is not liable for another
portfolio's obligations, and that AIM's liability to one portfolio does
not automatically extend to another portfolio.
Each of these changes is discussed more fully below. Except for these
changes, the terms of the current advisory agreement and the proposed advisory
agreement are substantially similar, except for the effective dates and the
renewal dates. Although both the current and proposed advisory agreements state
that AIM may provide advisory services to multiple designations of shares of the
fund representing interests in separate investment portfolios, presently the
fund operates as a single investment portfolio.
Administrative Services
The fund and AIM are parties to an Administrative Services Agreement dated
February 28, 1997. The current advisory agreement states that AIM will provide
certain administrative services to the fund at the Board's request. The Board
has traditionally asked AIM to provide such services to the fund. AIM then
provides such services pursuant to the Administrative Services Agreement.
The Board proposes to separate the advisory services and the administrative
services that AIM provides to the fund, so that the provision of administrative
services is dealt with solely in an Administrative Services Agreement. As a
result, the proposed advisory agreement omits all references to the
Administrative Services Agreement. Since this omission will not change the
administrative services that AIM provides to the fund or the compensation AIM
receives for providing administrative services, the Board believes that this
change is a matter
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of form rather than a substantive change in the relationship between AIM and the
fund.
Expense Limitations
The current advisory agreement provides that advisory fees will be reduced
in accordance with certain expense limitations set forth in securities
regulations of the states in which the fund's shares are qualified for sale.
States can no longer impose expense limitations because federal law has
pre-empted these state regulations. Accordingly, the Board believes that this
expense limitation provision should be omitted from the proposed advisory
agreement.
Non-Exclusivity Provisions
The current advisory agreement provides that neither AIM nor the directors
or officers of the fund owe an exclusive duty to the fund. The current advisory
agreement expressly permits AIM to render investment advisory, administrative
and other services to other entities (including investment companies). The
current advisory agreement also expressly permits the directors and officers of
the fund to serve as partners, officers, directors or trustees of other entities
(including other investment advisory companies). The Board believes that the
non-exclusivity provision in the current advisory agreement should be bifurcated
into two separate provisions: one dealing with AIM and the other dealing with
officers and directors of the fund.
The non-exclusivity provisions of the proposed advisory agreement are
substantially similar to the provision in the current advisory agreement.
However, the proposed advisory agreement explicitly states that the fund
recognizes that AIM's obligations to other clients may adversely affect the
fund's ability to participate in certain investment opportunities. The proposed
advisory agreement also explicitly states that AIM, in its sole discretion,
shall be entitled to determine the allocation of investment opportunities among
the AIM funds and other clients in accordance with a policy that AIM believes to
be equitable.
Delegation
The proposed advisory agreement expands the extent to which AIM can
delegate its rights, duties and obligations by expressly providing that AIM may
delegate any or all of its rights, duties or obligations under the agreement to
one or more sub-advisors. It also provides that AIM may replace sub-advisors
from time to time in accordance with applicable federal securities laws and
rules and regulations in effect or interpreted from time to time by the SEC or
with exemptive orders or other similar relief. If, in accordance with the laws,
rules, interpretations and exemptions, AIM is not required to seek shareholder
approval of a substitution in sub-advisors, it may do so upon approval of the
Board.
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Affiliated Brokerage
Although AIM does not currently execute trades through brokers or dealers
that are affiliated with AIM, the proposed advisory agreement includes a new
provision that would permit such trades, subject to compliance with applicable
federal securities laws.
Securities Lending
The proposed advisory agreement includes a new provision that discusses the
services to be rendered by AIM if the fund engages in securities lending
activities, as well as the compensation AIM may receive for such services.
Services to be provided include: (a) overseeing participation in the securities
lending program to ensure compliance with all applicable regulatory and
investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as may be necessary.
As compensation for such services provided by AIM in connection with
securities lending activities of the fund, the fund shall pay AIM a fee equal to
25% of the net monthly interest or fee income retained or paid to the fund from
such activities. AIM currently intends to waive such fees, and has agreed to
seek Board approval prior to its receipt of all or a portion of such fees.
Liability
The proposed advisory agreement clarifies that no fund shall be liable for
the obligations of another fund, and the liability of AIM to one fund shall not
automatically render AIM liable to any other fund. This provision would affect
the fund only if the Board creates additional investment portfolios in the
future.
WHAT DID THE DIRECTORS CONSIDER IN APPROVING THE ADVISORY AGREEMENT?
At the request of AIM, the Board discussed the approval of the proposed
advisory agreement at a meeting in person held on February 3, 2000. The
independent directors also discussed approval of the proposed advisory agreement
with independent counsel at that meeting. In evaluating the proposed advisory
agreement, the Board requested and received information from AIM to assist in
its deliberations. The Board considered various matters in determining the
reasonableness and fairness of the proposed changes in the current advisory
agreement with respect to the fund. In doing so, the Board considered the fact
that the changes (i) would not result in any changes in the persons providing
investment advisory services to the fund; (ii) would not result in any changes
to
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the types or level of services provided by AIM to the fund (other than to have
AIM provide certain additional services if the fund engages in securities
lending); (iii) would not result in any changes to the advisory fees payable by
the fund (other than to permit AIM's receipt of fees in connection with
securities lending); (iv) would clarify the terms under which AIM will provide
investment advisory services to the fund; and (v) would omit outdated, or
otherwise unnecessary, provisions from the new advisory agreement. After
considering these matters, the Board concluded that it is in the best interests
of the fund and its shareholders to approve the new advisory agreement.
The Board reached its conclusion after careful discussion and analysis. The
Board believes that it has carefully and thoroughly examined the pertinent
issues and alternatives. In recommending that you approve the proposed advisory
agreement, the independent directors have considered what they believe to be in
your best interests. In so doing, they were advised by independent counsel,
retained by the independent directors and paid for by the fund, as to the nature
of the matters to be considered and the standards to be used in reaching their
decision.
WHEN WILL PROPOSAL 5 BE IMPLEMENTED?
If approved, the new advisory agreement will become effective on May 24,
2000 and will expire, unless renewed, on or before June 30, 2001. If
shareholders do not approve the proposed advisory agreement, the current
advisory agreement will continue in effect.
WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 5?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
PROPOSALS 6(a) THROUGH 6(k): CHANGES TO THE
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND
WHO VOTES ON THIS PROPOSAL?
Proposals 6(a) through 6(k) apply to all shareholders of the fund.
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve changing the fund's investment
restrictions. The Board is asking you to vote on these changes because the
investment restrictions described below are fundamental and shareholders must
approve any change.
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Pursuant to the 1940 Act, the fund has adopted fundamental restrictions
covering certain types of investment practices, which may be changed only with
shareholder approval. Restrictions that the fund has not specifically designated
as being fundamental are considered to be "non-fundamental" and may be changed
by the Board without shareholder approval. In addition to investment
restrictions, the fund operates pursuant to investment objectives and policies.
These objectives and policies govern the investment activities of the fund and
further limit its ability to invest in certain types of securities or engage in
certain types of transactions.
The Board is proposing that you approve changes to the fund's fundamental
investment restrictions. The changes will conform these restrictions to a set of
uniform model restrictions under which most AIM funds will operate. The Board
approved the changes to your fund's fundamental investment restrictions at a
meeting held on February 3, 2000. The current fundamental investment
restrictions for the fund are in Appendix H.
WHAT ARE THE REASONS FOR THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Several of the fund's current fundamental restrictions reflect regulatory,
business or industry conditions, practices or requirements that are no longer
applicable. For example, the National Securities Markets Improvement Act of 1996
(NSMIA) preempted state laws, under which the fund previously was regulated and
which required the adoption of certain restrictions. In addition, other
fundamental restrictions reflect federal regulatory requirements that remain in
effect but are not required to be stated as fundamental, or in some cases even
as non-fundamental, restrictions. Also, as new AIM funds have been created or
acquired during recent years, substantially similar fundamental restrictions
often have been phrased in slightly different ways, sometimes resulting in minor
but unintended differences in effect or potentially giving rise to unintended
differences in interpretation.
Accordingly, the Board has approved changes to certain of the fund's
fundamental restrictions in order to simplify, modernize and make more uniform
those restrictions that are required to be fundamental.
The Board expects that you will benefit from these changes in a number of
ways. The proposed uniform restrictions will provide the fund with as much
investment flexibility as is possible under the 1940 Act. The Board believes
that eliminating the disparities among the fundamental restrictions of the AIM
funds will enhance management's ability to manage efficiently and effectively
the funds' assets in changing regulatory and investment environments. In
addition, by reducing to a minimum those restrictions that can be changed only
by shareholder vote, the fund will be able to avoid the costs and delays
associated with a shareholder meeting if the Board decides to make future
changes to its investment policies.
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WHAT ARE THE PROPOSED CHANGES TO THE FUNDAMENTAL RESTRICTIONS?
Each proposed change to the fund's fundamental restrictions is described
below. The proposed fundamental restrictions will provide the fund with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
operating under such interpretations or exemptions. Even though the fund will
have this flexibility, if the proposed fundamental restrictions are approved,
several new non-fundamental investment restrictions (which function as internal
operating guidelines) will become effective. AIM must follow these non-
fundamental investment restrictions in managing the funds. Of course, if
circumstances change, the Board may change or eliminate any non-fundamental
investment restriction in the future without shareholder approval.
With respect to each fundamental or non-fundamental restriction, if a
percentage restriction is adhered to at the time of an investment or
transaction, a later increase or decrease in percentage resulting from a change
in the values of the fund's portfolio securities or the amount of its total
assets will not be considered a violation of the restriction.
PROPOSAL 6(a): CHANGE TO FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
WHO VOTES ON THIS PROPOSAL?
Proposal 6(a) applies to all shareholders of the fund.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(a), a new fundamental restriction on issuer
diversification would replace the current restrictions for the fund, as follows:
"The fund is a 'diversified company' as defined in the 1940 Act.
The fund will not purchase the securities of any issuer if, as a
result, the fund would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from
time to time or are interpreted from time to time by the SEC staff
(collectively, the 1940 Act laws and interpretations) or except to the
extent that the fund may be permitted to do so by exemptive order or
similar relief (collectively, with the 1940 Act laws and
interpretations, the 1940 Act laws, interpretations and exemptions).
In complying with this restriction, however, the fund may purchase
securities of other investment companies to the extent permitted by
the 1940 Act laws, interpretations and exemptions."
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Discussion:
The proposed change to the fund's fundamental restrictions on issuer
diversification would permit the fund to take advantage of the 1940 Act laws,
interpretations and exemptions in effect from time to time relating to issuer
diversification. The Board does not expect this change to have any material
impact on the fund's current operations.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective:
"In complying with the fundamental restriction regarding issuer
diversification, the fund will not, with respect to 75% of its total
assets, purchase securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(ii) the fund would hold more than 10% of the outstanding voting
securities of that issuer. The fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money
market funds and lend money to other investment companies and their
series portfolios that have AIM as an investment advisor, subject to
the terms and conditions of any exemptive orders issued by the SEC."
PROPOSAL 6(b): CHANGE TO FUNDAMENTAL RESTRICTION ON BORROWING MONEY AND ISSUING
SENIOR SECURITIES
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(b), the existing fundamental restriction on
issuing senior securities and borrowing money for the fund would be changed to
read as follows:
"The fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act laws, interpretations and exemptions."
Discussion:
The 1940 Act establishes limits on the ability of the fund to borrow money
or issue "senior securities," a term that is defined, generally, to refer to
obligations that have a priority over the fund's shares with respect to the
distribution of its assets or the payment of dividends. Currently, the
fundamental restriction for the fund is more limiting than required by the 1940
Act.
The proposed changes would make the fund's restriction on borrowing money
or issuing senior securities consistent and no more limiting than required by
the 1940 Act. The Board believes that changing the fund's fundamental
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restriction in this manner will provide flexibility for future contingencies.
However, the Board does not expect this change to have any material impact on
the fund's current operations. The fundamental limitation that prohibits the
fund from purchasing portfolio securities when borrowings from banks have not
been repaid will be revised so that the fund may not purchase additional
securities when borrowings from banks exceed 5% of the fund's total assets and
continue as a non-fundamental policy.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective for the fund:
"In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The fund may
borrow from banks, broker/dealers or other investment companies or
their series portfolios that have AIM or an affiliate of AIM as an
investment advisor (an AIM fund). The fund may not borrow for
leveraging, but may borrow for temporary or emergency purposes, in
anticipation of or in response to adverse market conditions, or for
cash management purposes. The fund may not purchase additional
securities when any borrowing from banks exceeds 5% of the fund's
total assets."
PROPOSAL 6(c): CHANGE TO FUNDAMENTAL RESTRICTION
ON UNDERWRITING SECURITIES
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(c), the existing fundamental restriction on
underwriting securities for the fund would be changed to read as follows:
"The fund may not underwrite the securities of other issuers. This
restriction does not prevent the fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the fund may be considered to be an
underwriter under the Securities Act of 1933."
Discussion:
The proposed changes to this fundamental restriction would expand the types
of transactions in which the fund may engage, even if it may be considered an
underwriter, and would eliminate minor differences in the wording of the AIM
funds' current restriction on underwriting securities.
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PROPOSAL 6(d): CHANGE TO FUNDAMENTAL RESTRICTION
ON INDUSTRY CONCENTRATION
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(d), the existing fundamental restriction on
industry concentration for the fund would be changed to read as follows:
"The fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act laws, interpretations and exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) tax-exempt obligations issued by governments
or political subdivisions of governments. In complying with this
restriction, the fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security."
Discussion:
The proposed changes to the fund's fundamental restriction on concentration
would clarify that for industry concentration purposes, the fund will not
consider a bank-issued guaranty or financial guaranty insurance as a separate
security. The proposed changes will also permit the fund to take advantage of
laws, interpretations and exemptions in effect from time to time relating to
concentration issues.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective:
"In complying with the fundamental restriction regarding industry
concentration, the fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry."
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PROPOSAL 6(e): CHANGE TO FUNDAMENTAL RESTRICTION
ON PURCHASING OR SELLING REAL ESTATE AND ELIMINATION OF FUNDAMENTAL RESTRICTION
ON INVESTMENTS
IN OIL, GAS OR OTHER MINERAL EXPLORATION
OR DEVELOPMENT PROGRAMS
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(e), the existing fundamental restriction on
real estate investments for the fund would be changed to read as follows:
"The fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein."
In addition, upon the approval of Proposal 6(e), the fundamental
restriction on investments in oil, gas or minerals for the fund would be
eliminated.
Discussion:
The proposed changes to this fundamental restriction would clarify the
types of real estate related securities that are permissible investments for the
fund. In addition, the proposed restriction includes an exception that permits
the fund to hold real estate acquired as a result of ownership of securities or
other instruments.
The fund is not required to have a fundamental restriction with respect to
oil, gas or mineral investments. In order to maximize each fund's flexibility in
this area, the Board believes that the fund's restriction on oil, gas and
mineral investments should be eliminated. This restriction was imposed by state
laws and NSMIA preempted state law requirements. Notwithstanding the elimination
of this fundamental restriction, the fund does not expect to invest at the
present time in oil, gas or other mineral exploration or development programs.
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PROPOSAL 6(f): CHANGE TO FUNDAMENTAL RESTRICTION
ON PURCHASING OR SELLING COMMODITIES AND ELIMINATION OF FUNDAMENTAL RESTRICTION
ON PUTS AND CALLS
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(f), the existing fundamental restriction on
investing in commodities for the fund would be changed to read as follows:
"The fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities."
In addition, upon the approval of Proposal 6(f), the fund's existing
fundamental restriction with regard to investing in puts or purchasing calls
would be eliminated.
Discussion:
The proposed changes to the fundamental restrictions are intended to ensure
that the fund will have the maximum flexibility to enter into hedging and other
transactions utilizing financial contracts and derivative products when doing so
is permitted by the fund's other investment policies. Furthermore, the proposed
restriction would allow the fund to respond to the rapid and continuing
development of derivative products.
Also, there is no legal requirement that the fund have a fundamental
restriction with regard to investing in puts or calls. To maximize the fund's
flexibility in this area, the Board believes that this restriction should be
eliminated.
PROPOSAL 6(g): CHANGE TO FUNDAMENTAL RESTRICTION
ON MAKING LOANS
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(g), the existing fundamental restriction on
making loans for the fund would be changed to read as follows:
"The fund may not make personal loans or loans of its assets to
persons who control or are under common control with the fund, except
to the extent permitted by 1940 Act laws, interpretations and
exemptions. This restriction does not prevent the fund from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests."
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Discussion:
The proposed restriction more completely describes various types of debt
instruments available in the financial markets that the fund may purchase that
do not constitute the making of a loan and broadens the potential circumstances
under which the funds could make loans.
If you approve the proposed change, the following non-fundamental
investment restriction will become effective:
"In complying with the fundamental restriction with regard to making
loans, the fund may lend up to 33 1/3% of its total assets and may
lend money to another AIM fund, on such terms and conditions as the
SEC may require in an exemptive order."
PROPOSAL 6(h): ELIMINATION OF FUNDAMENTAL
RESTRICTION ON MARGIN TRANSACTIONS
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(h), the existing fundamental restriction on
engaging in margin transactions for the fund would be eliminated.
Discussion:
The fund is not required to have a fundamental restriction on margin
transactions. In order to maximize the fund's flexibility in this area, the
Board believes that the fund's fundamental restriction with regard to margin
transactions should be deleted. Although the fund would have greater flexibility
to engage in margin transactions, it has no present intention of doing so.
If shareholders approve Proposal 6(h), the fund will not purchase any
security on margin, except that it may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of portfolio securities. The
payment by the fund of initial or variation margin in connection with futures or
related options transactions will not be considered the purchase of a security
on margin. The Board does not expect the elimination of the fundamental
restriction regarding margin transactions to have any material impact on the
fund's current operations.
PROPOSAL 6(i): ELIMINATION OF FUNDAMENTAL RESTRICTION
ON SHORT SALES OF SECURITIES
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(i), the existing fundamental restriction on
short sales of securities for the fund would be eliminated.
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Discussion:
The fund currently has a fundamental restriction with regard to selling
securities short. The fundamental restriction allows short sales "against the
box," which means that a fund contemporaneously owns or has the right to acquire
at no additional cost securities identical to, or convertible into or
exchangeable for, those securities sold short. However, the fundamental
restriction does not permit short sales that are not against the box. The SEC
considers short sales of securities by a fund that are not against the box to be
"senior securities." As such, they would be covered under the fundamental
restriction with regard to issuing senior securities that shareholders are being
asked to vote on in Proposal 6(b). Therefore, the Board believes that the
current fundamental restriction on short sales of securities that are not
against the box is unnecessary and should be eliminated for the fund. The fund
would retain the ability to engage in short sales against the box, provided that
the fund may not deposit or pledge more than 10% of its total assets as
collateral for such short sales at any one time. The Board does not expect the
elimination of the fundamental restriction regarding short sales of securities
to have any material impact on the fund's current operations.
PROPOSAL 6(j): ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING FOR THE
PURPOSE OF CONTROL
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(j), the existing fundamental restriction on
investing for the purpose of control for the fund would be eliminated.
Discussion:
The Board proposes to eliminate this fundamental restriction, which
prohibits the fund from investing in companies for the purpose of exercising
control or management. Elimination of this restriction would clarify the fund's
ability to exercise freely its rights as a shareholder of the companies in which
it invests. The fund, however, does not currently intend to become involved in
directing or administering the day-to-day operations of any company.
AIM believes that it should be able to communicate freely the fund's views
as a shareholder on important matters of policy to a company's management, its
board of directors and its shareholders, when AIM or the Board believes that
such action or policy may affect significantly the value of its investment. The
activities that the fund might engage in, either individually or with others,
include seeking changes in a company's direction, seeking the sale of a company
or a portion of its assets, or participating in a takeover effort or in
opposition to a takeover effort. AIM believes that the fund currently may engage
in such activities without necessarily violating this fundamental restriction.
Nevertheless,
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the existence of the investment restriction might give rise to a claim that such
activities did in fact constitute investing for control or management.
PROPOSAL 6(k): ELIMINATION OF FUNDAMENTAL RESTRICTION ON PURCHASING SECURITIES
OF ISSUERS IN WHICH OFFICERS AND DIRECTORS OF THE FUND AND ITS
AFFILIATES OWN SECURITIES.
WHAT IS THE PROPOSED CHANGE?
Upon the approval of Proposal 6(k), the fund's existing fundamental
restriction on purchasing securities of issuers in which officers and directors
of the fund and its investment advisor own securities would be eliminated.
Discussion:
There is no legal requirement that the fund have this fundamental
restriction. This restriction was imposed by state laws and NSMIA preempted
state law requirements. Moreover, the Board and AIM do not believe this
restriction provides any safeguards against conflicts of interest that are not
covered under AIM's and the fund's Code of Ethics. Accordingly, the Board
believes this restriction should be eliminated.
WHEN WILL PROPOSALS 6(A) THROUGH 6(K) BE IMPLEMENTED?
If you approve each of the above proposals, the new fundamental investment
restrictions will replace the fundamental investment restrictions for the fund.
Accordingly, they will become the only fundamental investment restrictions under
which the fund will operate. If approved, the above restrictions 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 Board
anticipates that these proposals, if approved, will be implemented on May 24,
2000.
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WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSALS 6(a) THROUGH 6(k)?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSALS 6(a) THROUGH 6(k).
PROPOSAL 7: RATIFICATION OF SELECTION OF KPMG LLP AS
INDEPENDENT ACCOUNTANTS
WHO VOTES ON THIS PROPOSAL?
Proposal 7 applies to all shareholders of the fund.
WHAT AM I BEING ASKED TO APPROVE?
The Board has selected KPMG LLP as independent accountants for the fund for
its fiscal year ending October 31, 2000. As the fund's independent accountants,
KPMG LLP will examine and verify the accounts and securities of the fund and
report on them to the Board and to the fund's shareholders. The Board's
selection will be submitted for your ratification at the meeting.
WHY HAS THE BOARD SELECTED KPMG LLP AS THE INDEPENDENT ACCOUNTANTS?
KPMG was selected primarily on the basis of its expertise as auditors of
investment companies, its independence from AIM and its affiliates, the quality
of its audit services, and the competitiveness of the fees charged for these
services. KPMG LLP also serves as independent accountants for some of the other
AIM funds.
WILL A REPRESENTATIVE FROM KPMG LLP BE AVAILABLE FOR QUESTIONS?
The Board expects that a representative of KPMG LLP will be present at the
meeting. The representative will have an opportunity to make a statement should
he or she desire to do so and will be available to respond to shareholders'
questions.
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WHAT IS THE BOARD'S RECOMMENDATION ON PROPOSAL 7?
YOUR BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
GENERAL INFORMATION
WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?
Information about the executive officers of the fund is in Appendix I.
WHAT IS THE SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN HOLDERS?
Information about the ownership of the fund's shares by the directors and
the executive officers of the fund and by 5% holders of the fund is listed in
Appendix J.
WHO ARE THE INVESTMENT ADVISOR, ADMINISTRATOR AND PRINCIPAL UNDERWRITER OF THE
FUND?
A I M Advisors, Inc., whose principal address is 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173, serves as the investment advisor and
administrator for the fund.
A I M Distributors, Inc., whose principal address is 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, serves as the principal underwriter for
the fund.
HAS THE FUND HIRED A PROXY SOLICITOR?
The fund has engaged the services of Shareholder Communications Corporation
(SCC) to assist it in soliciting proxies for the meeting. The fund estimates
that the aggregate cost of SCC's services will be approximately $[ ]. The
fund will bear the cost of soliciting proxies. The fund expects to solicit
proxies principally by mail, but either the fund or SCC may also solicit proxies
by telephone, facsimile, the Internet or personal interview. The fund may also
reimburse firms and others for their expenses in forwarding solicitation
materials to the beneficial owners of shares of the fund.
HOW CAN I SUBMIT A PROPOSAL?
As a general matter, the fund does not hold regular meetings of
shareholders. If you wish to submit a proposal for consideration at a meeting of
shareholders of the fund, you should send such proposal to the fund at the
address set forth on the first page of this proxy statement. To be considered
for presentation at a shareholders' meeting, the fund must receive proposals a
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reasonable time before proxy materials are prepared relating to that meeting.
Your proposal also must comply with applicable law.
OTHER MATTERS
The Board does not know of any matters to be presented at the meeting other
than those set forth in this proxy statement. If any other business should come
before the meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
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APPENDIX A
DISTRIBUTION PLAN
OF
AIM SUMMIT FUND, INC.
SECTION 1. AIM Summit Fund (the "Fund") may act as a distributor of
its Shares (the "Shares"), pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act"),
according to the terms of this Distribution Plan (the
"Distribution Plan").
SECTION 2. The Fund may incur, pursuant to the terms of this
Distribution Plan, expenses at the rates of .30% per annum
of the average daily net assets of Shares, subject to any
applicable limitations imposed from time to time by
applicable rules of the National Association of Securities
Dealers, Inc.
SECTION 3. 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, advertising
programs, 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, overhead, supplemental payments to
dealers and other institutions as asset-based sales
charges. Amounts set forth in Section 2 may also be used
to finance payments of service fees under a shareholder
service arrangement to be established by A I M
Distributors, Inc. ("Distributors") as the Fund's
distributor in accordance with Section 4, and the costs of
administering the Distribution Plan. To the extent that
amounts paid hereunder are not used specifically to
reimburse Distributors for any such expense, such amounts
may be treated as compensation for Distributors' services.
All amounts expended pursuant to the Distribution Plan
shall be paid to Distributors and are the legal obligation
of the Fund and not of Distributors. That portion of the
amounts paid under the Distribution Plan that is not paid
or advanced by Distributors 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
Distribution Plan shall be interpreted to prohibit any
payments by the Fund during periods when the Fund has
suspended or otherwise limited sales.
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SECTION 4. (a) Amounts expended by the Fund under the Distribution
Plan shall be used in part for the implementation by
Distributors of shareholder service arrangements with
respect to the Shares, AIM Summit Investors Plans I
and AIM Summit Investors Plans II (the "Plans"). The
maximum service fee paid to any service provider shall
be twenty-five one-hundredths of one percent (0.25%)
per annum of the average daily net assets,
attributable to the Shares beneficially owned by the
customers of such service provider.
(b) Pursuant to this program, Distributors may enter into
agreements substantially in the form attached hereto
as Exhibit A ("Service Agreements") with such broker-
dealers ("Dealers") or other entities as may be
selected from time to time by Distributors for the
provision of personal shareholder services in
connection with the Shares or Plans to the 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, 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 into any of several retirement plans
offered; (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; and (vi)
providing such other information and services as the
Fund or the Customer may reasonably request.
SECTION 5. Any amendment to this Plan that requires the approval of
the holders of the Shares pursuant to Rule 12b-1 under the
1940 Act shall become effective as to the Shares upon the
approval of such amendment by a "majority of the
outstanding voting securities" (as defined in the 1940
Act) of the Fund, provided that the Board of Directors of
the Fund has approved such amendment in accordance with
the provisions of Section 6 of this Distribution Plan.
SECTION 6. This Distribution Plan, any amendment to this Distribution
Plan and any agreements related to this Distribution Plan
A-2
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shall become effective immediately upon the receipt by the
Fund of both (a) the affirmative vote of a majority of the
Board of Directors of the Fund, and (b) the affirmative
vote of a majority of those directors of the Fund who are
not "interested persons" of the Fund (as defined in the
1940 Act) and have no direct or indirect financial
interest in the operation of this Distribution Plan or any
agreements related to it (the "Disinterested Directors"),
cast in person at a meeting called for the purpose of
voting on this Distribution Plan or such agreements.
Notwithstanding the foregoing, no such amendment that
requires the approval of the shareholders of the Shares
shall become effective as to the Shares until such
amendment has been approved by the shareholders of the
Shares in accordance with the provisions of Section 5 of
this Distribution Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this
Distribution Plan shall continue in effect until May 3,
2001, 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
Distribution Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of
Directors and the Board of Directors shall review, at
least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were
made.
SECTION 9. This Distribution Plan may be terminated at any time by
vote of a majority of the Disinterested Directors, or by
vote of a majority of the outstanding voting securities of
the Shares. If this Distribution Plan is terminated, the
obligation of the Fund to make payments pursuant to this
Distribution Plan will also cease and the Fund will not be
required to make any payments beyond the termination date
even with respect to expenses incurred prior to the
termination date.
SECTION 10. Any agreement related to this Distribution Plan shall be
made in writing, and shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority
of the Disinterested Directors or by a vote of the
outstanding voting securities of the Fund attributable
to the
A-3
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Shares, 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 11. This Distribution Plan may not be amended to increase
materially the amount of distribution expenses provided
for in Section 2 hereof unless such amendment is approved
in the manner provided in Section 5 hereof, and no
material amendment to the Distribution Plan shall be made
unless approved in the manner provided for in Section 6
hereof.
<TABLE>
<S> <C>
AIM SUMMIT FUND, INC.
Attest: ------------------------------- By: ----------------------------------
Assistant Secretary President
Effective as of ,
</TABLE>
A-4
<PAGE> 57
APPENDIX B
AIM SUMMIT FUND, INC.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
December 7, 1999, is entered into by and between AIM Summit Fund, Inc., a
Maryland corporation (the "Company"), and AIM Summit Fund, a Delaware business
trust (the "Trust"), acting on its own behalf and on behalf of its series
portfolio AIM Summit Fund.
BACKGROUND
The Company is organized as a management investment company and is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940. The Company currently publicly offers shares of its common
stock through AIM Summit Investors Plans I and AIM Summit Investors Plans II,
each a unit investment trust.
The Company desires to change its form and place of organization by
reorganizing as the Trust. In anticipation of such reorganization (the
"Reorganization"), the Board of Trustees of the Trust has designated shares of
beneficial interest in the Trust as an investment portfolio called AIM Summit
Fund (the "Portfolio").
The Reorganization will occur through the transfer of all of the assets of
the Company to the Portfolio. In consideration of its receipt of these assets,
the Portfolio will assume all of the liabilities of the Company, and the Trust
will issue to the Company shares of beneficial interest in the Portfolio (the
"Portfolio Shares"). The Company will then distribute the Portfolio Shares it
has received to its shareholders.
The Board of Directors of the Company has designated two classes of shares
of the common stock of the Company: Class I shares and Class II shares. At the
meeting of the Company's shareholders convened to consider the transactions
contemplated by this Agreement, the shareholders will be asked to approve a Plan
of Recapitalization pursuant to which the Company's Class II shares will be
reclassified as Class I shares of the Company's common stock (the
"Recapitalization"). If approved by shareholders, the Plan of Recapitalization
will be effected prior to the Reorganization contemplated by this Agreement.
The Reorganization is subject to, and shall be effected in accordance with,
the terms of this Agreement. This Agreement is intended to be and is adopted by
the Company and by the Trust, on its own behalf and on behalf of the Portfolio,
as a Plan of Reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
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NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
Any capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the preamble or background to this Agreement. In addition,
the following terms shall have the following meanings:
1.1 "Assets" shall mean all assets including, without limitation, all
cash, cash equivalents, securities, receivables (including interest and
dividends receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and prepaid
expenses shown as assets on the Company's books, and other property owned by the
Company at the Effective Time.
1.2 "Closing" shall mean the consummation of the transfer of assets,
assumption of liabilities and issuance of shares described in Sections 2.1, 2.2
and 2.3 of this Agreement, together with the related acts necessary to
consummate the Reorganization, to occur on the date set forth in Section 3.1.
1.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 "Company Share Class" shall mean each of the Class I and Class II
shares of the common stock of the Company, if any such classes of Company Shares
exist at the Effective Time.
1.5 "Company Shares" shall mean the shares of the Company outstanding
immediately prior to the Reorganization.
1.6 "Effective Time" shall have the meaning set forth in Section 3.1.
1.7 "Liabilities" shall mean all liabilities of the Company including,
without limitation, all debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
determinable at the Effective Time, and whether or not specifically referred to
herein.
1.8 "Portfolio" shall mean the AIM Summit Fund series of shares of
beneficial interest of the Trust
1.9 "Portfolio Share Class" shall mean each class of shares representing
an interest in the Portfolio, one of which shall correspond to one of the
Company Share Classes. The Trust will designate Portfolio Share Classes only if
Company Share Classes exist at the Effective Time.
1.10 "Portfolio Shares" shall mean those shares of beneficial interest in
the Portfolio, issued by the Trust to the Company in consideration of the
Portfolio's receipt of the Company's Assets.
1.11 "Recapitalization" shall mean the reclassification of the Class II
shares of the Company as Class I shares of the Company's common stock
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pursuant to a Plan of Recapitalization adopted by the Board of Directors of the
Company and approved by the holders of the Class II shares.
1.12 "Registration Statement" shall have the meaning set forth in Section
5.4
1.13 "RIC" shall mean a regulated investment company under Subchapter M of
the Code.
1.14 "SEC" shall mean the Securities and Exchange Commission.
1.15 "Shareholder(s)" shall mean the Company's shareholder(s) of record,
determined as of the Effective Time.
1.16 "Shareholders' Meeting" shall have the meaning set forth in Section
5.1.
1.17 "Transfer Agent" shall have the meaning set forth in Section 2.2
1.18 "1940 Act" shall mean the Investment Company Act of 1940, as amended.
2. PLAN OF REORGANIZATION.
2.1 In the event the Recapitalization is approved by the Class II
shareholders at the Shareholders' Meeting, the Reorganization shall be
consummated as follows. The Company shall assign, sell convey, transfer and
deliver all of the Assets to the Trust on behalf of the Portfolio. The Trust, on
behalf of the Portfolio, in exchange therefor:
(a) shall issue and deliver to the Company the number of full and
fractional (rounded to the third decimal place) Portfolio Shares equal to
the number of full and fractional Company Shares; and
(b) shall assume all of the Company 's Liabilities.
Such transactions shall take place at the Closing.
2.2 In the event that the Recapitalization is not approved by shareholders
at the Shareholders meeting, the Reorganization will be consummated as follows:
(a) The Trust shall designate the Portfolio Share Classes.
(b) The Company shall assign, sell, convey and deliver all of the
Assets to the Trust on behalf of the Portfolio. Those Assets attributed to
the Company's Class I shares shall be attributed to the Portfolio's Class I
shares and the Assets attributed to the Company's Class II shares shall be
attributed to the Portfolio's Class II shares.
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(c) The Trust, on behalf of the Portfolio, in exchange therefor:
(i) shall issue and deliver to the Company the number of full and
fractional (rounded to the third decimal place) Portfolio Shares of each
Portfolio Share Class equal to the number of full and fractional Company
Shares for each corresponding Company Share Class; and
(ii) shall assume all of the Company's Liabilities; all of the
Liabilities attributed to the Company's Class I shares will be
attributed to the Portfolio's Class I shares and all of the Liabilities
attributable to the Company's Class II shares shall be attributed to the
Portfolio's Class II shares.
Such transactions shall take place at the Closing.
2.3 At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the Portfolio Shares issued pursuant to paragraph 5.2 shall be
redeemed by the Trust for $1.00 and (b) the Company shall distribute the
Portfolio Shares received by it pursuant to paragraph 2.1 or 2.2 to the
Company's Shareholders in exchange for such Shareholders' Company Shares. Such
distribution shall be accomplished through opening accounts, by the transfer
agent for the Trust (the "Transfer Agent"), on the Trust's share transfer books
in the Shareholders' names and transferring Portfolio Shares to such accounts.
Each Shareholder's account shall be credited with the respective pro rata number
of full and fractional (rounded to the third decimal place) Portfolio Shares (of
each Portfolio Share Class if Company Share Classes exist at the Effective Time)
due that Shareholder. All outstanding Company Shares, including those
represented by certificates, shall simultaneously be canceled on the Company's
share transfer books. The Trust shall not issue certificates representing the
Portfolio Shares in connection with the Reorganization. However, certificates
representing Company Shares shall represent Portfolio Shares after the
Reorganization.
2.4 As soon as reasonably practicable after distribution of the Portfolio
Shares pursuant to paragraph 2.3, the Company shall dissolve its existence as
corporation under Maryland law.
2.5 Any transfer taxes payable on issuance of Portfolio Shares in a name
other than that of the registered holder of the Company Shares exchanged
therefor shall be paid by the person to whom such Portfolio Shares are to be
issued, as a condition of such transfer.
2.6 Any reporting responsibility of the Company to a public authority is,
and shall remain its responsibility up to and including the date on which it is
terminated.
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3. CLOSING.
3.1 The Closing shall occur at the principal office of the Company on May
24, 2000, or on such other date and at such other place upon which the parties
may agree. All acts taking place at the Closing shall be deemed to take place
simultaneously as of the Company's and the Trust's close of business on the date
of the Closing or at such other time as the parties may agree (the "Effective
Time").
3.2 The Company shall deliver to the Trust at the Closing a schedule of
its Assets as of the Effective Time, which shall set forth all portfolio
securities included therein, their adjusted tax basis and holding period by lot.
The Company shall cause its custodian to deliver at the Closing a certificate of
an authorized officer of the custodian stating that (a) the Assets held by the
custodian will be transferred to the Portfolio at the Effective Time and (b) all
necessary taxes in conjunction with the delivery of the Assets, including all
applicable federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
3.3 The Company shall deliver to the Trust at the Closing a list of the
names and addresses of its Shareholders and the number of outstanding Company
Shares owned by each Shareholder, all as of the Effective Time, certified by the
Company's Secretary or Assistant Secretary. The Trust shall cause the Transfer
Agent to deliver at the Closing a certificate as to the opening on the Trust's
transfer books of accounts in the Shareholders' names. The Trust shall issue and
deliver a confirmation to the Company evidencing the Portfolio Shares to be
credited to the Company at the Effective Time or provide evidence satisfactory
to the Company that such shares have been credited to the Company's account on
such books. At the Closing, each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts, or other documents as
the other party or its counsel may reasonably request.
3.4 The Company and the Trust shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Company represents and warrants as follows:
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland, and its Charter
is on file with the Maryland Department of Assessments and Taxation;
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(b) The Company is duly registered as an open-end series management
investment company under the 1940 Act, and such registration is in full
force and effect;
(c) At the Closing, the Company will have good and marketable title to
its Assets and full right, power, and authority to sell, assign, transfer,
and deliver its Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, the Portfolio will acquire good and
marketable title to the Assets;
(d) The Portfolio Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
(e) The Company qualified for treatment as a RIC for each past taxable
year since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year (and the
Assets will be invested at all times through the Effective Time in a manner
that ensures compliance with the foregoing); the Company has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it; and the Company has made all
distributions for each such past taxable year that are necessary to avoid
the imposition of federal excise tax or has paid or provided for the
payment of any excise tax imposed for any such year;
(f) There is no plan or intention of the Shareholders who individually
own 5% or more of any Company Shares and, to the best of the Company's
knowledge, there is no plan or intention of the remaining Shareholders to
redeem or otherwise dispose of any Portfolio Shares to be received by them
in the Reorganization. The Company does not anticipate dispositions of
those shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of redemptions of shares of the Company as a
series of an open-end investment company. Consequently, the Company expects
that the percentage of Shareholder interests, if any, that will be disposed
of as a result of or at the time of the Reorganization will be less than
one percent (1%) of the shares of the Company outstanding as of the
Effective Time;
(g) The Liabilities were incurred by the Company in the ordinary
course of its business and are associated with the Assets;
(h) The Company is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of Section 368(a)(3)(A) of the Code;
(i) As of the Effective Time, the Company will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Company Shares except for the
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right of investors to acquire its shares at net asset value in the normal
course of its business as an open-end diversified management investment
company operating under the 1940 Act;
(j) At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by the Company's
shareholders; and
(k) Throughout the five-year period ending on the date of the Closing,
the Company will have conducted its historic business within the meaning of
Section 1.368-1(d) of the Income Tax Regulations under the Code in a
substantially unchanged manner;
(l) The fair market value of the Assets of the Company transferred to
the Portfolio will equal or exceed the sum of the Liabilities assumed by
the Portfolio plus the amount of Liabilities, if any, to which the
transferred Assets are subject.
4.2 The Trust represents and warrants, on its own behalf and on behalf of
the Portfolio, to the Company as follows:
(a) The Trust is a business trust duly organized, validly existing and
in good standing under the laws of the State of Delaware, and its
Certificate of Trust has been duly filed in the office of the Secretary of
State of Delaware;
(b) At the Effective Time, the Trust will succeed to the Company's
registration statement filed under the 1940 Act with the SEC and thus will
become duly registered as an open-end management investment company under
the 1940 Act;
(c) At the Effective Time, the Portfolio will be a duly established
and designated series of the Trust and any Portfolio Share Classes existing
at the Effective Time will have been duly established and designated
classes of Portfolio Shares.
(d) The Portfolio has not commenced operations and nor will it
commence operations until after the Closing;
(e) Prior to the Effective Time, there will be no issued and
outstanding shares of the Portfolio or any other securities issued by the
Trust on behalf of the Portfolio, except as provided in paragraph 5.2;
(f) No consideration other than Portfolio Shares (and the Portfolio's
assumption of the Liabilities) will be issued in exchange for the Assets in
the Reorganization;
(g) The Portfolio Shares to be issued and delivered to the Company
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of the Trust, fully paid and non-assessable;
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(h) The Portfolio will meet all the requirements to qualify for
treatment as a RIC for its taxable year in which the Reorganization occurs;
(i) The Trust, on behalf of the Portfolio, has no plan or intention to
issue additional Portfolio Shares following the Reorganization except for
shares issued in the ordinary course of its business as a series of an
open-end investment company; nor does the Trust, on behalf of the
Portfolio, have any plan or intention to redeem or otherwise reacquire any
Portfolio Shares issued pursuant to the Reorganization, other than in the
ordinary course of its business or to the extent necessary to comply with
its legal obligation under section 22(e) of the 1940 Act;
(j) The Portfolio will actively continue the Company's business in
substantially the same manner that the Company conducted that business
immediately before the Reorganization; and the Portfolio has no plan or
intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of its business each dispositions
necessary to maintain its qualification as a RIC, although in the ordinary
course of its business the Portfolio will continuously review its
investment portfolio (as the Company did before the Reorganization) to
determine whether to retain or dispose of particular stocks or securities,
including those included in the Assets;
(k) There is no plan or intention for the Portfolio to be dissolved or
merged into another corporation or business trust or "fund" thereof (within
the meaning of section 851(g)(2) of the Code) following the Reorganization;
and
4.3 Each of the Company and the Trust, on its own behalf and on behalf of
the Portfolio, as appropriate, represents and warrants as follows:
(a) The fair market value of the Portfolio Shares received by each
Shareholder will be approximately equal to the fair market value of the
Company Shares surrendered in exchange therefor;
(b) Immediately following consummation of the Reorganization, the
Shareholders will own all the shares of the Portfolio and will own such
shares solely by reason of their ownership of the Company Shares
immediately before the Reorganization;
(c) The Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization;
(d) There is no intercompany indebtedness between the Company and the
Portfolio that was issued or acquired, or will be settled, at a discount;
and
(e) Immediately following consummation of the Reorganization, the
Portfolio will hold the same assets, except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
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expenses incurred in connection with the Reorganization, and be subject to
the same liabilities that the Company held or was subject to immediately
prior to the Reorganization. Assets used to pay expenses, all redemptions
and distributions (other than regular, normal dividends) made by the
Company after the date of this Agreement will, in the aggregate, constitute
less than one percent (1%) of its net assets.
5. COVENANTS.
5.1 As soon as practicable after the date of this Agreement, the Company
shall call a meeting of its shareholders (the "Shareholders Meeting") to
consider and act on this Agreement. The Board of Directors of the Company shall
recommend that shareholders approve this Agreement and the transactions
contemplated by this Agreement. Approval by shareholders of this Agreement will
authorize the Company, and the Company hereby agrees, to vote on the matters
referred to in paragraphs 5.2 and 5.3.
5.2 The Trust's trustees shall authorize the issuance of, and the Trust
shall issue, prior to the Closing, one Portfolio Share (in each Portfolio Share
Class if so designated) to the Company in consideration of the payment of $1.00
per share for the purpose of enabling the Company to elect the Company's
directors as the Trust's trustees (to serve without limit in time, except as
they may resign or be removed by action of the Trust's trustees or
shareholders), to ratify the selection of the Trust's independent accountants,
and to vote on the matters referred to in paragraph 5.3;
5.3 Immediately prior to the Closing, the Trust (on its own behalf and
with respect to the Portfolio or each Portfolio Share Class, as appropriate)
shall enter into a Master Investment Advisory Agreement, a Master Sub-Advisory
Agreement, a Master Administrative Services Agreement, Master Distribution
Agreements, a Custodian Agreement and a Transfer Agency and Servicing Agreement;
shall adopt plans of distribution pursuant to Rule 12b-1 of the 1940 Act, a
multiple class plan pursuant to Rule 18f-3 of the 1940 Act and shall enter into
or adopt, as appropriate, such other agreements and plans as are necessary for
the Portfolio's operation as a series of an open-end investment company. Each
such agreement and plan shall have been approved by the Trust's trustees and, to
the extent required by law, by such of those trustees who are not "interested
persons" of the Trust (as defined in the 1940 Act) and by the Company as the
sole shareholder of the Portfolio.
5.4 The Company or the Trust, as appropriate, shall file with the SEC one
or more post-effective amendments to the Company's Registration Statement on
Form N-1A under the Securities Act of 1933, as amended, and the 1940 Act, as
amended (the "Registration Statement"), (i) which contain such amendments to
such Registration Statement as are determined by the Company to be necessary and
appropriate to effect the Reorganization and (ii) pursuant to which the Trust
adopts such Registration Statement, as so amended, as its own,
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and shall use its best efforts to have such post-effective amendment or
amendments to the Registration Statement become effective as of the Closing.
6. CONDITIONS PRECEDENT.
The obligations of the Company and the Trust, on its own behalf and on
behalf of the Portfolio, will be subject to (a) performance by the other party
of all its obligations to be performed hereunder at or before the Effective
Time, (b) all representations and warranties of the other party contained herein
being true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated hereby, as of
the Effective Time, with the same force and effect as if made on and as of the
Effective Time, and (c) the further conditions that, at or before the Effective
Time:
6.1 The shareholders of the Company shall have approved this Agreement and
the transactions contemplated by this Agreement in accordance with applicable
law.
6.2 All necessary filings shall have been made with the SEC and state
securities authorities, and no order or directive shall have been received that
any other or further action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state securities
authorities) deemed necessary by either the Company or the Trust to permit
consummation, in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain such consults, orders,
and permits would not involve a risk of a material adverse effect on the assets
or properties of either the Company or the Portfolio, provided that either the
Company or the Trust may for itself waive any of such conditions;
6.3 Each of the Company and the Trust shall have received an opinion from
Ballard Spahr Andrews & Ingersoll, LLP as to the federal income tax consequences
mentioned below. In rendering such opinion, such counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations made in this Agreement (or in separate letters of representation
that the Company and the Trust shall use their best efforts to deliver to such
counsel) and the certificates delivered pursuant to paragraph 3.4. Such opinion
shall be substantially to the effect that, based on the facts and assumptions
stated therein and conditioned on consummation of the Reorganization in
accordance with this Agreement, for federal income tax purposes:
(a) The Reorganization will constitute a reorganization within the
meaning of section 368(a) of the Code, and the Company and the Portfolio
will be "a party to a reorganization" within the meaning of section 368(b)
of the Code;
(b) No gain or loss will be recognized to the Company on the transfer
of the Assets to the Portfolio in exchange solely for Portfolio Shares and
the
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Portfolio 's assumption of the Liabilities or on the subsequent
distribution of Portfolio Shares to the Shareholders, in constructive
exchange for their Company Shares, in liquidation of the Company;
(c) No gain or loss will be recognized to the Portfolio on its receipt
of the Assets in exchange for Portfolio Shares and its assumption of the
Liabilities;
(d) The Portfolio's basis for the Assets will be the same as the basis
thereof in the Company's hands immediately before the Reorganization, and
the Portfolio's holding period for the Assets will include the Company's
holding period therefor;
(e) A Shareholder will recognize no gain or loss on the constructive
exchange of Company Shares solely for Portfolio Shares pursuant to the
Reorganization; and
(f) A Shareholder's basis for the shares of the Portfolio to be
received in the Reorganization will be the same as the basis for the
Company Shares to be constructively surrendered in exchange for such
Portfolio Shares, and a Shareholder's holding period for such Portfolio
Shares will include its holding period for the Company Shares
constructively surrendered, provided that the Portfolio Shares are held as
capital assets by the Shareholder at the Effective Time.
6.4 No stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the SEC (and not withdrawn or terminated).
At any time prior to the Closing, any of the foregoing conditions (except
those set forth in paragraph 6.1) may be waived by the directors/trustees of
either the Company or the Trust if, in their judgment, such waiver will not have
a material adverse effect on the interests of the Company's shareholders.
7. EXPENSES.
Except as otherwise provided in subparagraph 4.3(c), all expenses incurred
in connection with the transactions contemplated by this Agreement (regardless
of whether they are consummated) will be borne by the parties as they mutually
agree.
8. ENTIRE AGREEMENT.
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties.
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9. AMENDMENT.
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding its approval by the Company's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
10. TERMINATION.
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by the Company's shareholders:
10.1 By either the Company or the Trust (a) in the event of the other
party's material breach of any representation, warranty, or covenant contained
herein to be performed at or prior to the Effective Time, (b) if a condition to
its obligations has not been met and it reasonably appears that such condition
will not or cannot be met, or (c) if the Closing has not occurred on or before
July 31, 1999; or
10.2 By the parties' mutual agreement.
Except as otherwise provided in Section 7, in the event of termination
under paragraphs 10.1(c) or 10.2, there shall be no liability for damages on the
part of either the Company or the Trust or Portfolio to the other.
11. MISCELLANEOUS.
11.1 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
11.2 Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
11.3 The execution and delivery of this Agreement have been authorized by
the Trust's trustees, and this Agreement has been executed and delivered by
authorized officers of the Trust acting as such; neither such authorization by
such trustees nor such execution and delivery by such officers shall be deemed
to have been made by any of them individually or to impose any liability on any
of them or any shareholder of the Trust personally, but shall bind only the
assets and property of the Company, as provided in the Trust's Agreement and
Declaration of Trust.
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IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
<TABLE>
<S> <C>
Attest: AIM SUMMIT FUND, INC.
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- --------------------------------- ------------------------------------
Title: President
-----------------------------
Attest: AIM SUMMIT FUND
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- --------------------------------- ------------------------------------
Title: President
-----------------------------
</TABLE>
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APPENDIX C
PLAN OF RECAPITALIZATION
FOR
AIM SUMMIT FUND, INC.
This Plan of Recapitalization provides for the reclassification of the
Class II shares of the common stock of AIM Summit Fund, Inc. (the "Fund") into
Class I shares of the Fund's common stock.
WHEREAS, the Fund is a Maryland corporation and a registered investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Charter of the Fund divides the shares of its common stock
into two classes, Class I shares and Class II shares;
WHEREAS, the Board of Directors of the Fund has determined that it would be
in the best interests of the Fund and its shareholders to recapitalize the Fund
by reclassifying the Class II shares of the Fund's common stock as Class I
shares pursuant to an amendment to the Charter of the Fund, all in the manner
described below.
NOW, THEREFORE, the Class II shares of the Fund shall be reclassified as
Class I shares of the Fund on the following terms and conditions.
1. Plan of Recapitalization
(a) Change and Reclassification of Shares. At the Effective Time
described in Section 3 below all of the issued and outstanding Class II
shares of the Fund shall be changed into and become Class I shares of the
Fund based upon their respective net asset values, and thereafter shall
have the attributes of Class I shares of the Fund. All issued and
outstanding Class II shares shall thereafter be deemed to have been
redeemed and become authorized but unissued Class II shares. Immediately
following the foregoing actions and events, all authorized but unissued
Class II shares of the Fund shall be reclassified as authorized but
unissued Class I shares of the Fund and the name of the Class I shares
shall be changed to "Common Stock." The stock transfer books for the Class
II shares of the Fund will be permanently closed at the Effective Time and
only requests for the redemption of shares of Class II shares of the Fund
received in proper form prior to the close of trading on the New York Stock
Exchange on the date of the Effective Time shall be accepted. Thereafter,
redemption requests received by the Fund for its Class II shares shall be
deemed to be redemption requests for the Class I shares into which such
Class II shares were reclassified under this Plan of Recapitalization.
(b) Attribution of Assets and Liabilities. At the Effective Time
described in Section 3 below, the proportionate undivided interest in the
net
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assets of the Fund attributable to its Class II shares shall become a part
of the proportionate undivided interest in the net assets of the Fund
attributable to its Class I shares, and the expenses, costs, charges and
reserves allocated to the Class II shares of the Fund immediately prior to
the Effective Time shall become expenses, costs, charges and reserves of
Class I shares of the Fund. The Fund shall instruct its custodian to
reflect in the custodian's records the attribution of the assets of Class
II shares in the manner described above.
(c) Shareholder Accounts. At the Effective Time described in Section 3
below, each shareholder of record of Class II shares of the Fund will
receive that number of Class I shares of the Fund having an aggregate net
asset value equal to the aggregate net asset value of the Class II shares
of the Fund held by such shareholder immediately prior to the Effective
Time. The Fund will establish an open account on its records in the name of
each Class II shareholder to which will be credited the respective number
of Class I shares of the Fund due such shareholder. Fractional Class II
shares will be carried to the third decimal place. Certificates
representing Class I shares will not be issued. The net asset value of the
Class I and Class II shares will be determined at the Effective Time in
accordance with the policies and procedures of the Fund.
2. Amendment to Charter. The Fund shall effect the recapitalization by
amending its Charter to provide for the change of its issued and outstanding
Class II shares into Class I shares based upon their respective net asset
values, to provide for the reclassification of the authorized but unissued Class
II shares as Class I shares, to provide for the change of the name of the Class
I shares to "Common Stock," and to make such other provision as the officers of
the Corporation shall deem appropriate in connection with the foregoing, after
consultation with counsel.
3. Effective Time of the Reorganization. The recapitalization of the Fund
contemplated by this Plan of Recapitalization shall occur on May 24, 2000 at
5:00 p.m. Eastern Time, or such later date and time as the officers of the Fund
shall determine (the "Effective Time").
4. Approval of Shareholders. A meeting of the holders of the shareholders
of the Fund shares shall be duly called and constituted for the purpose of
acting upon this Plan of Recapitalization and the transactions contemplated
herein, including approval of the amendment to the Charter of the Fund described
above. Approval by such shareholders of this Plan of Recapitalization shall
authorize the Fund to take the actions required to effect the Plan of
Recapitalization.
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5. Conditions Precedent. The Fund will consummate the Plan of
Recapitalization only after satisfaction of each of the following conditions:
(a) The amendment to the Charter of the Fund described in paragraph 2
shall have been filed with the Maryland Department of Assessments and
Taxation specifying the Effective Time as the effective date thereof.
(b) All consents, approvals, permits and authorizations required to be
obtained from governmental authorities, including the Securities and
Exchange Commission and state securities commissions, to permit the parties
to carry out the transactions contemplated by this Plan of Recapitalization
shall have been received.
(c) This Plan of Recapitalization, the amendment to the Charter and
related corporate matters shall have been approved by the shareholders of
the Fund at a special meeting by the affirmative vote of a majority of the
total number of votes entitled to be cast.
(d) The assets of the Class II shares to be transferred to the Class I
shares shall constitute at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets held
by the Fund for the Class II shares immediately prior to the
reclassification. For purposes of this paragraph 5(d), assets used by the
Fund to pay the expenses it incurs in connection with this Plan of
Recapitalization and to effect all shareholder redemptions and
distributions (other than regular, normal dividends and regular, normal
redemptions pursuant to the 1940 Act, and not in excess of the requirements
of Section 852 of the Code, occurring in the ordinary course of the Fund's
business as a series of an open-end management investment company) after
the date of this Plan of Recapitalization shall be included as assets of
the Fund held for the Class II shares immediately prior to the
reclassification.
(e) The dividend or dividends described in the last sentence of
paragraph 6(a) shall have been declared.
(f) The Fund shall have received an opinion of Ballard Spahr Andrews &
Ingersoll, LLP ("BSA&I") to the effect that consummation of the
transactions contemplated by this Plan of Recapitalization will constitute
a "reorganization" within the meanings of Section 368(a) of the Internal
Revenue Code (the "Code"), and that the Class II shareholders of the Fund
will recognize no gain or loss to the extent that they receive Class I
shares of the Fund in exchange for their Class II shares in accordance with
this Plan of Recapitalization. In rendering such opinion, BSA&I may request
and rely upon representations contained in certificates of officers of the
Fund and others, and the officers of the Fund shall use their best efforts
to make available such truthful certificates.
C-3
<PAGE> 73
(g) The Fund shall have received an opinion of BSA&I, dated as of the
Effective Time, addressed to and in form and substance satisfactory to the
Fund, to the effect that this Plan of Recapitalization has been duly
authorized and approved by all requisite action of the Fund and the holders
of the shares of the Fund.
At any time prior to the Effective Time, any of the foregoing conditions
may be waived by the Fund if, in the judgment of its Board of Directors, such
waiver will not have a material adverse effect on the benefits intended under
this Plan of Recapitalization for the Class II shareholders.
6. Fund Tax Matters.
(a) The Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code. The Fund has qualified as such for
each taxable year since inception that has ended prior to the Effective
Time and will satisfy the requirements of Part I of Subchapter M of the
Code to maintain such qualification for its current taxable year. The Fund
has no earnings or profits accumulated in any taxable year in which the
provisions of Subchapter M of the Code did not apply to it and the Company
has made all distributions for each such past taxable year that are
necessary to avoid the imposition of federal excise tax or has paid or
provided for the payment of any excise tax imposed for any year.
(b) The Fund has timely filed all returns required to be filed by it
and all taxes with respect thereto have been paid. No deficiencies for any
taxes have been proposed, assessed or asserted in writing by any taxing
authority against the Fund, and no deficiency has been proposed, assessed
or asserted, in writing, where such deficiency would reasonably be
expected, individually or in the aggregate, to have a material adverse
effect on the condition, financial or otherwise, property, assets or
prospects of the Fund.
(c) The fiscal year of the Fund has not been changed for tax purposes
since the date on which it commenced operations.
7. Termination. The Fund may terminate this Plan of Recapitalization with
the approval of its Board of Directors at any time prior to the Effective Time,
notwithstanding approval thereof by the Fund's shareholders if, in the judgment
of the Board, proceeding with the Plan of Recapitalization would be inadvisable.
8. Further Assurances. The Fund shall take such further action as may be
necessary or desirable and proper to consummate the transactions contemplated
hereby.
9. Expenses. The Class I shares and the Class II shares shall each bear any
expenses it incurs in connection with this Plan of Recapitalization and the
transactions contemplated hereby.
This Plan of Recapitalization was approved and adopted by the Board of
Directors of the Fund on the 3rd day of February, 2000.
C-4
<PAGE> 74
APPENDIX D
AIM SUMMIT FUND, INC.
FORM OF MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this day of , , by and
between AIM Summit Fund, Inc., a Maryland corporation (the "Company") and AIM
Advisors, Inc., a Delaware corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, as of the date of this Agreement, the shares of the Company
represent an interest in a single portfolio of investment securities (hereafter
referred to as the "Existing Fund");
WHEREAS, the Board of Directors of the Company has the authority under its
charter to classify and reclassify its authorized and unissued shares and to
set, among other things, the preferences, conversion or other rights, voting
powers, and restrictions of the shares it has classified, thereby creating
additional classes of shares representing interests in additional portfolios of
investment securities (such portfolios, together with the Existing Fund, are
hereafter collectively referred to as the "Funds" and individually as a "Fund");
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Existing Fund and to any other
Fund shown from time to time on Schedule A hereto, as such Schedule is amended
from time to time, upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for the
Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Board of Directors. The Advisor shall give the
Company and the Funds the benefit of its best judgment, efforts and facilities
in rendering its services as investment advisor.
D-1
<PAGE> 75
2. Investment Analysis and Implementation. In carrying out its obligations
under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
(b) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Funds,
and whether concerning the individual issuers whose securities are included
in the assets of the Funds or the activities in which such issuers engage,
or with respect to securities which the Advisor considers desirable for
inclusion in the Funds' assets;
(c) determine which issuers and securities shall be represented in the
Funds' investment portfolios and regularly report thereon to the Board of
Directors;
(d) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Board of Directors; and
(e) take, on behalf of the Company and the Funds, all actions which
appear to the Company and the Funds necessary to carry into effect such
purchase and sale programs and supervisory functions as aforesaid,
including but not limited to the placing of orders for the purchase and
sale of securities for the Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide the
following services in connection with the securities lending activities of each
Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure that
securities loans are effected in accordance with the Advisor's instructions and
with procedures adopted by the Board of Directors; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of
Directors with respect to securities lending activities; (e) respond to Agent
inquiries; and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection
with securities lending activities of each Fund, a lending Fund shall pay the
Advisor a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to delegate
any or all of its rights, duties and obligations under this Agreement to one or
more sub-advisors, and may enter into agreements with sub-advisors, and may
replace any such sub-advisors from time to time in its discretion, in accordance
D-2
<PAGE> 76
with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as
such statutes, rules and regulations are amended from time to time or are
interpreted from time to time by the staff of the Securities and Exchange
Commission ("SEC"), and if applicable, exemptive orders or similar relief
granted by the SEC and upon receipt of approval of such sub-advisors by the
Board of Directors and by shareholders (unless any such approval is not required
by such statutes, rules, regulations, interpretations, orders or similar
relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company in any way or otherwise be deemed to be an agent of the
Company.
6. Control by Board of Directors. Any investment program undertaken by the
Advisor pursuant to this Agreement, as well as any other activities undertaken
by the Advisor on behalf of the Funds, shall at all times be subject to any
directives of the Board of Directors.
7. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers Act and
any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company, as
the same may be amended from time to time under the Securities Act of 1933
and the 1940 Act;
(c) the provisions of the Charter, as the same may be amended from
time to time;
(d) the provisions of the by-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
8. Broker-Dealer Relationships. The Advisor is responsible for decisions to
buy and sell securities for the Funds, broker-dealer selection, and negotiation
of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a security
transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration: the
best net price available; the reliability, integrity and financial
condition of the broker-dealer; and the value of the expected contribution
of the broker-dealer to the investment performance of the Funds on a
continuing basis. Accordingly, the price to the Funds in any transaction
may be less favorable than that
D-3
<PAGE> 77
available from another broker-dealer if the difference is reasonably
justified by other aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Directors may from time
to time determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Funds to pay a broker or dealer that
provides brokerage and research services to the Advisor an amount of
commission for effecting a fund investment transaction in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Advisor's overall
responsibilities with respect to a particular Fund, other Funds of the
Company, and to other clients of the Advisor as to which the Advisor
exercises investment discretion. The Advisor is further authorized to
allocate the orders placed by it on behalf of the Funds to such brokers and
dealers who also provide research or statistical material, or other
services to the Funds, to the Advisor, or to any sub-advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocations regularly to the
Board of Directors indicating the brokers to whom such allocations have
been made and the basis therefor.
(d) With respect to one or more Funds, to the extent the Advisor does
not delegate trading responsibility to one or more sub-advisors, in making
decisions regarding broker-dealer relationships, the Advisor may take into
consideration the recommendations of any sub-advisor appointed to provide
investment research or advisory services in connection with the Funds, and
may take into consideration any research services provided to such sub-
advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the 1940 Act,
the Securities Exchange Act of 1934, and rules and regulations thereunder,
as such statutes, rules and regulations are amended from time to time or
are interpreted from time to time by the staff of the SEC, any exemptive
orders issued by the SEC, and any other applicable provisions of law, the
Advisor may select brokers or dealers with which it or the Funds are
affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor is
set forth in Appendix B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses incurred
in the operations of the Funds and the offering of their shares shall be borne
by the Funds unless specifically provided otherwise in this Agreement. These
expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, auditing, or governmental fees, the cost
of
D-4
<PAGE> 78
preparing share certificates, custodian, transfer and shareholder service agent
costs, expenses of issue, sale, redemption and repurchase of shares, expenses of
registering and qualifying shares for sale, expenses relating to directors and
shareholder meetings, the cost of preparing and distributing reports and notices
to shareholders, the fees and other expenses incurred by the Company on behalf
of the Funds in connection with membership in investment company organizations
and the cost of printing copies of prospectuses and statements of additional
information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Company understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Company has no objection to the Advisor
so acting, provided that whenever the Company and one or more other investment
companies or accounts managed or advised by the Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each company and account.
The Company recognizes that in some cases this procedure may adversely affect
the size of the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Company understands that the persons employed by
the Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature. The Company
further understands and agrees that officers or directors of the Advisor may
serve as officers or directors of the Company, and that officers or directors of
the Company may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Appendix A attached hereto.
If so approved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Board of Directors or (ii) by the vote of "a majority
of the outstanding voting securities" of such Fund (as defined in Section
2(a)(42) of the 1940 Act); and
D-5
<PAGE> 79
(b) by the affirmative vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the 1940
Act) of a party to this Agreement (other than as Company directors), by
votes cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated as to the Company or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Board of Directors or by vote of a majority of the outstanding
voting securities of the applicable Fund, or by the Advisor, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless it
is in writing and signed by the party against which enforcement of the amendment
is sought.
16. Liability of Advisor and Fund. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company or to
the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. Any
liability of the Advisor to one Fund shall not automatically impart liability on
the part of the Advisor to any other Fund. No Fund shall be liable for the
obligations of any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Company individually but are binding
only upon the assets and property of the Company and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Company and that of the Advisor shall be 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
19. Questions of Interpretation. Any question of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of
D-6
<PAGE> 80
any controlling decision of any such court, by rules, regulations or orders of
the SEC issued pursuant to said Acts. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Texas.
20. License Agreement. The Company shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Company with respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
<TABLE>
<S> <C>
AIM SUMMIT FUND, INC.
(a Maryland corporation)
Attest:
By:
- ---------------------------------------
Assistant Secretary --------------------------------------
President
(SEAL)
Attest: A I M ADVISORS, INC.
- --------------------------------------- By:
Assistant Secretary
--------------------------------------
(SEAL) President
</TABLE>
D-7
<PAGE> 81
APPENDIX A
FUNDS AND EFFECTIVE DATES
<TABLE>
<CAPTION>
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
- ------------ ------------------
<S> <C>
AIM Summit Fund, Inc. May 24, 2000
</TABLE>
D-8
<PAGE> 82
APPENDIX B
COMPENSATION TO THE ADVISOR
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory fee for such Fund set forth
below. Such fee shall be calculated by applying the following annual rates to
the average daily net assets of such Fund for the calendar year computed in the
manner used for the determination of the net asset value of shares of such Fund.
AIM SUMMIT FUND, INC.
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $10 million.... 1.00 %
Over $10 million up
to and including
$150 million....... 0.75 %
Over $150 million.... 0.625%
</TABLE>
D-9
<PAGE> 83
APPENDIX E
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF
A I M ADVISORS, INC.
The following table provides information with respect to the principal
executive officer and the directors of A I M Advisors, Inc., all of whose
business address is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH AIM PRINCIPAL OCCUPATION
- ---------------- ----------------- --------------------
<S> <C> <C>
Charles T. Bauer Director and Chairman See director table under
Proposal 1
Gary T. Crum Director and Senior Vice See Appendix I
President
Robert H. Graham Director and President See director table under
Proposal 1
Dawn M. Hawley Director, Senior Vice President Senior Vice President, Chief
and Treasurer Financial Officer and
Treasurer, A I M Management
Group Inc.; and Vice President
and Treasurer for A I M Capital
Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund
Management Company.
Carol F. Relihan Director, Senior Vice See Appendix I
President, General Counsel and
Secretary
</TABLE>
E-1
<PAGE> 84
APPENDIX F
FEES PAID TO AIM AND AFFILIATES IN MOST RECENT FISCAL YEAR
The following chart sets forth the fees paid during the fiscal period or
year ended October 31, 1999 by the fund to A I M Advisors, Inc. ("AIM") for
administrative services and to affiliates of AIM. The administrative and other
services currently provided by AIM and its affiliates will continue to be
provided after the investment advisory contract with AIM is approved.
<TABLE>
<CAPTION>
AIM
(ADMINISTRATIVE A I M A I M FUND
SERVICES) DISTRIBUTORS, INC.* SERVICES, INC.
--------------- ------------------- --------------
<S> <C> <C> <C>
AIM SUMMIT FUND, INC................ $114,068 $ 0 $ 0
</TABLE>
* Net amount received from Rule 12b-1 fees. Excludes amounts reallowed to
brokers, dealers, agents and other service providers.
F-1
<PAGE> 85
APPENDIX G
ADVISORY FEE SCHEDULES FOR OTHER AIM FUNDS
The following table provides information with respect to the annual
advisory fee rates paid to AIM by certain funds that have the same investment
objective as AIM Summit Fund, Inc.
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Aggressive Growth Fund.. 0.80% of the first $150 million; $ 2,840,171,882
0.625% of the excess over $150
million
AIM Capital Development
Fund....................... 0.75% of the first $350 million; $ 1,084,854,198
0.625% of the excess over $350
million
AIM Constellation Fund...... 1.00% of the first $30 million; $ 15,288,481,794
0.75% over $30 million up to $150
million; 0.625% of the excess over
$150 million
AIM Dent Demographic Trends
Fund....................... 0.85% of the first $2 billion; $ 392,908,501
0.80% of the excess over $2
billion
AIM Large Cap Growth Fund... 0.75% of the first $1 billion; $ 13,869,426
0.70% over $1 billion up to $2
billion; 0.625% of the excess over
$2 billion
AIM Mid Cap Growth Fund..... 0.80% of the first $1 billion; N/A*
0.75% of the excess over $1
billion
AIM Weingarten Fund......... 1.00% of the first $30 million; $ 9,600,690,471
0.75% over $30 million up to $350
million; 0.625% of the excess over
$350 million
AIM Asian Growth Fund....... 0.95% of the first $500 million; $ 42,497,099
0.90% of the excess over $500
million
AIM European Development
Fund....................... 0.95% of the first $500 million; $ 178,160,567
0.90% of the excess over $500
million
AIM Global Aggressive Growth
Fund....................... 0.90% of the first $1 billion; $ 1,795,495,057
0.85% of the excess over $1
billion
</TABLE>
* AIM Mid Cap Growth Fund commenced operations on November 1, 1999.
G-1
<PAGE> 86
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Global Growth Fund...... 0.85% of the first $1 billion; $ 845,251,073
0.80% of the excess over $1
billion
AIM International Equity
Fund....................... 0.95% of the first $1 billion; $ 3,063,733,110
0.90% of the excess over $1
billion
AIM Select Growth Fund...... 0.80% of the first $150 million; $ 1,079,458,334
0.625% of the excess over $150
million
AIM V.I. Aggressive Growth
Fund....................... 0.80% of first $150 million; $ 17,325,844
0.625% of the excess over $150
million
AIM V.I. Capital
Appreciation Fund.......... 0.65% of first $250 million; 0.60% $ 1,131,217,460
of the excess over $250 million
AIM V.I. Capital Development
Fund....................... 0.75% of first $350 million; $ 11,034,931
0.625% of the excess over $350
million
AIM V.I. Dent Demographic
Trends Fund................ 0.85% of first $2 billion; 0.80% $ 999,599
of the excess over $2 billion
AIM V.I. Growth Fund........ 0.65% of first $250 million; 0.60% $ 704,095,680
of the excess over $250 million
AIM V.I. International
Equity Fund................ 0.75% of first $250 million; 0.70% $ 454,059,551
of excess over $250 million
AIM V.I. Telecommunications
Fund....................... 1.00% $ 108,427,764
AIM Large Cap Opportunities
Fund....................... Base fee of 1.50%; maximum annual N/A**
performance adjustment of +/-
1.00%
AIM Mid Cap Opportunities
Fund....................... Base fee of 1.00%; maximum annual $ 4,789,875
adjustment of +/- 1.00%
AIM Small Cap Opportunities
Fund....................... Base fee of 1.00%; maximum annual $ 365,491,330
adjustment of +/-0.75%
AIM Basic Value Fund........ First $500 million 0.475%; Next $ 136,276,615
$500 million 0.45%; Next $500
million 0.425%; excess over 0.40%
</TABLE>
** AIM Large Cap Opportunities Fund commenced operations on December 30, 1999.
G-2
<PAGE> 87
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Euroland Growth Fund.... First $500 million 0.975%; Next $ 541,308,192
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Japan Growth Fund....... First $500 million 0.975%; Next $ 304,533,247
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Mid Cap Equity Fund..... First $500 million 0.725%; Next $ 333,668,281
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM New Pacific Growth
Fund....................... First $500 million 0.975%; Next $ 139,121,407
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Small Cap Growth Fund... First $500 million 0.475%; Next $ 716,060,823
$500 million 0.45%; Next $500
million 0.425%; excess over 0.40%
AIM Global Consumer Products
and Services Fund.......... First $500 million 0.725%; Next $ 184,973,907
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Financial
Services Fund.............. First $500 million 0.725%; Next $ 81,913,285
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Health Care
Fund....................... First $500 million 0.975%; Next $ 462,669,291
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Global Infrastructure
Fund....................... First $500 million 0.725%; Next $ 45,124,457
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
AIM Global Resources Fund... First $500 million 0.725%; Next $ 35,998,488
$500 million 0.70%; Next $500
million 0.675%; excess over 0.65%
</TABLE>
G-3
<PAGE> 88
<TABLE>
<CAPTION>
FEE WAIVERS,
ANNUAL RATE TOTAL NET ASSETS FOR EXPENSE CAPS AND/OR
(BASED ON AVERAGE THE MOST RECENTLY EXPENSE
NAME OF FUND DAILY NET ASSETS) COMPLETED FISCAL YEAR REIMBURSEMENTS
- ------------ ----------------- --------------------- -------------------
<S> <C> <C> <C>
AIM Global
Telecommunications and
Technology Fund............ First $500 million 0.975%; Next $ 1,935,476,632
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Latin American Growth
Fund....................... First $500 million 0.975%; Next $ 88,788,170
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
AIM Global Trends Fund...... First $500 million 0.975%; Next $ 51,201,676
$500 million 0.95%; Next $500
million 0.925%; excess over 0.90%
</TABLE>
G-4
<PAGE> 89
APPENDIX H
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
AIM Summit Fund, Inc. may not purchase a security if as a result of that
purchase:
(1) More than 25% of the value of the fund's total assets would be
invested in the securities of issuers primarily engaged in the same
industry, except that this restriction does not apply to obligations issued
or guaranteed by the United States Government or its agencies or
instrumentalities;
(2) More than 5% of the value of the fund's total assets would be
invested in the securities of a single issuer, except that this restriction
does not apply to obligations issued or guaranteed by the United States
Government or its agencies or instrumentalities, or repurchase agreements
pertaining to such securities, and except that the fund may purchase
securities of other investment companies to the extent permitted by
applicable law or exemptive order; or
(3) The fund would own more than 10% of the outstanding voting
securities of any issuer or more than 10% of any class of securities of an
issuer, with the debt and preferred stock of an issuer each considered to
be a separate single class for this purpose, except that the fund may
purchase securities of other investment companies to the extent permitted
by applicable law or exemptive order.
Also the fund will not:
(4) Purchase or hold securities of any issuer if the fund has
knowledge that the officers and directors of the fund and its investment
advisor collectively own beneficially more than 5% of the outstanding
securities of such issuer. (Individual holdings of less than 1/2 of 1% will
not be counted for the purpose of this restriction.)
(5) Borrow money or issue senior securities, except that the fund may
borrow from banks for temporary or emergency purposes in amounts up to 10%
of the value of its total assets at the time of borrowing. (This provision
is included solely to facilitate the orderly sale of portfolio securities
to accommodate abnormally heavy redemption requests if they should occur
and is not for leverage purposes. Any borrowings by the fund will be repaid
prior to the purchase of additional portfolio securities.)
(6) Underwrite securities issued by any other person.
(7) Invest in real estate or purchase oil, gas or mineral interests,
except that this restriction does not apply to marketable securities
secured by real estate or interests therein or issued by issuers which
invest in real estate or interests therein, or to securities issued by
companies engaged in
H-1
<PAGE> 90
the exploration, development, production, refining, transporting and
marketing of oil, gas or minerals.
(8) Buy or sell commodities or commodity futures contracts.
(9) Make loans of money or securities other than (a) through the
purchase of securities in accordance with the fund's investment program,
and (b) by entering into repurchase agreements; provided that the fund may
lend its portfolio securities so long as the value of securities loaned by
it does not exceed an amount equal to 33 1/3% of the fund's total assets.
(10) Purchase securities on margin, except to the extent necessary for
the clearance of its securities transactions.
(11) Make short sales of securities or maintain a short position in
securities unless at all times when a short position is open, the fund owns
at least an equal amount of such securities or owns securities convertible
into or exchangeable for at last an equal amount of such securities, and
unless not more than 10% of the fund's total assets (taken at current
value) is held as collateral for such short sales at any one time.
(12) Invest in companies for the purpose of exercising control or
management except that the fund may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
(13) Purchase or sell puts or purchase calls.
H-2
<PAGE> 91
APPENDIX I
EXECUTIVE OFFICERS OF AIM SUMMIT FUND, INC.
The following table provides information with respect to the executive
officers of the fund. Each executive officer is elected by the Board and serves
until his or her successor is chosen and qualified or until his or her
resignation or removal by the Board. The business address of all officers of the
fund is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION PRINCIPAL OCCUPATION(S)
WITH THE FUND OFFICER SINCE DURING PAST 5 YEARS
- ---------------------- ------------- -----------------------
<S> <C> <C>
Charles T. Bauer (81), May 2, 1992 See director table under
Chairman Proposal 1
Robert H. Graham (53), January 1, 1994 See director table under
President Proposal 1
Gary T. Crum (52), September 11, 1993 Director and President, A I M
Senior Vice President Capital Management, Inc.;
Director and Executive Vice
President, A I M Management
Group Inc.; Director and Senior
Vice President A I M Advisors,
Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP
PLC.
Carol F. Relihan (45), August 4, 1994 Director, Senior Vice President,
Senior Vice President General Counsel and Secretary,
Secretary A I M Advisors, Inc.; Senior
Vice President, General Counsel
and Secretary, A I M Management
Group Inc.; Director, Vice
President and General Counsel,
Fund Management Company; Vice
President and General Counsel,
A I M Fund Services, Inc; and
Vice President, A I M Capital
Management, Inc. and A I M
Distributors, Inc.
Melville B. Cox (56), March 5, 1992 Vice President and Chief
Vice President Compliance Officer, A I M
Advisors, 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 September 11, 1993 Vice President and Fund
President Controller, A I M Advisors,
Treasurer Inc.; and Assistant Vice
President and Assistant
Treasurer, Fund Management
Company.
Edgar M. Larsen (59), March 12, 1999 Vice President, A I M Capital
Vice President Management, Inc.
</TABLE>
I-1
<PAGE> 92
APPENDIX J
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the ownership
of the shares of common stock of the fund by the directors and executive
officers of the fund. No information is given if a director or officer held no
shares of any or all classes of the fund as of February 18, 2000.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT
NAME OF DIRECTOR/OFFICER FUND (CLASS) BENEFICIALLY OF CLASS
- ------------------------ ------------ ------------ --------
<S> <C> <C> <C>
Charles T. Bauer.............................
Bruce L. Crockett............................
Owen Daly II.................................
Edward K. Dunn Jr. ..........................
Jack M. Fields...............................
Carl Frischling..............................
Robert H. Graham.............................
Prema Mathai-Davis...........................
Lewis F. Pennock.............................
Louis S. Sklar...............................
Gary T. Crum.................................
Carol F. Relihan.............................
Melville B. Cox..............................
Dana R. Sutton...............................
Edgar M. Larsen..............................
All Directors and Officers as a Group........
</TABLE>
* Less than 1% of the outstanding shares of the class.
J-1
<PAGE> 93
SECURITY OWNERSHIP OF CERTAIN RECORD OWNERS
To the best knowledge of the fund, the names and addresses of the holders
of 5% or more of the outstanding shares of each class of the fund as of February
18, 2000, and the amount of the outstanding shares owned of record or
beneficially by such holders, are set forth below.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND PERCENT OF CLASS
ADDRESS CLASS OWNED SHARES OWNED OWNED
FUND (CLASS) OF RECORD OWNER SHARES OWNED OF RECORD OF RECORD BENEFICIALLY* BENEFICIALLY*
- ------------ --------------- ---------------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
</TABLE>
* The company has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
J-2
<PAGE> 94
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
PROXY PROXY
PROXY SOLICITED BY THE BOARD
OF AIM SUMMIT FUND, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 3, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of AIM Summit Fund, Inc., on May 3, 2000, at 3:00 p.m.,
Central time, and at any adjournment thereof, all of the shares of the fund
which the undersigned would be entitled to vote if personally present. IF THIS
PROXY IS SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED
"FOR" EACH DIRECTOR AND "FOR" THE APPROVAL OF EACH OTHER PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY CARD. All joint owners should sign.
When signing as executor, administrator, attorney,
director or guardian or as custodian for a minor,
please give full title as such. If a corporation,
please sign in full corporate name and indicate
the signer's office. If a partner, sign in the
partnership name.
--------------------------------------------------
Signature
--------------------------------------------------
Signature (if held jointly)
Dated
--------------------------------------------
<PAGE> 95
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING "FOR" EACH PROPOSAL.
TO VOTE, FILL IN BOX COMPLETELY. EXAMPLE: [X]
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK
THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'(S)
NAME. YOUR SHARES WILL BE VOTED "FOR" THE REMAINING NOMINEE(S).
1. To elect ten individuals to the Board of Directors of AIM Summit Fund,
Inc., each of whom will serve until his or her successor is elected and
qualified:
FOR WITHHOLD FOR ALL EXCEPT
AUTHORITY
FOR ALL
NOMINEES
[ ] [ ] [ ]
Charles T. Bauer Carl Frischling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr. Lewis F. Pennock
Jack M. Fields Louis S. Sklar
2. To approve a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for the Class I shares of the fund.
Class I Shareholders Only
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 96
3. To approve a Plan of Recapitalization to amend this fund's Charter to
reclassify Class II shares of the fund's common stock as Class I
shares.
Class II Shareholders Only
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To approve an Agreement and Plan of Reorganization to reorganize the
fund as a Delaware business trust.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. To approve a new Master Investment Advisory Agreement with A I M
Advisors, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. To approve changing the fund's fundamental investment restrictions.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(a) Change to Fundamental Restriction on Issuer FOR AGAINST ABSTAIN
Diversification [ ] [ ] [ ]
(b) Change to Fundamental Restriction on Borrowing
Money and Issuing Senior Securities FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(c) Change to Fundamental Restriction on Underwriting FOR AGAINST ABSTAIN
Securities [ ] [ ] [ ]
(d) Change to Fundamental Restriction on Industry FOR AGAINST ABSTAIN
Concentration [ ] [ ] [ ]
(e) Change to Fundamental Restriction on Purchasing or FOR AGAINST ABSTAIN
Selling Real Estate and Elimination of Fundamental [ ] [ ] [ ]
Restriction on Investments in Oil, Gas or Other
Mineral Exploration or Development Programs.
(f) Change to Fundamental Restriction on Purchasing or FOR AGAINST ABSTAIN
Selling Commodities and Elimination of Fundamental [ ] [ ] [ ]
Restriction on Puts and Calls
(g) Change to Fundamental Restriction on Making Loans FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(h) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Margin Transactions [ ] [ ] [ ]
(i) Elimination of Fundamental Restriction on Short FOR AGAINST ABSTAIN
Sales of Securities [ ] [ ] [ ]
(j) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Investing for the Purpose of Control [ ] [ ] [ ]
</TABLE>
<PAGE> 97
<TABLE>
<S> <C> <C> <C>
(k) Elimination of Fundamental Restriction on FOR AGAINST ABSTAIN
Purchasing Securities of Issuers in which Officers [ ] [ ] [ ]
and Directors of the Fund and its Affiliates Own
Securities
</TABLE>
7. To ratify the selection of KPMG LLP as independent accountants of the
fund for the fiscal year ending in 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE> 98
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND ONE OR MORE PROXY CARDS RELATING TO EACH OF THE
FUNDS FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR
VOTING INSTRUCTIONS ON EACH OF THE ENCLOSED PROXY CARDS, DATE AND SIGN THEM,
AND RETURN THEM IN THE ENVELOPE PROVIDED. IF YOU SIGN, DATE AND RETURN A
PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR"
THE NOMINEES FOR DIRECTOR NAMED IN THE ATTACHED PROXY STATEMENT AND "FOR" ALL
OTHER PROPOSALS INDICATED ON THE CARDS. IN ORDER TO AVOID THE ADDITIONAL
EXPENSES OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY CARDS PROMPTLY. UNLESS PROXY CARDS ARE SIGNED BY THE APPROPRIATE PERSONS
AS INDICATED IN THE INSTRUCTIONS BELOW, THEY WILL NOT BE VOTED.
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense involved in validating your vote if you fail
to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration. For
example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C> <C>
Trust Accounts
(1) ABC Trust Account............................................. John B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78........................... Jane B. Doe
Partnership Accounts
(1) The XYZ Partnership........................................... Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership.......................... Jane B. Smith, General Partner
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr.
UGMA/UTMA..................................................... John B. Smith
(2) Estate of John B. Smith....................................... John B. Smith, Jr., Executor
Corporate Accounts
(1) ABC Corp...................................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp...................................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer............................. John Doe
(4) ABC Corp. Profit Sharing Plan................................. John Doe, Trustee
</TABLE>
